<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1995
REGISTRATION NO. 33-
811-8828
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. [_]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 3 [X]
NEW ENGLAND VARIABLE ANNUITY
SEPARATE ACCOUNT
(EXACT NAME OF REGISTRANT)
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
501 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02117
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER: 617-578-2000
NAME AND ADDRESS OF AGENT FOR SERVICE: COPY TO:
H. James Wilson Stephen E. Roth, Esquire
General Counsel and Secretary Sutherland, Asbill & Brennan
New England Variable Life Insurance Company
1275 Pennsylvania Avenue, N.W.
501 Boylston Street Washington, D.C. 20004-2404
Boston, Massachusetts 02117
APPROXIMATE DATE OF THE PROPOSED PUBLIC OFFERING:
As soon as practicable after effectiveness of the Registration Statement.
TITLE OF SECURITIES BEING REGISTERED:
Interest in a separate account under individual flexible premium deferred
variable annuity contracts.
DECLARATION PURSUANT TO RULE 24F-2
An indefinite amount of securities is being registered under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. A
filing fee of $500 is being paid with this filing of the initial registration
statement.
----------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), shall determine.
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- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEETS
Between information contained in the Prospectus and Statement of Additional
Information and the Required Items of Form N-4.
<TABLE>
<CAPTION>
FORM N-4 CAPTION IN STATEMENT OF
ITEM NO. CAPTION IN PROSPECTUS ADDITIONAL INFORMATION
-------- --------------------- -----------------------
<C> <S> <C>
1 Cover Page
2 Glossary of Special Terms used in
this Prospectus
3 Highlights; Expense Table
4 Inapplicable
5 The Company; The Variable Account;
Investments of the Variable
Account-The New England Zenith
Fund Series
6 Administrative Charges, Contingent
Deferred Sales Charge and Other
Deductions; Distribution of the
Contracts
7 The Contracts; Investments of the
Variable Account (Substitution of
Investments); The Fixed Account;
8 Annuity Payments; Amount of
Variable Annuity Payments
9 The Contracts
10 The Contracts; Cover Page Net Investment Factor
11 The Contracts;
12 Federal Income Tax Status
(Taxation of the Contracts)
13 Inapplicable
14 Table of Contents of Statement of
Additional Information
15 Cover Page
16 Table of Contents
17 Inapplicable
18 Services to the Variable Account
19 Administration Charges, Contingent
Deferred Sales Charge and Other
Deductions
20 Services to the Variable Account
21(b) Calculation of Performance Data
22 Annuity Payments
23 Financial Statements
</TABLE>
<PAGE>
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
ISSUED BY
NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 578-2000
This prospectus offers individual flexible and single purchase payment
variable annuity contracts (the "Contracts") that are currently intended for
use with certain retirement plans that qualify for tax benefited treatment
under the Internal Revenue Code (the "Code"), for individual use, and for use
with plans and trusts not qualifying under the Code for tax benefited
treatment. All purchase payments made under the Contracts may be allocated to
New England Variable Annuity Separate Account (the "Variable Account"), a
separate investment account of New England Variable Life Insurance Company
("NEVLICO" or the "Company"). Assets of the Variable Account are invested in
shares of certain Series of the New England Zenith Fund (collectively, the
"Eligible Funds"). See "Investments of the Variable Account." The owner of a
Contract chooses the Eligible Funds in which the purchase payments are
invested and may change the Eligible Fund or Funds selected from time to time.
Any one or a combination of the following Eligible Funds may be selected,
within limits:
Back Bay Advisors Bond Income Series Draycott International Equity Series
Back Bay Advisors Money Market Series Alger Equity Growth Series
Loomis Sayles Avanti Growth Series Venture Value Series
Westpeak Value Growth Series Salomon Brothers U.S. Government Series
Loomis Sayles Small Cap Series Salomon Brothers Strategic Bond
Loomis Sayles Balanced Series Opportunities Series
A Fixed Account option is also available in approved states. (See "The Fixed
Account" for more information.) Special limits apply to transfers of Contract
---------------------------------------------
Value to and from the Fixed Account.
- ------------------------------------
This prospectus sets forth concisely the information about the Contracts
that a prospective investor ought to know before investing. The prospectus
should be read carefully and retained for future reference.
Certain additional information about the Contracts is contained in a
Statement of Additional Information dated , 1996, as it may be
supplemented from time to time, which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Table of
Contents of the Statement of Additional Information appears on page A- of
this prospectus. The Statement of Additional Information is available without
charge and may be obtained by writing to New England Securities Corporation
("New England Securities"), 399 Boylston St., Boston, Massachusetts 02116.
New England Securities serves as principal underwriter for the Variable
Account. New England Securities is a subsidiary of New England Mutual Life
Insurance Company ("The New England"), the parent company of NEVLICO.
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.
The date of this Prospectus is , 1996.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR
THE NEW ENGLAND ZENITH FUND AND SHOULD BE RETAINED FOR FUTURE REFERENCE.
AN INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED
OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND IS NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY, AND INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
A-1
<PAGE>
TABLE OF CONTENTS
OF
THE PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS......................... A-4
HIGHLIGHTS................................................................ A-5
EXPENSE TABLE............................................................. A-8
HOW THE CONTRACT WORKS.................................................... A-13
THE COMPANY............................................................... A-14
THE VARIABLE ACCOUNT...................................................... A-14
INVESTMENTS OF THE VARIABLE ACCOUNT....................................... A-14
Investment Advice..................................................... A-16
Substitution of Investments........................................... A-16
GUARANTEED OPTION......................................................... A-16
THE CONTRACTS............................................................. A-16
Purchase Payments..................................................... A-16
Allocation of Purchase Payments....................................... A-17
Contract Value and Accumulation Unit Value............................ A-17
Payment on Death Prior to Annuitization............................... A-17
Transfer Privilege.................................................... A-19
Dollar Cost Averaging................................................. A-20
Surrenders............................................................ A-21
Systematic Withdrawals................................................ A-21
Suspension of Payments................................................ A-22
Ownership Rights...................................................... A-22
Requests and Elections................................................ A-22
Ten Day Right to Review............................................... A-23
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUC-
TIONS.................................................................... A-23
Administration Charges................................................ A-23
Mortality and Expense Risk Charge..................................... A-23
Contingent Deferred Sales Charge...................................... A-24
Premium Tax Charge.................................................... A-26
Other Expenses........................................................ A-26
ANNUITY PAYMENTS.......................................................... A-27
Election of Annuity................................................... A-27
Annuity Options....................................................... A-27
AMOUNT OF VARIABLE ANNUITY PAYMENTS....................................... A-29
FEDERAL INCOME TAX STATUS................................................. A-29
Introduction.......................................................... A-29
Taxation of NEVLICO................................................... A-30
Tax Status of the Contract............................................ A-30
Taxation of Annuities................................................. A-31
Qualified Contracts................................................... A-32
Withholding........................................................... A-34
Possible Changes in Taxation.......................................... A-34
Other Tax Consequences................................................ A-34
General............................................................... A-34
VOTING RIGHTS............................................................. A-34
DISTRIBUTION OF CONTRACTS................................................. A-35
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE FIXED ACCOUNT.......................................................... A-35
General Description of the Fixed Account............................... A-36
Contract Value and Fixed Account Transactions.......................... A-36
FINANCIAL STATEMENTS....................................................... A-36
INVESTMENT EXPERIENCE INFORMATION.......................................... A-37
AVERAGE ANNUAL TOTAL RETURN................................................ A-37
APPENDIX A: Consumer Tips.................................................. A-43
APPENDIX B: Contingent Deferred Sales Charge............................... A-44
</TABLE>
A-3
<PAGE>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS
ACCOUNT--A sub-account of the Variable Account or the Fixed Account.
ACCUMULATION UNIT--An accounting device used to calculate the Contract Value
prior to annuitization.
ACCUMULATION UNIT VALUE--The value of an Accumulation Unit, determined as of
the close of regular trading on the New York Stock Exchange on each day the
Exchange is open. The Accumulation Unit Value of a sub-account reflects the
net investment experience of the underlying Eligible Fund and daily deductions
for the Mortality and Expense Risk Charge.
ADMINISTRATION CONTRACT CHARGE--A charge deducted annually from the Contract
Value in the Variable Account to cover the Company's cost of providing certain
administrative services relating to the Contracts and the Variable Account.
The charge is the lesser of 2% of the total Contract Value or $30.
ANNUITANT--The person on whose life the Contract is issued.
ANNUITIZATION--Application of proceeds under the Contract to an annuity
option on the Maturity Date or upon an earlier surrender of the Contract.
ANNUITY UNIT--An accounting device used to calculate the dollar amount of
annuity payments.
BENEFICIARY--The person designated to receive Death Proceeds under a
Contract if a Contract Owner (or Annuitant, if the Contract Owner is not a
natural person) dies before annuitization of the Contract.
CONTINGENT ANNUITANT--If designated in the application, the person who
becomes the Annuitant under the Contract if the Annuitant dies prior to
annuitization. A Contingent Annuitant must be designated for individually
owned Contracts where the Contract Owner and Annuitant are not the same. The
Contingent Annuitant must be a Contract Owner. The Contingent Annuitant cannot
be changed after the death of the Annuitant.
CONTINGENT DEFERRED SALES CHARGE--A charge deducted upon certain full and
partial surrenders and applications of proceeds to certain annuity payment
options, or, in certain circumstances, upon withdrawal of amounts that were
applied to a payment option. In addition, in states where the maximum maturity
age permitted by law is less than 95, a Contingent Deferred Sales Charge may
apply at the Maturity Date.
CONTRACT DATE--The date shown as the Contract Date in the Contract.
CONTRACT OWNER--The person so designated in the application or as
subsequently changed.
CONTRACT VALUE--On or before annuitization, the value obtained by
multiplying the number of Accumulation Units credited to the Contract by the
appropriate current Accumulation Unit Value. Under Contracts with the Fixed
Account option, the Contract Value also includes the amount of Contract Value
allocated to the Fixed Account.
CONTRACT YEAR--A twelve month period commencing with the Contract Date and
with each Contract anniversary thereafter.
DEATH PROCEEDS (prior to annuitization)--The amount payable by the Company
upon receipt of due proof of the death of the Contract Owner (or of the death
of the first Contract Owner to die under a jointly owned Contract) and
election of payment prior to annuitization. For a Contract that is not owned
by an individual, the Death Proceeds are payable upon receipt of due proof of
the death of the Annuitant (and election of payment) prior to annuitization.
The Death Proceeds are guaranteed to be no less than the purchase payments
made, adjusted for any previous surrenders. However, after the first seven
Contract Years, a higher (but never a lower) guarantee may apply, depending on
your Contract Value. In certain states, the Death Proceeds will be reduced by
the applicable premium tax charge.
ELIGIBLE FUNDS--A term that currently includes 11 Series of the New England
Zenith Fund. Purchase payments allocated to the Variable Account may be
invested in shares of one or more of these Series, as described on pages A-
to A- .
A-4
<PAGE>
FIXED ACCOUNT--A part of the Company's general account to which net purchase
payments may be allocated under certain Contracts. The Fixed Account provides
guarantees of principal and interest. Special limits apply to transfers of
Contract Value to and from the Fixed Account. See page A- .
MORTALITY AND EXPENSE RISK CHARGE--A charge deducted daily from the assets
of each sub-account of the Variable Account to compensate the Company for
assuming certain mortality and expense risks under the Contracts. On an
annualized basis, the charge equals 1.00% of daily net assets.
MATURITY DATE--The date on which annuity payments are to commence, unless
the Contract Owner applies the Contract Value to an annuity payment option at
an earlier date. The Maturity Date will be the date when the older of the
Contract Owner(s) and the Annuitant at his or her nearest birthday would be
age 95 (or the maximum age permitted by state law, if less).
PAYEE--Any person or entity entitled to receive payment in one sum or under
a payment option. The term includes (i) an Annuitant, (ii) a Beneficiary or
contingent Beneficiary who becomes entitled to payments upon death of the
Contract Owner (or Annuitant, if the Contract is not owned in an individual
capacity), and (iii) in the event of surrender or partial surrender of the
Contract, the Contract Owner.
PREMIUM TAX CHARGE--A charge to recover premium taxes which the Company pays
to certain states.
PURCHASE PAYMENTS--Amounts paid to the Company for investment in the
Contract.
SYSTEMATIC WITHDRAWALS--A method of distributing your Contract Value which
involves a series of partial surrenders.
TEN DAY RIGHT TO REVIEW--Within 10 days (or more if required by law) of your
receipt of an issued Contract you may return it to the Company or its agent
for cancellation. Upon cancellation of the Contract, the Company will return
to you the Contract Value (or, if required by state law, all purchase payments
made).
VARIABLE ACCOUNT--A separate investment account of the Company designated as
the New England Variable Annuity Separate Account. The Variable Account is
divided into sub-accounts, each of which invests in shares of one of the
Eligible Funds.
VARIABLE ANNUITY--An annuity providing for payments varying in amount in
accordance with the investment experience of the assets of a separate
investment account.
HIGHLIGHTS
This prospectus describes Contracts under which purchase payments are
allocated to the Variable Account. If the Fixed Account is available under
your Contract, you may allocate all or part of your purchase payments or
transfer all or part of your Contract Value to that account. For a description
of the Fixed Account, the rules regarding transactions which involve the Fixed
Account (such as special restrictions on transfers of Contract Value to and
from the Fixed Account), and the way in which the Fixed Account affects the
Contract Value, see "The Fixed Account". You should review "The Fixed Account"
carefully before allocating purchase payments or Contract Value to that
account.
TAX DEFERRED VARIABLE ANNUITIES:
The deferral of taxes on earnings under variable annuities is designed to
encourage long-term personal savings and supplemental retirement plans.
THE CONTRACT:
The Contract is a variable annuity issued by the Company. The variable
annuity provides for variable payments to commence at the Maturity Date. The
Contract Owner may, however, surrender the Contract and apply the proceeds to
an annuity payment option at an earlier date. The payments generally are made
on a monthly basis and will vary in amount according to the payment option
selected and the investment results of the underlying Eligible Fund(s). (See
"Annuity Payments".)
A-5
<PAGE>
PURCHASE PAYMENTS:
Under current rules, the minimum initial purchase payment is $10,000. The
maximum purchase payment permitted is $1,000,000, unless the Company consents
to a higher amount. Any subsequent purchase payments must be at least $250.
The Company reserves the right to limit purchase payments made in any Contract
Year or in total under a Contract. No purchase payment may be made (1) within
four years prior to the Contract's Maturity Date (except under Contracts
issued in Pennsylvania or New York), unless the initial purchase payment is
$1,000,000 or more, or (2) after a Contract Owner (or after the Annuitant, if
the Contract is not owned in an individual capacity) reaches age 86. (See
"Purchase Payments".)
OWNERSHIP:
The Contracts may be purchased and owned by an individual, an employer, a
trust, a corporation, a partnership, a custodian or any entity specified in an
eligible employee benefit plan. The Contracts are available to the following
retirement plans which offer Federal tax benefits: individual retirement
accounts under Section 408(a) of the Code, individual retirement annuities
under Section 408(b) of the Code (both referred to as "IRAs"), and simplified
employee pension plans under Section 408(k) of the Code ("SEPs"). The
Contracts are not currently available to other plans that qualify for tax
benefits under the Code.
A Contract may have joint owners. If the Annuitant is not the Contract Owner
and the Contract Owner is an individual, then the Contract Owner must be the
Contingent Annuitant. Under a jointly owned Contract, if the Annuitant is not
one of the Contract Owners, then one Contract Owner must be the Contingent
Annuitant. Where a Contract is used to fund an IRA, the Contract Owner must be
the Annuitant, and no Contingent Annuitant will be allowed.
The Company relies on instructions from trustees and custodians, as Contract
Owners, who may exercise certain rights under the Contracts on behalf of plan
participants. In any event, references to "you" in this prospectus refer to
the Contract Owner(s) or to plan participants who may be entitled to instruct
their trustee or custodian with regard to the exercise of these rights. (See
"Ownership Rights".)
INVESTMENT OPTIONS:
You may allocate purchase payments to the Series of the New England Zenith
Fund that are Eligible Funds under the Contracts, or to the Fixed Account (if
available under your Contract). Your Contract Value may be distributed among
no more than 10 accounts (including the Fixed Account) at any time.
You may change your allocation of future purchase payments. You may also
transfer Contract Value between Eligible Funds without taxation. The Company
reserves the right to limit the number and amount of transfers and charge a
transfer fee. Currently the Company does not charge a transfer fee or limit
the number of transfers prior to annuitization. However, special limits apply
in situations which the Company determines involve "market-timing". (See
"Transfer Privilege" for more information.) After variable annuity payments
begin, the Company currently allows one transfer per year in total. Special
limits apply to transfers of Contract Value to and from the Fixed Account.
(See "The Fixed Account" for a description of transfers involving that
account.) Currently, the Company's rules for transfers prior to annuitization
generally require that the amount transferred from any sub-account must be at
least $100 (net of any transfer fee), and the amount transferred to any sub-
account must be at least $100. The maximum amount which can be transferred is
$500,000 per transaction.
CHARGES:
No sales charges are deducted from purchase payments before they are
invested in the Contract. The Company currently imposes a premium tax charge
under Contracts on the lives of Annuitants residing in states imposing premium
taxes. Generally, the Company deducts any applicable premium tax charge from
the Contract Value on the date when annuity payments begin. In South Dakota
and Kentucky the Company deducts the premium tax charge at the earliest of: a
full or partial surrender, annuitization or payment of the Death Proceeds
(including application of the Death Proceeds to the
A-6
<PAGE>
Beneficiary Continuation provision) due to the death of a Contract Owner (or
Annuitant under a Contract not owned in an individual capacity). (See "Premium
Tax Charge.") For assuming mortality and expense risks under the Contract, the
Company deducts an amount equal to an annual rate of 1.00% of the daily net
assets of the Variable Account. (See "Mortality and Expense Risk Charge".) The
Company also imposes an annual administration charge against your Contract
Value in the Variable Account, equal to the lesser of 2% of the total Contract
Value (including any Contract Value in the Fixed Account) and $30. (The annual
administration charge will be waived for any Contract Year in which the
Contract Value reaches certain amounts established by the Company. In
addition, the charge will not apply if the entire Contract Value is allocated
to the Fixed Account. See "Administration Charges".)
A Contingent Deferred Sales Charge will be imposed on certain full and
partial surrenders and applications of proceeds to certain payment options,
or, in certain circumstances, on withdrawal of amounts that were applied to a
payment option. (See "Contingent Deferred Sales Charge.") In addition, a
Contingent Deferred Sales Charge may apply at the Maturity Date under
Contracts issued in Pennsylvania or New York, if at that time a purchase
payment has been invested less than four years. The Contingent Deferred Sales
Charge is a maximum of 4% of each purchase payment made. No Contingent
Deferred Sales Charge will be imposed if the initial purchase payment is
$1,000,000 or more.
TEN DAY RIGHT TO REVIEW:
Within 10 days (or more where required by state insurance law) after you
receive the Contract you may return it to the Company or the Company's agent
for cancellation. The Company will return to you the Contract Value (or, if
required by state law or regulation, all purchase payments made). (See "Ten
Day Right to Review" on page A- .)
PAYMENT ON DEATH:
The Contract provides for a payment to the Beneficiary if the Contract Owner
dies (or, if a Contract Owner under a jointly owned Contract dies) prior to
annuitization. (In the case of a Contract not owned in an individual capacity,
the Death Proceeds will be paid if the Annuitant dies prior to annuitization.)
The Death Proceeds are guaranteed not to be less than purchase payments made
under the Contract, adjusted for any previous surrenders and, in certain
states, reduced by a premium tax charge. However, on the seventh Contract
Anniversary, and at seven year intervals thereafter until the Contract Owner's
76th birthday, the guaranteed minimum Death Proceeds payable are recalculated
to determine whether a higher (but never a lower) guarantee will apply. (Under
a jointly owned Contract, the recalculation of the minimum Death Proceeds will
be made at seven year intervals prior to the 71st birthday of the older
Contract Owner.) The Death Proceeds payable will be the greater of the
guaranteed minimum Death Proceeds amount applicable to the Contract and the
current Contract Value. (See "Payment on Death Prior to Annuitization".)
SURRENDERS:
Generally, you may surrender the Contract for all or a portion of the
Contract Value by written request at any time prior to annuitization so long
as, after a partial surrender, the remaining Contract Value is at least
$2,500. Under the Company's current rules, a partial surrender must be at
least $100. (See "Surrenders".) The Federal tax laws impose penalties upon,
and in some cases prohibit, certain premature distributions from the Contracts
before or after the date on which the annuity payments are to begin. (See
"Federal Income Tax Status.") A Contingent Deferred Sales Charge will be
imposed in connection with certain Contract surrenders and applications of
proceeds to certain payment options, or, in certain circumstances, upon
subsequent withdrawal of amounts applied to a payment option. Upon a full
surrender, a pro rata portion of the annual $30 administration charge and, in
certain states, a premium tax charge will also be deducted. In any Contract
Year, an amount equal to the greater of (1) 10% of the Contract Value at the
beginning of the Contract Year and (2) the excess of the Contract Value over
purchase payments subject to the Contingent Deferred Sales Charge on the date
of the surrender may be surrendered without sales charge. (See "Contingent
Deferred Sales Charge" for more information.)
- -------------------------------------------------------------------------------
A-7
<PAGE>
EXPENSE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Charge Imposed on Purchase Payments (as a percentage of pur-
chase payments)..................................................... 0%
Maximum Contingent Deferred Sales Charge(2) (as a percentage of each
purchase payment)................................................... 4%
Transfer Fee(3)...................................................... $ 0
ANNUAL CONTRACT FEE
Administration Contract Charge (per Contract)(4)..................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as percentage of average net assets)
Mortality and Expense Risk Charge.................................... 1.00%
-----
Total Separate Account Annual Expenses........................... 1.00%
</TABLE>
A-8
<PAGE>
NEW ENGLAND ZENITH FUND
ANNUAL OPERATING EXPENSES(6) (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER
EXPENSE CAP OR EXPENSE DEFERRAL)
<TABLE>
<CAPTION>
BACK BAY BACK BAY LOOMIS LOOMIS
ADVISORS ADVISORS WESTPEAK SAYLES SAYLES LOOMIS DRAYCOTT
BOND MONEY VALUE AVANTI SMALL SAYLES INTERNATIONAL
INCOME MARKET GROWTH GROWTH CAP BALANCED EQUITY
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- -------- -------- ------ ------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... .40% .35% .70% .70% 1.00% .70% .90%
Other Expenses.......... .14% .15% .15% .15% -- .15% .40%
---- ---- ---- ---- ----- ---- -----
Total Operating Ex-
penses............... .54% .50% .85% .85% 1.00% .85% 1.30%
</TABLE>
<TABLE>
<CAPTION>
SALOMON SALOMON
BROTHERS BROTHERS
ALGER EQUITY VENTURE U.S. STRATEGIC BOND
GROWTH VALUE GOVERNMENT OPPORTUNITIES
SERIES SERIES SERIES SERIES
------------ ------- ---------- --------------
<S> <C> <C> <C> <C>
Management Fee................... .70% .75% .55% .65%
Other Expenses................... .15% .15% .15% .20%
---- ---- ---- ----
Total Operating Expenses....... .85% .90% .70% .85%
</TABLE>
EXAMPLE (NOTE: The examples shown below are entirely hypothetical. Although
they are based on the expenses shown in the expense tables above, the examples
are not representations of past or future performance or expenses. Actual
performance and/or expenses may be more or less than shown.(7)) For purchase
payments allocated to each of the Series indicated:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000 purchase
payment assuming
1) 5% annual return on the underlying New England Zenith
Fund Series and 2) that you surrender your Contract or that
you elect to annuitize under a period certain option for a
specified period of less than 15 years, at the end of each
time period:
Back Bay Advisors Bond Income.............................. $ $
Back Bay Advisors Money Market.............................
Westpeak Value Growth......................................
Loomis Sayles Avanti Growth................................
Loomis Sayles Small Cap....................................
Loomis Sayles Balanced.....................................
Draycott International Equity..............................
Alger Equity Growth........................................
Venture Value..............................................
Salomon Brothers U.S. Government...........................
Salomon Brothers Strategic Bond Opportunities..............
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000 purchase
payment assuming
1) 5% annual return on the underlying New England Zenith
Fund Series and 2) that you do not surrender your Contract
or that you elect to annuitize under a life contingency
option, or under a period certain option for a minimum
specified period of 15 years, at the end of each time
period(8):
Back Bay Advisors Bond Income............................ $ $
Back Bay Advisors Money Market...........................
Westpeak Value Growth....................................
Loomis Sayles Avanti Growth..............................
Loomis Sayles Small Cap..................................
Loomis Sayles Balanced...................................
Draycott International Equity............................
Alger Equity Growth......................................
Venture Value............................................
Salomon Brothers U.S. Government.........................
Salomon Brothers Strategic Bond Opportunities............
</TABLE>
A-10
<PAGE>
- --------
NOTES:
(1) Premium tax charges are not shown. They range from 0% (in most states) to
3.5% of Contract Value. The amount of the premium tax charge, if any, is
generally deducted from the Contract Value on the date selected by the
Contract Owner for the commencement of annuity benefits, but in two states
is deducted at the earliest of: a full or partial surrender,
annuitization, or payment of the Death Proceeds due to the death of the
Contract Owner (or Annuitant if the Contract is not owned in an individual
capacity). (See "Premium Tax Charge.")
(2) The Contingent Deferred Sales Charge applies to each purchase payment
except that no Contingent Deferred Sales Charge will apply if the initial
purchase payment is $1,000,000 or more. The Contingent Deferred Sales
Charge declines by 1% annually over the first four year period the
purchase payment is invested in the Contract until it reaches 0% for that
purchase payment at the end of four years. Amounts subject to the
Contingent Deferred Sales Charge will be determined by assuming that
purchase payments are withdrawn (whether for a surrender or annuitization)
on a "first in-first out" basis. An amount equal to the greater of (1) 10%
of the Contract Value at the beginning of the Contract Year and (2) the
excess of the Contract Value over purchase payments that are subject to
the Contingent Deferred Sales Charge at the time of surrender may be
surrendered without sales charge in any one Contract Year.
(3) The Company reserves the right to limit the number and amount of transfers
and charge a transfer fee.
(4) This charge is not imposed after annuitization. As a percentage of the
estimated average Contract Value in the Variable Account, this fee equals
%, based on an estimated average Contract Value of approximately $ .
(5) These charges are not imposed after annuitization if annuity payments are
made on a fixed basis.
(6) Total Operating Expenses for the Back Bay Advisors Bond Income, Back Bay
Advisors Money Market, Westpeak Value Growth, and Loomis Sayles Avanti
Growth Series take into account a voluntary expense cap. For each of these
Series, TNE Advisers, Inc. ("TNE Advisers"), the Series' investment
adviser, will bear those expenses (other than the management fee) that
exceed 0.15% of average daily net assets. Without this cap or any other
expense reimbursement arrangement, Total Operating Expenses for the Back
Bay Advisors Bond Income, Back Bay Advisors Money Market, Westpeak Value
Growth and Loomis Sayles Avanti Growth Series for the year ended December
31, 1995 would have been %, %, % and %, respectively. For the
Loomis Sayles Small Cap Series, Total Operating Expenses take into account
a voluntary cap on expenses by TNE Advisers, which will bear all expenses
that exceed 1.00% of average daily net assets. Absent this cap or any
other expense reimbursement arrangement, Total Operating Expenses for the
Loomis Sayles Small Cap Series for the year ended December 31, 1995 would
have been %. For the six other Series shown, the total operating
expenses are after giving effect to a voluntary expense deferral. Under
the deferral, expenses that exceed a certain limit are paid by TNE
Advisers in the year they are incurred and transferred to the Series in a
future year when actual expenses of the Series are below the limit. The
limit on expenses for each of these Series is: .70% of average daily net
assets for the Salomon Brothers U.S. Government Series; .85% of average
daily net assets for the Salomon Brothers Strategic Bond Opportunities,
Loomis Sayles Balanced and Venture Value Series; .90% of average daily net
assets for the Alger Equity Growth Series; and 1.30% of average daily net
assets for the Draycott International Equity Series. Absent the voluntary
expense deferral, Total Operating Expenses for the Loomis Sayles Balanced,
Draycott International Equity, Alger Equity Growth, Venture Value, Salomon
Brothers U.S. Government and Salomon Brothers Strategic Bond Opportunities
Series for the year ended December 31, 1995 would have been %, %, %,
%, %, and %, respectively. The expense cap and deferral arrangements
are voluntary and may be terminated at any time. See attached prospectus
for New England Zenith Fund for more complete information.
(7) In these examples, the average Administration Contract Charge of % has
been used. (See (4), above.)
(8) If you subsequently withdraw the commuted value of amounts placed under
any of these options, the Company will deduct from the amount you receive
a portion of the Contingent Deferred Sales Charge amount that would have
been deducted when you originally applied the Contract proceeds to the
option. The applicable portion of the Contingent Deferred Sales Charge
will be based on the ratio of (1) the number of whole months remaining at
the time of withdrawal until the date when the Contingent Deferred Sales
Charge would expire, to (2) the number of whole months that were
remaining, when the proceeds were applied to the option, until the date
when the Contingent Deferred Sales Charge would expire.
- -------------------------------------------------------------------------------
A-11
<PAGE>
The preceding table lists the charges and expenses incurred with respect to
purchase payments invested under the Contracts. The items listed include
charges deducted from purchase payments, charges assessed against Variable
Account assets, and charges deducted from the assets of each of the Eligible
Funds. The examples assume that the entire purchase payment was allocated
initially to a single sub-account without any subsequent transfers. The
purpose of the table is to assist you in understanding the various costs and
expenses you will bear, directly and indirectly, as a Contract Owner.
A-12
<PAGE>
HOW THE CONTRACT WORKS
PURCHASE PAYMENT CONTRACT VALUE DAILY DEDUCTION FROM
ASSETS
. You can make a . Payments are
one-time allocated to your . Mortality and
investment or choice, within expense risk
establish an limits, of charge of 1.00% on
ongoing Eligible Funds an annualized
investment and/or the Fixed basis is deducted
program, Account from the Contract
subject to the Value daily
Company's . The Contract Value
minimum and reflects purchase . Investment
maximum payments, advisory fees are
purchase investment deducted from the
payment experience, Eligible Fund
guidelines interest credited assets daily
on Fixed Account
ADDITIONAL PAYMENTS allocations, ANNUAL CONTRACT FEE
partial
. Generally may surrenders, and . $30 Administration
be made at any Contract charges Contract Charge is
time, (subject deducted from the
to Company . The Contract Value Contract Value in
limits), but invested in the the Variable
no purchase Eligible Funds is Account on each
payments not guaranteed anniversary while
allowed (1) the Contract is
during the . Earnings are in-force, other
four years accumulated free than under a
immediately of any current Payment Option.
preceding the income taxes (see (May be waived for
Maturity Date page A- ) certain large
(except under Contracts.) A pro
Contracts . You may change the rata portion is
issued in allocation of deducted on full
Pennsylvania future payments, surrender and at
or New York), within limits, at the Maturity Date.
unless the any time
initial SURRENDER CHARGE
purchase . Prior to
payment is annuitization, you . Consists of
$1,000,000 or may transfer Contingent
more, or (2) Contract Value Deferred Sales
after a among accounts, Charge based on
Contract Owner currently free of purchase payments
(or the charge. (Special made (see pages A-
Annuitant, if limits apply to to A- )
not owned in the Fixed Account
an individual and to situations PREMIUM TAX CHARGE
capacity) that involve
reaches age "market timing".) . Where applicable,
86. is deducted from
. Allocations of the Contract Value
. Minimum $250 payments and when annuity
transfers of benefits commence
SURRENDERS Contract Value are (or, in certain
limited in that states, at the
. Up to the Contract Value may earliest of: full
greater of: not be allocated or partial
10% of the among more than surrender,
Contract Value ten accounts annuitization or
at the (including the payment of the
beginning of Fixed Account) at Death Proceeds due
the Contract any time. to the death of a
Year, and the Contract Owner or,
excess of the RETIREMENT BENEFITS if applicable, of
Contract Value the Annuitant.)
over purchase . Lifetime income
payments that options ADDITIONAL BENEFITS
are subject to
the Contingent . Fixed and/or . You pay no taxes
Deferred Sales variable payout on your investment
Charge on the options as long as it
date of remains in the
surrender can . Retirement Contract
be withdrawn benefits may be
each year taxable . Contract may be
without surrendered at any
incurring a . Premium tax charge time for its
Contingent may apply Contract Value,
Deferred Sales less any
Charge applicable
Contingent
. Surrenders may Deferred Sales
be taxable Charge
. Prior to age . If available in
59 1/2 a 10% your state,
penalty tax Contingent
may apply Deferred Sales
Charge may be
. Premium tax waived upon
charge may evidence of
apply terminal illness,
confinement to a
DEATH PROCEEDS nursing home, or
permanent and
. Guaranteed not total disability.
to be less
than your
total purchase
payment
adjusted for
any prior
surrenders
(and, where
applicable,
net of premium
tax charges)
. Death proceeds
pass to the
beneficiary
without
probate
. Death proceeds
may be taxable
. Premium tax
charge may
apply
A-13
<PAGE>
THE COMPANY
The Company was organized as a stock life insurance company in Delaware in
1980 and is authorized to operate in all states, the District of Columbia and
Puerto Rico. The Company's Home Office is in Wilmington, Delaware and its
Administrative Office is at 501 Boylston Street, Boston, Massachusetts 02116.
The Company is a wholly-owned subsidiary of The New England, which was
organized in Massachusetts in 1835. The New England is the oldest chartered
mutual life insurance company in the United States. On December 31, 1995, The
New England had over $ billion of assets and approximately $ billion of life
insurance in force. As of December 31, 1995, The New England and its
affiliates had over $ billion in assets under management.
The New England and Metropolitan Life Insurance Company ("MetLife") have
entered into an agreement to merge, with MetLife to be the survivor of the
merger. The merger is conditioned upon, among other things, approval by the
policyholders of The New England and MetLife and receipt of certain regulatory
approvals. The merger is not expected to occur until after , 1996. If
the merger is consummated, the Company will become a direct or indirect
wholly-owned subsidiary of MetLife. The Company is not expected to be affected
by the merger except to the extent that assets of The New England may be
transferred to the Company in view of the merger.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company as a separate investment
account under Delaware law on July 1, 1994, and is registered as a unit
investment trust under the Investment Company Act of 1940. The Variable
Account meets the definition of a "separate account" under Federal securities
laws. The Variable Account supports other variable annuity contracts besides
the Contracts.
Applicable law provides that the assets in the Variable Account equal to the
reserves and other contract liabilities of the Variable Account shall not be
chargeable with liabilities arising out of any other business the Company may
conduct. The Company believes this means that the assets of the Variable
Account equal to its reserves and other contract liabilities are not available
to meet the claims of the Company's general creditors and may only be used to
support the Contract Values under the Contracts and the other variable annuity
contracts supported by the Variable Account. The income and realized and
unrealized capital gains or losses of the Variable Account are, in accordance
with the Contracts, credited to or charged against the Variable Account
without regard to other income, gains or losses of the Company. All
obligations arising under the Contracts are, however, general corporate
obligations of the Company.
Purchase payments are allocated to the sub-accounts of the Variable Account
that you elect. The value of Accumulation Units credited to your Contract and
the amount of the variable annuity payments depend on the investment
experience of the Eligible Fund in which each of your selected sub-accounts
invests. The Company does not guarantee the investment performance of the
Variable Account. Thus, you bear the full investment risk for all amounts
contributed to the Variable Account.
INVESTMENTS OF THE VARIABLE ACCOUNT
Purchase payments applied to the Variable Account will be invested in one or
more of the Eligible Funds listed below, at net asset value without deduction
of any sales charge, according to the selection you make in your application.
You may change your selection of Eligible Funds for future purchase payments
at any time without charge. (See "Requests and Elections.") You also may
transfer your Contract Value among the Eligible Funds, subject to certain
conditions. (See "Transfer Privilege.") Your Contract Value may be distributed
among no more than 10 accounts (including the Fixed Account) at any time. The
Company reserves the right to add or remove Eligible Funds from time to time
as investments for the Variable Account.
BACK BAY ADVISORS MONEY MARKET SERIES
The Back Bay Advisors Money Market Series seeks the highest possible level
of current income consistent with preservation of capital. The Back Bay
Advisors Money Market Series invests in a variety of high quality money market
instruments.
A-14
<PAGE>
BACK BAY ADVISORS BOND INCOME SERIES
The Back Bay Advisors Bond Income Series' investment objective is to provide
a high level of current income consistent with protection of capital and
moderate investment risk through investment primarily in U.S. Government and
corporate bonds.
WESTPEAK VALUE GROWTH SERIES
The Westpeak Value Growth Series seeks long-term total return (capital
appreciation and dividend income) through investment primarily in equity
securities. Emphasis will be given to both undervalued securities ("value"
style) and securities of companies with growth potential ("growth" style).
LOOMIS SAYLES AVANTI GROWTH SERIES
The Loomis Sayles Avanti Growth Series seeks long-term growth of capital.
The Series normally will invest primarily in equity securities of companies
with medium and large capitalization (capitalization of $1 billion to $5
billion and over $5 billion, respectively), but will also invest a portion of
its assets in equity securities of companies with relatively small market
capitalization (under $1 billion).
LOOMIS SAYLES SMALL CAP SERIES
The Loomis Sayles Small Cap Series seeks long-term capital growth from
investments in common stocks or their equivalent. The Series will normally
invest at least 65% of its total assets in companies with market
capitalization of less than $500 million.
LOOMIS SAYLES BALANCED SERIES
The Loomis Sayles Balanced Series seeks a reasonable long-term investment
return from a combination of long-term capital appreciation and moderate
current income. The Series is "flexibly managed" in that sometimes it invests
more heavily in equity securities and at other times it invests more heavily
in fixed-income securities. Under normal conditions, the Series will invest at
least 25% of its assets in bonds and at least 50% of its assets in common
stocks.
DRAYCOTT INTERNATIONAL EQUITY SERIES
The Draycott International Equity Series seeks total return from long-term
growth of capital and dividend income. The Series will invest primarily in
common stocks of issuers either headquartered outside the U.S. or deriving a
substantial part of their revenues from countries outside of the U.S.
ALGER EQUITY GROWTH SERIES
The Alger Equity Growth Series' investment objective is long-term capital
appreciation. The Series seeks to achieve its investment objective by
investing primarily in a diversified, actively managed portfolio of equity
securities, with the majority of issuers having a total market capitalization
of $1 billion or greater.
VENTURE VALUE SERIES
The Venture Value Series' investment objective is growth of capital. The
Series will primarily invest in domestic common stocks (and securities
convertible into common stock) that have capital growth potential due to
factors such as undervalued assets or earnings potential, product development
and demand, favorable operating ratios, resources for expansion, management
abilities, reasonableness of market price, and favorable overall business
prospects. The Series will generally invest predominantly in equity securities
of companies with market capitalizations of at least $250 million.
SALOMON BROTHERS U.S. GOVERNMENT SERIES
The Salomon Brothers U.S. Government Series seeks a high level of current
income consistent with preservation of capital and maintenance of liquidity.
The Series will invest primarily in debt obligations and mortgage-backed
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and, to the extent allowed by state insurance law,
derivative securities such as collateralized mortgage obligations backed by
such securities.
A-15
<PAGE>
SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES
The Salomon Brothers Strategic Bond Opportunities Series seeks a high level
of total return consistent with preservation of capital. Assets will be
allocated primarily among U.S. Government obligations, mortgage backed
securities, domestic corporate debt and international debt securities rated
investment grade (BBB or higher by S&P or Baa or higher by Moody's) (or
unrated but deemed to be of equivalent quality in the subadviser's judgement)
and domestic corporate debt and international debt securities rated below
investment grade. Depending on market conditions, the Series may invest
without limit in below investment grade fixed-income securities. Securities of
below investment grade quality are considered high yield, high risk securities
and are commonly known as "junk bonds."
INVESTMENT ADVICE
TNE Advisers, Inc., a subsidiary of The New England, serves as investment
adviser for the Eligible Funds. Each of these Eligible Funds also has a
subadviser. The Back Bay Advisors Money Market Series and Back Bay Advisors
Bond Income Series receive investment subadvisory services from Back Bay
Advisors, L.P., an indirect subsidiary of The New England. The Westpeak Value
Growth Series receives investment subadvisory services from Westpeak
Investment Advisors, L.P., an indirect subsidiary of The New England. The
Loomis Sayles Avanti Growth Series, Loomis Sayles Small Cap Series and Loomis
Sayles Balanced Series receive investment subadvisory services from Loomis
Sayles & Company, L.P., an indirect subsidiary of The New England. The
Draycott International Equity Series receives investment subadvisory services
from Draycott Partners, Ltd., an indirect subsidiary of The New England. The
Alger Equity Growth Series receives investment subadvisory services from Fred
Alger Management, Inc. The Venture Value Series receives investment
subadvisory services from Davis Selected Advisers, L.P. The Salomon Brothers
U.S. Government Series and Salomon Brothers Strategic Bond Opportunities
Series receive investment subadvisory services from Salomon Brothers Asset
Management. More complete information on each Series of the New England Zenith
Fund (the "Zenith Fund") is contained in the attached Zenith Fund prospectus,
which you should read carefully before investing, as well as in the Zenith
Fund's Statement of Additional Information, which may be obtained free of
charge by writing to New England Securities, 399 Boylston St., Boston,
Massachusetts, 02116.
SUBSTITUTION OF INVESTMENTS
If investment in the Eligible Funds or a particular Series is no longer
possible or in the judgment of the Company becomes inappropriate for the
purposes of the Contract, the Company may substitute another Eligible Fund or
Funds without your consent. Substitution may be made with respect to both
existing investments and the investment of future purchase payments. However,
no such substitution will be made without any necessary approval of the
Securities and Exchange Commission.
GUARANTEED OPTION
Purchase payments may also be allocated to the Fixed Account in states that
have approved the Fixed Account option. The Fixed Account is a part of the
Company's general account and provides guarantees of principal and interest.
(See "The Fixed Account" for more information.)
THE CONTRACTS
The Contracts provide that your purchase payments will be invested by the
Company in the Eligible Fund(s) you select and that, after the Maturity Date,
the Company will make variable annuity payments on a monthly basis unless you
select a fixed annuity option. You assume the risk of investment gain or loss
because the value of your Contract before annuitization and, in the case of a
variable payment option, the annuity payments after annuitization, will vary
with the investment performance of the Eligible Funds in which your Contract
is invested.
PURCHASE PAYMENTS
The minimum initial purchase payment currently required is $10,000. Any
subsequent purchase payments must be at least $250. The Company reserves the
right to limit purchase payments made under a Contract. The Company currently
reserves the right not to accept any purchase payment that, when combined with
the Contract Value under all Contracts
A-16
<PAGE>
owned by a single Contract Owner, would exceed $1,000,000. Under its current
rules, in no event will the Company accept a purchase payment that, when
combined with the Contract Value under all Contracts owned by a single
Contract Owner, would exceed $2,000,000. If a Contract Owner selects a single
purchase payment Contract in the application, the Company reserves the right
not to accept any additional purchase payments. If a Contract Owner selects a
flexible purchase payment Contract in the application, the Company reserves
the right to limit purchase payments in any Contract Year to three times the
amount shown in the application.
No purchase payments may be made (1) within four years prior to the
-------------------------------------------------------------------
Contract's Maturity Date (except under contracts issued in Pennsylvania or New
- ------------------------------------------------------------------------------
York), unless the initial purchase payment is $1,000,000 or more, or (2) after
- ------------------------------------------------------------------------------
a Contract Owner (or the Annuitant, if the Contract is not owned in an
- ----------------------------------------------------------------------
individual capacity) reaches age 86.
- ------------------------------------
The Company will determine whether to approve applications for new
Contracts, and will apply initial purchase payments under new Contracts, not
later than two business days after a completed application (including the
initial purchase payment) is received at the Company's Administrative Office.
If an application is not complete upon receipt, the Company will apply the
initial purchase payment not later than two business days after it is
completed. If an incomplete application is not completed within five days
after the Company receives it, however, the Company will inform the applicant
of the reasons for the delay and will refund any purchase payment unless the
applicant agrees to have the Company retain the purchase payment until the
application is completed. The Company reserves the right to reject any
application.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments are converted into Accumulation Units of the sub-accounts
you select (subject to the limitation that the Contract Value may be allocated
among no more than ten accounts, including the Fixed Account, at any time).
The number of Accumulation Units of each sub-account to be credited to the
Contract is determined by dividing the net purchase payment by the
Accumulation Unit Value for the selected sub-accounts next determined
following receipt of the purchase payment at the Company's Administrative
Office (or, in the case of the initial purchase payment, next determined
following approval of the Contract application.
CONTRACT VALUE AND ACCUMULATION UNIT VALUE
The value of a Contract is determined by multiplying the number of
Accumulation Units credited to the Contract by the appropriate Accumulation
Unit Values. As described below, the Accumulation Unit Value of each sub-
account depends on the net investment experience of its corresponding Eligible
Fund and reflects fees and expenses borne by the Eligible Fund as well as
charges assessed against subaccount assets. The Accumulation Unit Value of
each sub-account was set at $1.00 on or about the date on which shares of the
corresponding Eligible Fund were first publicly available. The Accumulation
Unit Value is determined as of the close of regular trading on the New York
Stock Exchange on each day the Exchange is open for trading by multiplying the
most recent Accumulation Unit Value by the net investment factor for that day.
The net investment factor for any sub-account reflects the change in net asset
value per share of the corresponding Eligible Fund as of the close of regular
trading on the Exchange from the net asset value most recently determined, the
amount of dividends or other distributions made by that Eligible Fund since
the previous determination of net asset value per share, and daily deductions
for the Mortality and Expense Risk Charge, equal, on an annual basis, to 1.00%
of the average daily net asset value of the sub-account. The net investment
factor may be greater or less than one. The formula for determining the net
investment factor is described under the caption "Net Investment Factor" in
the Statement of Additional Information.
Under a Contract with the Fixed Account option, the total Contract Value
includes the amount of Contract Value held in the Fixed Account. (See "The
Fixed Account".)
PAYMENT ON DEATH PRIOR TO ANNUITIZATION
The Contract's Death Proceeds are payable to the Beneficiary if the Company
receives due proof of the death, prior to annuitization, of: (1) the Contract
Owner, (2) the first Contract Owner to die, in the case of a Contract with
joint owners, or (3) the Annuitant, in the case of a Contract that is not
owned in an individual capacity. (In situation (2) above, if there is no named
Beneficiary, the Death Proceeds will be paid to the surviving Contract Owner.)
A-17
<PAGE>
The Contract's Death Proceeds at any time are the greater of the current
Contract Value and the applicable guaranteed minimum Death Proceeds amount.
For this purpose, the current Contract Value is the value next determined
after the later of the date when due proof of death is received at the
Administrative Office and the date when an election of payment in one sum or
under a payment option is received at the Administrative Office. In certain
states, the Death Proceeds payable will be reduced by the applicable premium
tax charge.
At the inception of the Contract, the guaranteed minimum Death Proceeds
------------------
amount is equal to your initial purchase payment. Thereafter, until the
seventh Contract Anniversary, any subsequent purchase payment will immediately
increase your guaranteed minimum Death Proceeds amount by the amount of the
purchase payment. Any partial surrender will immediately decrease your
guaranteed minimum Death Proceeds by the percentage of the Contract Value
being withdrawn.
On the seventh Contract Anniversary, and every seventh year anniversary
thereafter until the Contract Owner's (or, if applicable, the Annuitant's)
76th birthday, the guaranteed minimum Death Proceeds payable under the
------------------
Contract are recalculated to determine whether a higher (but never a lower)
guarantee will apply. (For a jointly owned Contract, this recalculation is
made every seven years until the 71st birthday of the older Contract Owner.)
The purpose of the recalculation is to give you the benefit of any positive
investment experience under your Contract. Your Contract's previous investment
experience can cause the guaranteed minimum Death Proceeds amount to increase
- -----------------------------------------------------------------------------
on the recalculation date, but cannot cause it to decrease. The guaranteed
- --------------------------------------------------------------------------
minimum determined on a recalculation date is the larger of:
- ------------------------------------------------------------
(a) the guaranteed minimum Death Proceeds amount that applied to your
Contract just before the recalculation; and
(b) the Contract Value on the date of the recalculation.
The new guaranteed minimum Death Proceeds amount applies to your Contract
------------------
until the next recalculation date, or until you make a purchase payment or
surrender. In that case, the same adjustment will be made to the guaranteed
minimum Death Proceeds amount as is made during the first seven years.
- -------------------------------------------------------------------------------
Example: Assume that a Contract is issued with a $10,000 purchase payment on
5/1/95. No further purchase payments are made and, during the first
seven Contract Years, no partial surrenders are made. During the
first seven Contract Years, the guaranteed minimum Death Proceeds
amount is $10,000. Assume that on the Contract Anniversary on
5/1/02, the Contract Value is $25,000. The minimum guaranteed Death
Proceeds amount is reset on that date to $25,000.
Assume that the Contract Value increases to $27,000 by 1/1/03, and
that you request a partial surrender of 20% of your Contract Value,
or $5,400, on that date. The guaranteed minimum Death Proceeds amount
immediately following the partial surrender is $20,000 [$25,000 -
.20($25,000)].
Assume that on 6/15/03 the Contract Value has decreased to $18,000.
The guaranteed minimum Death Proceeds amount remains at $20,000 and
the Death Proceeds payable on 6/15/03 are $20,000.
- -------------------------------------------------------------------------------
Options for Death Proceeds. The Death Proceeds will be paid in a lump sum or
---------------------------
will be applied to provide one or more of the fixed or variable methods of
payment available (see "Annuity Options"). (Certain annuity options under the
Contract are not available for the Death Proceeds.) The Contract Owner may
elect the form of payment during his or her lifetime (or during the
Annuitant's lifetime, if the Contract is not owned in an individual capacity).
Such an election, particularly in the case of Contracts issued in connection
with retirement plans qualifying for tax benefited treatment, is subject to
any applicable requirements of Federal tax law. If the Contract Owner has not
made such an election, the Beneficiary may elect payment in a single sum, or
certain payment options that begin within one year of the date of death, or
may apply the Death Proceeds to the Beneficiary Continuation provision,
described below. However, if the Beneficiary does not make an election within
90 days after receipt by the Company of due proof of the Contract Owner's (or
Annuitant's where applicable) death, the Death Proceeds will be held within
the Contract under the Beneficiary Continuation provision.
The Contracts which are not used with a tax-qualified plan provide, as
required by the Code, that all of the Death Proceeds must be distributed
within five years after the death of the Contract Owner (or, if applicable, of
the Annuitant), or applied to a payment option payable over the life (or over
a period not extending beyond the life expectancy) of the Beneficiary, and the
payment option payments must start within one year of the date of death. If
the Contract Owner (or, if
A-18
<PAGE>
applicable, the Annuitant) dies on or after annuitization, the remaining
interest in the Contract must be distributed at least as quickly as under the
method of distribution in effect on the date of death.
As described in the preceding paragraph, the Code permits payment of the
Death Proceeds to be deferred for a maximum period of five years from the date
of death of the Contract Owner (or, if applicable, of the Annuitant) if the
Owner (or Annuitant) dies before annuitization of the Contract. Under the
Beneficiary Continuation provision, unless the Beneficiary or Beneficiaries
elect payment of the Death Proceeds in a single sum within 90 days after the
Company receives due proof of death, or apply the Death Proceeds to a
permitted payment option within one year of the date of death, the Death
Proceeds will be held in the Contract and the Contract will be continued for
the maximum five year period, for each Beneficiary whose share of the Death
Proceeds meets the Company's published minimum (currently $10,000). For any
Beneficiary whose share of the Death Proceeds does not meet the published
minimum, the proceeds will be paid in a single sum if no election has been
made within the 90 day period described above. The Contract may not be
continued for any Beneficiary whose share of the Death Proceeds does not meet
the minimum. If the Contract is continued under the Beneficiary Continuation
provision, the Death Proceeds (reduced by any applicable premium tax charge)
become the Contract Value on the date the continuation is effected, and will
be allocated among the accounts in the same proportion as the Contract Value
on that date. If the Contract is continued, each Beneficiary will have the
right to make transfers and fully or partially surrender his or her portion of
the Contract Value, but may not make further purchase payments or exercise the
dollar cost averaging feature. No guaranteed minimum Death Proceeds amount or
------------------
Contingent Deferred Sales Charge will apply once the Contract is continued by
the Beneficiary or Beneficiaries. Each Beneficiary's death benefit will equal
his or her share of the Contract Value on the date when due proof of his or
her death is received at the Administrative Office. At the end of the period
for which the Contract is continued (five years from the date of death of the
Contract Owner or, if applicable, of the Annuitant), the Company will pay the
Contract Value to the Beneficiaries.
--Special Options for Spouses. Under the Spousal Continuation provision, the
----------------------------
Contract may be continued after the death of a Contract Owner in certain
spousal arrangements. First, if a Contract has spousal joint owners who are
also the only Beneficiaries under the Contract, then upon the death of one
Contract Owner prior to annuitization under the Spousal Continuation
provision, the other may elect to continue the Contract rather than receive
the Death Proceeds. In addition, if only one spouse is the Contract Owner and
the other spouse is the Beneficiary, the surviving Beneficiary can elect to
continue the Contract in the event of the Contract Owner's death. In either of
these situations, the surviving spouse may elect to receive the Death Proceeds
(either in one sum or under a permitted payment option) or apply the Death
Proceeds to continue the Contract under the Beneficiary Continuation
provision, or may elect to forego the Death Proceeds and instead continue the
Contract under the Spousal Continuation provision with the spouse as the
Contract Owner. However, if the surviving spouse does not make an election
within 90 days after the Company receives due proof of death, the Contract
will automatically be continued under the Spousal Continuation provision with
the result that the surviving spouse will forego the right to receive the
Death Proceeds at that time. All terms and conditions of the Contract that
applied prior to the death will apply to a Contract continued under the
Spousal Continuation provision, except that the Maturity Date will be reset,
if necessary, based on the age of the surviving spouse. Spousal Continuation
will not be available if the reset Maturity Date would be greater than the
Company's permitted maximum. Except under Contracts issued in New York or
Pennsylvania, if the reset Maturity Date would be less than four years after
the date of the most recent purchase payment made, no Contingent Deferred
Sales Charge will apply under the Contract.
TRANSFER PRIVILEGE
You may transfer your Contract Value among sub-accounts and/or the Fixed
Account without current taxation. The Company reserves the right to limit
transfers and to charge a transfer fee. The Company currently does not charge
a transfer free or limit the number of transfers prior to annuitization.
Currently all transfers prior to annuitization are subject to a maximum of
$500,000 per transfer. Currently the Company's rules for transfers prior to
annuitization require that the amount transferred from any sub-account must be
at least $100 (net of any transfer fee) and the amount transferred to any sub-
account must be at least $100. (If the full amount of Contract Value in a sub-
account is less than $100, net of any transfer fee, the amount may be
transferred to a sub-account in which Contract Value is already invested, or
it may be transferred to any sub-account if it is transferred in combination
with Contract Value from another sub-account so that the total transferred to
the new sub-account is at least $100.) After variable annuity payments begin,
the Company currently allows one transfer per Contract year. In applying the
$500,000 limit, the Company
A-19
<PAGE>
will treat as one transfer all transfers requested by a Contract Owner on the
same day for all Contracts he or she owns. If the $500,000 limitation is
exceeded for multiple transfers requested on the same day that are treated as
a single transfer, no amount of the transfer will be executed by the Company.
Transfers will be made at the Accumulation Unit Values next determined after
the request is received. However, Contract Owners should be aware that because
transfer limitations may prevent you from making a transfer on the date you
want to, your future Contract Value may be lower than it would have been had
the transfer been made on the desired date.
For transfers that the Company determines to be based on "market-timing"
(e.g., transfers under different Contracts that are being requested under
Powers of Attorney with a common attorney-in-fact or that are in the Company's
determination based on the recommendation of a common investment adviser or
broker/dealer), the current transfer limitation prior to annuitization is one
transfer every 30 days, each transfer subject to a maximum of $500,000. In
applying the limitation of one $500,000 transfer every 30 days, the Company
will treat as one transfer all transfers requested under different Contracts
that are being requested under Powers of Attorney with a common attorney-in-
fact or that are, in the Company's determination, based on the recommendation
of a common investment adviser or broker/dealer. If the $500,000 limitation is
exceeded for multiple transfers requested on the same day that are treated as
a single transfer, no amount of the transfer will be executed by the Company.
If a transfer is executed under one Contract and, within the next 30 days, a
transfer request for another Contract is determined by the Company to be
related to the executed transfer under this paragraph's rules, the transfer
request will not be executed by the Company. (In order for it to be executed,
it would need to be requested again after the 30-day period and it, along with
any other transfer requests that are collectively treated as a single
transfer, would need to total no more than $500,000).
The Company's interest in applying these limitations on the maximum number
and size of transfers is to protect the interests of both Contract Owners who
are not engaging in significant transfer activity and Contract Owners who are
engaging in such activity. The Company has determined that the actions of
Contract Owners engaging in significant transfer activity among sub-accounts
may cause an adverse effect on the performance of the underlying Eligible
Funds. The movement of significant sub-account values from one sub-account to
another may prevent the appropriate Eligible Fund from taking advantage of
investment opportunities because it must maintain a significant cash position
in order to handle redemptions. Such movement may also cause a substantial
increase in Eligible Fund transaction costs which must be indirectly borne by
Contract Owners.
Contract Owners will be notified, in advance, of any change in the transfer
fee or in the limitation on the number or amount of transfers.
See "Requests and Elections" for information regarding transfers made by
written request and by telephone.
For special rules regarding transfers involving the Fixed Account, see "The
Fixed Account". Transfers out of the Fixed Account are limited as to amount.
------------------------------------------------------------
Your Contract Value may be distributed among no more than ten accounts
(including the Fixed Account) at any time. Transfer requests not complying
with this rule will not be processed.
DOLLAR COST AVERAGING
The Company offers an automated transfer privilege referred to here as
dollar cost averaging. Under this feature you may request that an amount of
your Contract Value be transferred on the same day each month, prior to
annuitization, from any one account of your choice (including the Fixed
Account, subject to the limitations on transfers out of the Fixed Account) to
one or more of the other accounts (including the Fixed Account, subject to the
limitations on transfers into the Fixed Account), subject to the limitation
that Contract Value may not be allocated to more than 10 accounts, including
the Fixed Account, at any time. Currently, a minimum of $100 must be
transferred to each account that you select under this feature. You may cancel
your use of the dollar cost averaging program at any time prior to the monthly
transfer date. (See Appendix A.)
A-20
<PAGE>
SURRENDERS
Prior to annuitization, you may surrender your Contract for all or part of
the Contract Value. You may receive the proceeds in cash or apply them to a
payment option. The proceeds you receive will be the Contract Value reduced by
the following amounts:
. any applicable Contingent Deferred Sales Charge;
. a pro rata portion of the Administration Contract Charge (on a full
surrender only);
. a premium tax charge (in certain states only).
See "Administration Charges, Contingent Deferred Sales Charge and Other
Deductions" for a description of these charges and when they apply.
Federal tax laws, laws relating to employee benefit plans, or the terms of
benefit plans for which the Contracts may be purchased may restrict your right
to surrender the Contract. In addition, Federal tax laws impose penalties on
certain premature distributions from the Contracts. Full and partial
surrenders and systematic withdrawals prior to age 59 1/2 may be subject to a
10% penalty tax. (See "Federal Income Tax Status".) Because a surrender may
result in adverse tax consequences, you should consult a qualified tax advisor
before taking a distribution from the Contract.
To surrender, you must submit a request in proper form to the Company's
Administrative Office. (See "Requests and Elections".) If you are seeking a
waiver of the Contingent Deferred Sales Charge due to terminal illness,
confinement to a nursing home or permanent and total disability, the request
must include satisfactory evidence of one of these conditions. (See
"Administration Charges, Contingent Deferred Sales Charge and Other
Deductions".) If you wish to apply the proceeds to a payment option, you must
---------------------------------------------------------------
indicate that in your surrender request; otherwise you will receive the
- -----------------------------------------------------------------------
proceeds in a lump sum and may be taxed on them as a full distribution. The
- -----------------------------------------------------------------------
surrender request must be received at the Administrative Office before the
earlier of the Maturity Date and a Contract Owner's death (or, for Contracts
not owned in an individual capacity, before the Annuitant's death). Surrender
proceeds will normally be paid within seven days after receipt of a request in
proper form at the Administrative Office, but payment may, by law, be delayed
under certain circumstances. (See "Suspension of Payments".)
The amount of the surrender proceeds will be based on the Accumulation Unit
Values that are next determined after the complete surrender request is
received at the Administrative Office; however, if you choose to apply the
surrender proceeds to a payment option, the surrender proceeds will be based
on Accumulation Unit Values determined on a later date if you so specify in
your request. Company consent is required if the amount of a partial surrender
is less than the Company's published minimum, which is currently $100. After a
partial surrender, the remaining Contract Value must be at least $2,500,
unless the Company consents to a lower amount. Otherwise, at your option,
either the amount of the partial surrender will be reduced or the transaction
will be treated as a full surrender that is subject to the full amount of any
applicable Contingent Deferred Sales Charge. A partial surrender will reduce
your Contract Value in the sub-accounts in proportion to the amount of your
Contract Value in each sub-account, unless you request otherwise.
SYSTEMATIC WITHDRAWALS
The Systematic Withdrawal feature available in connection with the Contract
allows you to have a portion of the Contract Value withdrawn automatically on
a monthly basis prior to annuitization. You can elect to withdraw each month
either a fixed dollar amount (which you can change periodically) or the
investment gain in the Contract. Currently a withdrawal must be a minimum of
$100; if you choose to have the investment gain withdrawn and it is less than
$100 for a month, no withdrawal will be made that month. The Company reserves
the right to change the required minimum monthly withdrawal amount. If the New
York Stock Exchange is closed on the day when the withdrawal is to be made,
the withdrawal will be processed on the next business day. The Contingent
Deferred Sales Charge will apply to amounts received under the Systematic
Withdrawal program in the same manner as it applies to other partial
surrenders and surrenders of Contract Value. (See "Contingent Deferred Sales
Charge".) If you make a partial surrender or a purchase payment at the same
time that you are having the investment gain withdrawn under the Systematic
Withdrawal feature, the Systematic Withdrawal will be canceled effective as of
the next monthly withdrawal date; however, at your option, the Company will
resume Systematic Withdrawals on the following monthly withdrawal date (that
is, the second monthly withdrawal date after the purchase
A-21
<PAGE>
payment or partial surrender). The amount of the Systematic Withdrawals will
be adjusted to reflect the purchase payment or partial surrender. Continuing
to make purchase payments under the Contract while you are making Systematic
Withdrawals means that you could incur any applicable Contingent Deferred
Sales Charge on the withdrawals at the same time that you are making the new
purchase payments; however, no Contingent Deferred Sales Charge will apply if
you are having the investment gain (rather than a fixed dollar amount)
withdrawn. The Federal tax laws may include systematic withdrawals in the
Contract Owner's gross income in the year in which the withdrawal occurs and
will impose a penalty tax of 10% on certain systematic withdrawals which are
premature distributions. Additional terms and conditions for the systematic
withdrawal program are set forth in the application for the program.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the payment of any
amounts due under the Contract or transfers of Contract Values between sub-
accounts or to the Fixed Account when permitted under applicable Federal laws,
rules and regulations. Current Federal law permits such suspension or
postponement if (a) the New York Stock Exchange is closed (other than for
customary weekend and holiday closings); (b) trading on the Exchange is
restricted; (c) an emergency exists such that it is not reasonably practicable
to dispose of securities held in the Variable Account or to determine the
value of its assets; or (d) the Securities and Exchange Commission by order so
permits for the protection of securities holders.
OWNERSHIP RIGHTS
During the Annuitant's lifetime, all rights under the Contract belong solely
to the Contract Owner unless otherwise provided. These rights include the
right to change the Beneficiary, to change the payment option, to assign the
Contract (subject to the restrictions referred to below), and to exercise all
other rights, benefits, options and privileges conferred by the Contract or
allowed by the Company.
Those Contracts offered by the prospectus which are designed to qualify for
the favorable tax treatment described below under "Federal Income Tax Status"
contain restrictions on transfer or assignment, reflecting requirements of the
Code which must be satisfied in order to assure continued eligibility for such
tax treatment. In accordance with such requirements, ownership of such a
Contract may not be changed and the Contract may not be sold, assigned or
pledged as collateral for a loan or for any other purpose except under certain
limited circumstances. A Contract Owner contemplating a sale, assignment or
pledge of the Contract should carefully review its provisions and consult a
qualified tax adviser.
If Contracts offered by this prospectus are used in connection with deferred
compensation plans or retirement plans not qualifying for favorable Federal
tax treatment, such plans may also restrict the exercise of rights by the
Contract Owner.
REQUESTS AND ELECTIONS
Requests for sub-account transfers or reallocation of future purchase
payments may be made by telephone or written request (which may be telecopied)
to the Company at its Administrative Office. Written requests for such
transfers or changes of allocation must be in a form acceptable to the
Company. Such written requests may be telecopied to 617-578-5412. To request a
transfer or change of allocation by telephone, please contact your registered
representative, or contact the Company's Administrative Office at 1-800-777-
5897 between the hours of 9:00 a.m. and 4:00 p.m., Eastern Time. Requests for
transfer (that are within the Company's current limits applicable to
transfers) or reallocation by telephone will be automatically permitted. The
Company (or any servicer acting on its behalf) will use reasonable procedures
such as requiring certain identifying information from the caller, tape
recording the telephone instructions, and providing written confirmation of
the transaction, in order to confirm that instructions communicated by
telephone are genuine. Any telephone instructions reasonably believed by the
Company (or any servicer acting on its behalf) to be genuine will be your
responsibility, including losses arising from any errors in the communication
of instructions. As a result of this policy, you will bear the risk of loss.
If the Company (or any servicer acting on its behalf) does not employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, they may be liable for any losses due to unauthorized or
fraudulent transactions. All other requests and elections under a Contract
must be in writing signed by the proper party,
A-22
<PAGE>
must include any necessary documentation and must be received at the Company's
Administrative Office to be effective. If acceptable to the Company, requests
or elections relating to Beneficiaries and ownership will take effect as of
the date signed unless the Company has already acted in reliance on the prior
status. The Company is not responsible for the validity of any written request
or election.
TEN DAY RIGHT TO REVIEW
Within 10 days (or more where required by applicable state insurance law)
after you receive your Contract you may return it to the Company or its agent
for cancellation. Upon cancellation of the Contract, the Company will return
to you the Contract Value. If required by the insurance law or regulations of
the state in which your Contract is issued, however, the Company will refund
all purchase payments made.
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUCTIONS
ADMINISTRATION CHARGES
The Company's administrative services include issuing Contracts, maintaining
Contract Owner records and accounting, valuation, regulatory and reporting
services. To help cover the cost of these services, the Company receives an
Administration Contract Charge generally equal to the lesser of: 2% of the
total Contract Value (including any Contract Value in the Fixed Account) and
$30.
The annual Administration Contract Charge is deducted from the Contract
Value on each Contract anniversary for the prior Contract Year and will be
deducted on a pro rata basis at the Maturity Date or at the time of a full
surrender if it is not on a Contract anniversary. If two Contracts are issued
to permit the funding of a spousal IRA, the Administration Contract Charge
will be imposed only on the Contract to which the larger purchase payments
have been allocated in the Contract application. The charge is deducted
entirely from the Contract Value in the Variable Account, and not from the
Contract Value in the Fixed Account. The charge will be waived for a Contract
Year if (1) the Contract Value at the end of the year was at least $50,000, OR
--
(2) you made at least $1,000 in net deposits (purchase payments minus partial
surrenders) during that Contract Year and the Contract Value at the end of the
previous Contract Year was at least $25,000. (A pro rata charge will always be
made on a full surrender and at the Maturity Date, however, regardless of the
amount of your Contract Value.) The Administration Contract Charge will be
deducted from each sub-account in the ratio of your interest therein to your
total Contract Value in the Variable Account. The Company does not expect the
Administration Contract Charge to exceed the actual costs (including overhead
costs) of administering the Contracts.
The Company reserves the right to charge a transfer fee for transfers of
Contract Value among sub-accounts and/or the Fixed Account, but will notify
Contract Owners in advance of imposing any such fee. (See "Transfer
Privilege".) The Company expects that the amount of any transfer fee will not
exceed the actual costs (including overhead costs) of administering transfers.
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a Mortality and Expense Risk Charge from the Variable
Account as compensation for assuming the mortality and expense risks under the
Contract. By assuming the expense risk under the Contract, the Company
guarantees that the dollar amount of the Administration Contract Charge will
not increase over the life of a Contract, regardless of the actual expenses.
By assuming the mortality risk, the Company guarantees that, although annuity
payments will vary according to the performance of the investments you select,
annuity payments will not be affected by the mortality experience (death rate)
of persons receiving such payments or of the general population. The Company
assumes this mortality risk by virtue of annuity rates in the Contract that
cannot be changed. The Company also assumes the risk of making a minimum death
benefit payment if the Contract Owner (or, if applicable, the Annuitant) dies
prior to annuitization. (See "Payment on Death.")
A-23
<PAGE>
The Mortality and Expense Risk Charge is computed and deducted on a daily
basis from each sub-account. The charge is at an annual rate of 1.00% of the
daily net assets of each such sub-account, of which .70% represents a
mortality risk charge and .30% represents an expense risk charge. The
Mortality and Expense Risk Charge as a percentage of Contract Value will not
increase over the life of a Contract. The Mortality and Expense Risk Charge
will continue to be assessed if annuity payments are made on a variable basis
either before or after the Maturity Date. (See "Annuity Payments.")
CONTINGENT DEFERRED SALES CHARGE
No charge for sales expenses is deducted from purchase payments when they
are made. However, a Contingent Deferred Sales Charge may apply on certain
events ("CDSC events"), except that no Contingent Deferred Sales Charge will
apply if the initial purchase payment is $1,000,000 or more. The Contingent
Deferred Sales Charge is intended to assist in covering sales expenses related
to the Contracts, including commissions, preparation of sales literature and
other promotional activity. The Contingent Deferred Sales Charge may not cover
the full amount of sales expenses, and the excess will be recovered from the
Company's general account, including any income from the Mortality and Expense
Risk Charge.
CDSC events are: (a) a full or partial surrender of your Contract (including
surrenders where you apply the proceeds to certain payment options), (b) in
certain circumstances, a withdrawal of the commuted value of amounts that you
applied to a payment option, or (c) under Contracts issued in Pennsylvania or
New York, the Maturity Date if at that date a purchase payment has been
invested for less than four years.
The Contingent Deferred Sales Charge is taken into account in calculating
the proceeds payable on a full surrender. On a partial surrender, the
Contingent Deferred Sales Charge is deducted from the Contract Value remaining
after deduction of the surrender amount requested and is taken from the
Contract Value in the sub-accounts and the Fixed Account in the same
proportion as the Contract Value surrendered.
The Contingent Deferred Sales Charge equals a percentage of each purchase
payment. Each purchase payment is subject to the charge for four years (12
month periods) from the date it is received by the Company, as follows:
<TABLE>
<CAPTION>
IF WITHDRAWN DURING YEAR CHARGE
------------------------ ------
<S> <C>
1................................... 4%
2................................... 3%
3................................... 2%
4................................... 1%
Thereafter............................ 0%
</TABLE>
Whether amounts surrendered, withdrawn or applied to an annuity option are
considered to include purchase payments subject to the Contingent Deferred
Sales Charge depends on the following rules.
In any Contract Year you may surrender a portion of your Contract Value (the
"free withdrawal amount") without incurring the Contingent Deferred Sales
Charge. The free withdrawal amount for each Contract Year is equal to the
greater of (1) 10% of the Contract Value at the beginning of the Contract Year
and (2) the excess of the Contract Value over purchase payments subject to the
Contingent Deferred Sales Charge on the date of surrender. If not used, the
free withdrawal amount does not carry over to the next Contract Year.
A-24
<PAGE>
EXAMPLE: Assume that a single purchase payment of $10,000 is made into the
Contract. The following illustrates the free withdrawal amount
available under two hypothetical situations.
<TABLE>
<CAPTION>
HYPOTHETICAL CONTRACT VALUE 10% OF
------------------------------ BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 1:............ $12,500 $14,000 $4,000 $1,250 $4,000
Situation 2:............ $11,000 $10,000 $ 0 $1,100 $1,100
</TABLE>
EXAMPLE: Assume that a $10,000 purchase payment is made into the Contract on
6/1/95 and another $10,000 purchase payment is made on 2/1/96. The
following illustrates the Contingent Deferred Sales Charge that
would apply on partial surrenders in two hypothetical situations.
<TABLE>
<CAPTION>
HYPOTHETICAL CONTRACT VALUE 10% OF
------------------------------ BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 1: $7,000
partial surrender on
12/1/96............... $22,000 $25,000 $5,000 $2,200 $5,000
</TABLE>
The first $5,000 withdrawn would be free of the Contingent Deferred Sales
Charge. The remaining $2,000 of the withdrawal would be made from the oldest
purchase payment (i.e. the 6/1/95 purchase payment). A 3% Contingent
Deferred Sales Charge would apply to the $2,000, because the withdrawal
would be taking place in the second year following the date of the purchase
payment.
<TABLE>
<CAPTION>
HYPOTHETICAL CONTRACT VALUE 10% OF
------------------------------ BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 2: $25,000
surrender on 12/1/98... $30,000 $33,000 $13,000 $3,000 $13,000
</TABLE>
The first $13,000 withdrawn would be free of the Contingent Deferred Sales
Charge. The remaining $12,000 of the withdrawal would be made by withdrawing
the $10,000 purchase payment made on 6/1/95 and $2,000 of the $10,000
purchase payment that was made on 2/1/96. The Contingent Deferred Sales
Charge that would apply is: 1% X $10,000 + 2% X $2,000, or $140. The
remaining amount of purchase payments that could be subject to the
Contingent Deferred Sales Charge (assuming no further purchase payments were
made) would be $8,000.
Amounts surrendered under the free withdrawal provision do not reduce the
total purchase payments that are potentially subject to the Contingent
Deferred Sales Charge under your Contract.
If your Contract Value is less than your total purchase payments due to a
free withdrawal, negative investment performance or deduction of the
Administration Contract Charge, the following rules apply for calculating the
Contingent Deferred Sales Charge: the deficiency will be attributed to your
most recent purchase payment first, and subsequent earnings will be credited
to that deficiency (and not treated as earnings) until Contract Value exceeds
purchase payments.
Waiver of Contingent Deferred Sales Charge. No Contingent Deferred Sales
Charge will apply:
. After 30 days from issue of the Contract if you apply the proceeds to a
variable or fixed payment option involving a life contingency (described
under "Annuity Options"), or, for a minimum specified period of 15 years,
to either the Variable Income for a Specified Number of Years Option or
the Variable Income Payments to Age 100 Option (described under "Annuity
Options"), or a comparable fixed option. However, if you subsequently
withdraw the commuted value of amounts placed under any of those options,
the Company will deduct from the amount you receive a portion of the
Contingent Deferred Sales Charge amount that would have been deducted
when you originally applied the Contract proceeds to the option, taking
into account the lapse of time from annuitization to
A-25
<PAGE>
surrender. The applicable portion of the Contingent Deferred Sales Charge
will be based on the ratio of (1) the number of whole months remaining, on
the date of the withdrawal, until the date when the Contingent Deferred
Sales Charge would expire, to (2) the number of whole months that were
remaining, when the proceeds were applied to the option, until the date
when the Contingent Deferred Sales Charge would expire. (See example in
Appendix B.)
. On full or partial surrenders if the Contract Owner submits satisfactory
evidence to the Company that the Contract Owner (or one Contract Owner
under a jointly owned Contract, or the Annuitant, if the Contract is not
owned in an individual capacity) is terminally ill (as defined in the
Contract), has been confined to a nursing home for more than 90
continuous days, or is permanently and totally disabled (as defined in
the Contract). This benefit is only available to an original owner of the
Contract who was not over age 65 at issue of the Contract, and may not be
available in every state.
. If under the Spousal Continuation provision the Contract's Maturity Date
is reset to a date that is less than four years after the most recent
purchase payment made under the Contract. The Contingent Deferred Sales
Charge will not apply to the Contract in these circumstances. This waiver
of the Contingent Deferred Sales Charge will not apply, however, to
Contracts issued in New York or Pennsylvania.
. If the initial purchase payment is $1,000,000 or more.
The Contracts may be sold directly, without compensation, to a registered
representative, to employees, officers, directors, and trustees of NEVLICO,
The New England and their affiliated companies, and spouses and immediate
family members (i.e. children, siblings, parents and grandparents) of the
foregoing, and to employees, officers, directors, trustees and registered
representatives of any broker/dealer authorized to sell the Contracts and of
any sub-adviser to the Eligible Funds, and spouses and immediate family
members of the foregoing. If sold under these circumstances, the Contracts
will be credited with an additional percentage of premium to reflect in part
or in whole any cost savings associated with the direct sale, but only if such
credit will not be unfairly discriminatory to any person.
PREMIUM TAX CHARGE
Certain states impose a premium tax on annuity purchase payments received by
insurance companies. The Company pays this tax when incurred, and recovers
this tax by imposing a premium tax charge on affected Contracts in accordance
with the following rules. Generally, the Company incurs a state premium tax
liability on the date when the Contract Owner elects to commence annuity
benefits. In those states, the Company deducts the premium tax charge from the
Contract Value on that date. However, for Contracts subject to the premium tax
law of states which impose a premium tax on purchase payments when they are
made (currently South Dakota and Kentucky), the Company deducts the applicable
premium tax charge at the earliest of: a full or partial surrender of the
Contract, the date when annuity benefits commence, or payment of the Death
Proceeds (including application of the Death Proceeds to the Beneficiary
Continuation provision) upon the death of a Contract Owner (or of the
Annuitant, if the Contract is not owned in an individual capacity). To
determine whether and when a premium tax charge will be imposed on a Contract,
the Company looks to the state of residence of the Annuitant when a surrender
is made, annuity benefits commence or Death Proceeds are paid. The Company
reserves the right to impose a premium tax charge when a premium tax is
incurred or at a later date.
Deductions for state premium tax charges currently range from 1/2% to 2.00%
of the Contract Value (or, if applicable, Death Proceeds) for Contracts used
with retirement plans qualifying for tax benefited treatment under the Code
and from 1% to 3.5% of the Contract Value (or, if applicable, Death Proceeds)
for all other Contracts. Premium tax rates are subject to being changed by
law, administrative interpretations or court decisions.
OTHER EXPENSES
A deduction for an investment advisory fee is made from, and certain other
expenses are paid out of, the assets of each Eligible Fund. (See "Expense
Table".) The prospectus and Statement of Additional Information of the
Eligible Funds describe these deductions and expenses.
A-26
<PAGE>
ANNUITY PAYMENTS
ELECTION OF ANNUITY
The Maturity Date of the Contract is based on the older of the Contract
Owner(s) and the Annuitant and is the date when that person, at his or her
nearest birthday, would be age 95 (or the maximum age allowed by state law).
The Contract Owner may not change the Maturity Date to an earlier date.
However, the Contract Owner may surrender the Contract at any time before the
Maturity Date and apply the surrender proceeds to an annuity option.
If the Contract Owner and Annuitant are not the same and the Annuitant dies
prior to the Maturity Date, the Contract will continue for the benefit of the
Contingent Annuitant. The Maturity Date will be reset, if necessary, based on
the age of the older Contract Owner.
Ownership of the Contract may not be changed without Company consent. If
ownership is changed, a change in the Maturity Date may be required, based on
the new Contract Owner's age. The new Maturity Date will be based on the older
of the new Contract Owner and the Annuitant and will be the date when that
person, at his or her nearest birthday, would be age 95 (or the maximum age
allowed by state law).
The Contract that is issued to you will provide for variable annuity
payments to begin at the Maturity Date for the life of the Payee, but for at
least ten years. If you wish to change this payment option you may do so at
any time prior to the Maturity Date. You may elect to have annuity payments
under a Contract made on a variable basis or on a fixed basis, or may
designate a portion to be paid on a variable basis and a portion on a fixed
basis. If you select payments on a fixed basis, the amount of Contract Value
applied to the fixed payment option (net of any applicable charges described
under "Administration Charges, Contingent Deferred Sales Charge and Other
Deductions") will be transferred to the general account of the Company, and
the annuity payments will be fixed in amount and duration by the payment
option selected, the age of the Payee and, for Contracts issued in New York or
Oregon for use in situations not involving an employer-sponsored plan, by the
sex of the Payee. (See "Amount of Variable Annuity Payments".)
Contracts acquired by retirement plans qualifying for tax benefited
treatment may be subject to various requirements concerning the time by which
benefit payments must commence, the period over which such payments may be
made, the payment options that may be selected, and the minimum annual amounts
of such payments. Penalty taxes or other adverse tax consequences may occur
upon failure to meet such requirements.
ANNUITY OPTIONS
The Contract provides several annuity payment options. Prior to the Maturity
Date you may elect to have the Contract Value applied to one of these payment
options at maturity. If you make a full or partial surrender of the Contract,
you may elect in your surrender request to apply the surrender proceeds to a
payment option. You may also elect to have the Contract's Death Proceeds
applied to a payment option, or, if the Death Proceeds become payable and you
have not previously elected a payment option, the Beneficiary can elect to
apply the Death Proceeds to a payment option; however, the Variable Income
Payments to Age 100 Option and the Variable Life Income for Two Lives Option,
described below, and comparable fixed options, are not available for this
purpose.
The selection of an annuity payment option must be made by written request
to the Company and is subject to any applicable Federal tax law restrictions.
The amount of the Death Proceeds or of the Contract Value at the Maturity Date
that is applied to a payment option will be reduced by any applicable premium
tax charge. The Contract Value at the Maturity Date is also reduced by a pro
rata portion of the Administration Contract Charge and by any applicable
Contingent Deferred Sales Charge. The amount of Contract Value applied to a
payment option at a full or partial surrender will be reduced by
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any applicable Contingent Deferred Sales Charge and premium tax charge, and,
on a full surrender, by a pro rata portion of the Administration Contract
Charge.
The Contract offers the variable payment options listed below.
Variable Income for a Specified Number of Years. The Company will make
variable monthly payments for the number of years elected, which may not be
more than 30 except with the consent of the Company.
Variable Life Income. The Company will make variable monthly payments
which will continue: while the Payee is living* ; while the Payee is living
but for at least ten years; or while the Payee is living but for at least
twenty years. (The latter two alternatives are referred to as Variable Life
Income with Period Certain Option.)
Variable Income Payments to Age 100. The Company will make variable
monthly payments for the number of whole years until the Payee is age 100.
THIS OPTION CANNOT BE SELECTED FOR DEATH PROCEEDS.
Variable Life Income for Two Lives. The Company will make variable
monthly payments which will continue: while either of two Payees is living
(Joint and Survivor Variable Life Income)*, while either of two Payees is
living but for at least 10 years (Joint and Survivor Variable Life Income,
10 Years Certain); while two Payees are living, and, after the death of one
while the other is still living, two-thirds to the survivor (Joint and 2/3
to Survivor Variable Life Income).* THIS OPTION CANNOT BE SELECTED FOR
DEATH PROCEEDS.
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* IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
PAYEE DIES (OR PAYEES DIE) BEFORE THE DUE DATE OF THE SECOND PAYMENT OR TO
RECEIVE ONLY TWO ANNUITY PAYMENTS IF THE PAYEE DIES (OR PAYEES DIE) BEFORE
THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
Comparable fixed payment options are also available for all of the options
described above. In addition, other payment options (including other periods
certain) may be available from time to time, and you should consult the
Company as to their availability. If you do not elect a payment option by the
Maturity Date, variable payments under the Contract will be made while the
Payee is living but for at least ten years. (This is the Variable Life Income
with Period Certain Option.) If installments under an option would be less
than the Company's published minimum, then the Contract proceeds can be
applied to a payment option only with the consent of the Company.
The Payee under the Variable Income for a Specified Number of Years Option
or the Variable Income Payments to Age 100 Option may withdraw the commuted
value of the remaining payments. The Payee (or Payees) under the Variable Life
Income with Period Certain Option or the Joint and Survivor Variable Life
Income, 10 Years Certain Option may withdraw the commuted value of the
remaining period certain portion of the payment option. The commuted value of
such payments is calculated based on the assumed interest rate under the
Contract. The life income portion of the payment portion cannot be commuted,
and variable annuity payments based on that portion will resume at the
expiration of the period certain if the Annuitant is alive at that time. (See
"Amount of Variable Annuity Payments."). Amounts applied to a fixed payment
option may not be withdrawn.
The section of the prospectus entitled "Administration Charges, Contingent
Deferred Sales Charge and Other Deductions" describes whether a Contingent
Deferred Sales Charge will be deducted upon application of the Contract's
proceeds to a particular payment option or upon withdrawal of the commuted
value of any payments certain under a variable payment option.
Payees under the Variable Income for a Specified Number of Years Option or
the Variable Income Payments to Age 100 Option may convert to a variable
payment option involving a life contingency.
The availability of certain annuity payment options may be restricted on
account of Company policy and Federal tax law, which among other things, may
restrict payment to the life expectancy of the payee.
The Company continues to assess the Mortality and Expense Risk Charge if
annuity payments are made under any variable payment option (either before or
after the Maturity Date), including an option not involving a life contingency
and under which the Company bears no mortality risk.
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AMOUNT OF VARIABLE ANNUITY PAYMENTS
At the Maturity Date (or any other application of proceeds to a payment
option), the Contract Value (reduced by any applicable charges) is applied
toward the purchase of monthly annuity payments. The amount of monthly
variable annuity payments will be determined on the basis of (i) annuity
purchase rates not lower than the rates set forth in the Life Income Tables
contained in the Contract that reflect the Payee's age, (ii) the assumed
interest rate selected, (iii) the type of payment option selected, and (iv)
the investment performance of the Eligible Funds selected.
The annuity purchase rates are used to calculate the basic payment level
purchased by the Contract Value. These rates vary according to the age of the
Payee. The higher the Payee's age at annuitization, the greater the basic
payment level under options involving life contingencies, because the Payee's
life expectancy and thus the period of anticipated income payments will be
shorter. With respect to Contracts issued in New York or Oregon for use in
situations not involving an employer-sponsored plan, purchase rates used to
calculate the basic payment level will also reflect the sex of the Payee.
Under such Contracts, a given Contract Value will produce a higher basic
payment level for a male Payee than for a female Payee, reflecting the longer
life expectancy of the female Payee. If the Contract Owner has selected a
payment option that guarantees that payments will be made for a certain number
of years regardless of whether the Payee remains alive, the Contract Value
will purchase lower monthly benefits than under a life contingent option.
The dollar amount of the initial variable annuity payment will be at the
basic payment level. The assumed interest rate under the Contract will affect
both this basic payment level and the amount by which subsequent payments
increase or decrease. Each payment after the first will vary with the
difference between the net investment performance of the sub-accounts selected
and the assumed interest rate under the Contract. If the actual net investment
rate exceeds the assumed interest rate, the payments will increase.
Conversely, if the actual rate is less than the assumed interest rate, annuity
payments will decrease. If actual investment performance is equal to the
assumed interest rate, the monthly payments will remain level.
Unless otherwise provided, the assumed interest rate will be at an annual
effective rate of 3.5%. You may select as an alternative an assumed interest
rate equal to an annual effective rate of 0% or, if allowed by applicable law
or regulation, 5%. A higher assumed interest rate will produce a higher first
payment, a more slowly rising series of subsequent payments when the actual
net investment performance exceeds the assumed interest rate, and a more rapid
drop in subsequent payments when the actual net investment performance is less
than the assumed interest rate. A lower assumed interest rate will produce a
lower first payment, a more rapidly rising series of subsequent payments when
the actual net investment performance exceeds the assumed interest rate, and a
less rapid drop in subsequent payments when the actual net investment
performance is less than the assumed interest rate.
You may, even after variable annuity payments have commenced, direct that
all or a portion of your investment in one sub-account be transferred to
another sub-account of the Variable Account in the manner provided under
"Transfer Privilege".
The Company may require proof of age, sex (if applicable) and survival of
any person upon the continuation of whose life annuity payments depend.
For more information regarding payment options, you should refer to the
Statement of Additional Information and also to the Contract, which contains
detailed information about the various forms of options available, and other
matters also of importance.
FEDERAL INCOME TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon NEVLICO's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal
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Revenue service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis ("Non-Qualified
Contract") or purchased and used in connection with certain plans entitled to
special income tax treatment ("Qualified Contracts") under section 408 of the
Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect of
federal income taxes on the amounts held under a Contract, on annuity
payments, and on the economic benefit to the Contract Owner, the Annuitant, or
the Beneficiary may depend on the type of retirement plan, and on the tax
status of the individual concerned. In addition, certain requirements must be
satisfied in purchasing a Qualified Contract and receiving distributions from
a Qualified Contract in order to continue receiving favorable tax treatment.
Therefore, purchasers of Qualified Contracts should seek competent legal and
tax advice regarding the suitability of the Contract for their situation, the
applicable requirements, and the tax treatment of the rights and benefits of
the Contract. The following discussion assumes that a Qualified Contract is
purchased with proceeds from and/or contributions under retirement plans that
qualify for the intended special federal income tax treatment.
TAXATION OF NEVLICO
NEVLICO is taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the Variable Account is not an entity separate from NEVLICO,
and its operations form a part of NEVLICO, it will not be taxed separately as
a "regulated investment company" under Subchapter M of the Code. Investment
income and realized capital gains arising from the operation of the Variable
Account are automatically applied to increase reserves under the Contracts.
Under existing federal income tax law, NEVLICO believes that the Variable
Account's investment income and realized net capital gains will not be taxed
to the extent that such income and gains are applied to increase the reserves
under the Contracts.
Accordingly, NEVLICO does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account and, therefore,
NEVLICO does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in NEVLICO
being taxed on income or gains attributable to the Variable Account, then
NEVLICO may impose a charge against the Variable Account (with respect to some
or all Contracts) in order to set aside amounts to pay such taxes.
TAX STATUS OF THE CONTRACT
Diversification. Section 817(h) of the Code requires that with respect to
----------------
Non-Qualified Contracts, the investments of the Funds be "adequately
diversified" in accordance with Treasury regulations in order for the
Contracts to qualify as annuity contracts under federal tax law. The Variable
Account, through the Eligible Funds, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affect how the Eligible Funds' assets may be invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of ownership
in those assets, such as the ability to exercise investment control over the
assets. The Treasury Department has 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
for the investments of a segregated asset account may cause the investor
[i.e., the Contract Owner], 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 Sub-Accounts
without being treated as owners of the underlying assets." As of the date of
this prospectus, no guidance has been issued.
The ownership rights under the Contract are similar to, but also different
in certain respects from, those described by the IRS in rulings in which it
was determined that contract owners were not owners of separate account
assets. For example, a Contract Owner has additional flexibility in allocating
premium payments and account values. These differences could result in a
Contract Owner being treated as the owner of a pro rata portion of the assets
of the Variable Account. In addition,
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NEVLICO 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. NEVLICO therefore reserves the right to modify the Contract as
necessary to attempt to prevent a Contract Owner from being considered the
owner of a pro rata share of the assets of the Variable Account.
Required Distributions. In order to be treated as an annuity contract for
-----------------------
federal income tax purposes, section 72(s) of the Code requires Non-Qualified
Contracts to provide that (a) if any Owner dies on or after the annuity date
but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such owner's death; and (b) if any Owner dies prior to the annuity date,
the entire interest in the Contract will be distributed within five years
after the date of such Owner's death. These requirements will be considered
satisfied as to any portion of an owner's interest which is payable to or for
the benefit of a "designated beneficiary" and which is distributed over the
life of such "designated beneficiary" or over a period not extending beyond
the life expectancy of that beneficiary, provided that such distributions
begin within one year of the owner's death. The "designated beneficiary"
refers to a natural person designated by the owner as a Beneficiary and to
whom ownership of the contract passes by reason of death. However, if the
"designated beneficiary" is the surviving spouse of a deceased owner, the
contract may be continued with the surviving spouse as the new owner.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. NEVLICO intends to
review such provisions when they are issued and modify the contracts in
question if necessary to assure that they comply with the requirements of Code
Section 72(s). Other rules may apply to Qualified Contracts.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
TAXATION OF ANNUITIES
In General. Section 72 of the Code governs taxation of annuities in general.
-----------
NEVLICO believes that a Contract Owner who is a natural person generally is
not taxed on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the Contract Value (e.g., withdrawals or annuity
-----
payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Contract Value
(and in the case of a Qualified Contract, any portion of an interest in the
qualified plan) generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an annuity)
is taxable as ordinary income.
The owner of any annuity contract who is not a natural person generally must
include in income any increase in the excess of the Contract Value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and prospective Contract Owners that are not
natural persons may wish to discuss these with a competent tax adviser.
The following discussion generally applies to a Contract owned by a natural
person.
Surrenders. In the case of a surrender under a Qualified Contract, including
-----------
Systematic Withdrawals, a ratable portion of the amount received is taxable,
generally based on the ratio of the "investment in the contract" to the
individual's total accrued benefit under the retirement plan. The "investment
in the contract" generally equals the amount of any non-deductible purchase
payments paid by or on behalf of any individual. For a Contract issued in
connection with qualified plans, the "investment in the contract" can be zero.
Special tax rules may be available for certain distributions from a Qualified
Contract.
With respect to Non-Qualified Contracts, partial surrenders, including
Systematic Withdrawals, are generally treated as taxable income to the extent
that the Contract Value immediately before the surrender exceeds the
"investment in the contract" at that time. Full surrenders are treated as
taxable income to the extent that the amount received exceeds the "investment
in the contract".
Annuity Payments. Although the tax consequences may vary depending on the
-----------------
annuity payment elected under the Contract, in general, only the portion of
the annuity payment that represents the amount by which the Contract Value
exceeds the "investment in the contract" will be taxed; after the "investment
in the contract" is recovered, the full amount of any additional annuity
payments is taxable. For variable annuity payments, the taxable portion is
generally determined by an
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equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the
entire distribution will be taxable once the recipient has recovered the
dollar amount of his or her "investment in the contract". For fixed annuity
payments, in general there is no tax on the portion of each payment which
represents the same ratio that the "investment in the contract" bears to the
total expected value of the annuity payments for the term of the payments;
however, the remainder of each annuity payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional annuity payments is taxable. If annuity payments cease as a result
of an Annuitant's death before full recovery of the "investment in the
contract," consult a competent tax advisor regarding deductibility of the
unrecovered amount.
Penalty Tax. In the case of a distribution pursuant to a Non-Qualified
------------
Contract, there may be imposed a federal income tax penalty equal to 10% of
the amount treated as taxable income. In general, however, there is no penalty
tax on distributions: (1) made on or after the date on which the taxpayer
attains age 59 1/2; (2) made as a result of death or disability of an owner;
(3) received in substantially equal periodic payments as a life annuity or a
joint and survivor annuity for the lives or life expectancies of the owner and
a "designated beneficiary". Other tax penalties may apply to certain
distributions pursuant to a Qualified Contract.
Taxation of Death Benefit Proceeds. Amounts may be distributed from the
-----------------------------------
Contract because of the death of a Contract Owner (or Annuitant if the
Contract Owner is not an individual). Generally, such amounts are includible
in the income of the recipient as follows: (1) if distributed in a lump sum,
they are taxed in the same manner as a full surrender as described above, or
(2) if distributed under an Annuity Option, they are taxed in the same manner
as annuity payments, as described above.
Transfers, Assignments, Exchanges and Maturity Dates. A transfer of
-----------------------------------------------------
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also an Owner, the selection of certain Maturity Dates,
the exchange of a Contract, or the receipt of a Contract in an exchange may
result in certain tax consequences that are not discussed herein. Anyone
contemplating any such designation, transfer, assignment, selection, or
exchange should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.
Multiple Contracts. All deferred non-qualified annuity contracts that are
-------------------
issued by NEVLICO (or its affiliates) to the same owner during any calendar
year are treated as one annuity contract for purposes of determining the
amount includible in gross income under section 72(e) of the Code. In
addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of section 72(e) through the serial purchase of
annuity contracts or otherwise. Congress has also indicated that the Treasury
Department may have authority to treat the combination purchase of an
immediate annuity contract and separate deferred annuity contracts as a single
annuity contract under its general authority to prescribe rules as may be
necessary to enforce the income tax laws.
QUALIFIED CONTRACTS
The Contract is designed for use as an Individual Retirement Annuity
("IRA"). Section 408(b) of the Code permits individuals to establish IRA's on
a tax benefited basis. The Contract is also designed for use with Simplified
Employee Pension Plans ("SEP"), which certain employers may adopt in order to
contribute to IRA's on their employees' behalf. The tax rules applicable to
participants and beneficiaries in these retirement plans vary according to the
type of plan and the terms and conditions of the plan. Special favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in
excess of specified limits; distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances.
NEVLICO makes no attempt to provide more than general information about use
of the Contracts with the various types of retirement plans. Contract Owners
and participants under retirement plans as well as Annuitants and
Beneficiaries are cautioned that the rights of any person to any benefits
under these Contracts may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration of the
Contracts. Contract Owners are responsible for determining that contributions,
distributions and other transactions with
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respect to the Contracts satisfy applicable law. Purchasers of Contracts for
use with any retirement plan should consult their legal counsel and tax
adviser regarding the suitability of the Contract under applicable federal and
state tax laws and ERISA.
The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within seven days of
the earlier of the establishment of the IRA or their purchase. A Contract
issued in connection with an IRA will be amended as necessary to conform to
the requirements of the Code. Purchasers should seek competent advice as to
the suitability of the Contract for use with IRAs.
(i) Plan Contribution Limits
SEPS
Statutory limitations on contributions to SEPs may limit the amount of money
that may be contributed to the Contract in any Contract Year. Any purchase
payments attributable to such contributions are tax deductible to the employer
and are not currently taxable to the Annuitants for whom the Contracts are
purchased. The contributions to the Contract and any increase in Contract
Value attributable to such contributions are not subject to taxation until
payments from the Contract are made to the Annuitant or his/her Beneficiaries.
IRA'S
The maximum tax deductible purchase payment which may be contributed each
year to an IRA is the lesser of $2,000 or 100 percent of includible
compensation if the taxpayer is not covered under an employer plan. A spousal
IRA is available if the taxpayer and spouse file a joint return and the spouse
earns no compensation (or elects to be treated as earning no compensation) and
is not yet age 70 1/2. The maximum tax deductible purchase payment which a
taxpayer may make to his or her own IRA and a spousal IRA, combined, is the
lesser of $2,250 or 100 percent of compensation of the working spouse. If
covered under an employer plan, taxpayers are permitted to make deductible
purchase payments; however, the deductions are phased out and eventually
eliminated, on a pro rata basis, for adjusted gross income between $25,000 and
$35,000 for an individual, between $40,000 and $50,000 for a married couple
filing jointly and between $0 and $10,000 for a married person filing
separately. A taxpayer may also make nondeductible purchase payments. However,
the total of deductible and nondeductible purchase payments may not exceed the
limits described above for deductible payments. For more information
concerning the contributions to IRAs, you should obtain a copy of IRS
Publication 590 on Individual Retirement Accounts. In addition to the above,
an individual may make a "rollover" contribution into an IRA with the proceeds
of a "lump sum" distribution (as defined in the Code) from a Qualified Plan.
(ii) Distributions from the Contract
IRAS AND SEPS
Payments made from the Contracts held under an IRA or a SEP are taxable
under Section 72 of the Code as ordinary income, in the year of receipt. Any
amount received in surrender of all or part of the Contract Value prior to
annuitization will, subject to restrictions and penalties discussed below,
also be included in income in the year of receipt. If there is any
"investment" in the Contract, a portion of each amount received is excluded
from gross income as a return of such investment. Distributions or withdrawals
prior to age 59 1/2 may be subject to a penalty tax of 10% of the amount
includible in income. This penalty tax does not apply: (i) to distributions of
excess contributions or deferrals; (ii) to distributions made on account of
the Annuitant's death, retirement, disability or early retirement at or after
age 55; (iii) when distribution from the Contract is in the form of an annuity
over the life or life expectancy of the Annuitant (or joint lives or life
expectancies of the Annuitant and his or her Beneficiary); or (iv) when
distribution is made pursuant to a divorce (in the case of IRAs) or a
qualified domestic relations order. In the case of IRAs, the exceptions for
distributions on account of early retirement at or after age 55 or made
pursuant to a qualified domestic relations order do not apply. A tax-free
rollover may be made once each year among individual retirement arrangements
subject to the conditions and limitations described in the Code.
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If the Annuitant dies before distributions begin, distributions must be
completed within five years after death, unless payments begin within one year
after death and are made over the life (or life expectancy) of the
Beneficiary. If the Annuitant's spouse is the Beneficiary, distributions need
not begin until the Annuitant would have reached age 70 1/2. If the Annuitant
dies after annuity payments have begun, payments must continue to be made at
least as rapidly as payments made before death.
Annuity payments, periodic payments or annual distributions generally must
commence by April 1 of the calendar year following the year in which the
Annuitant attains age 70 1/2. Each annual distribution must equal or exceed a
"minimum distribution amount" which is determined by minimum distribution
rules under the plan. A penalty tax of up to 50% of the amount which should be
distributed may be imposed by the IRS for failure to distribute the required
minimum distribution amount. Other tax penalties may apply to aggregate annual
distributions in excess of $150,000.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this prospectus Congress
is not actively considering any legislation regarding the taxation of
annuities, there is always the possibility that the tax treatment of annuities
could change by legislation or other means (such as IRS regulations, revenue
rulings, judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change).
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect NEVLICO's understanding of
the current law and the law may change. Federal estate and gift tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Contract Owner or recipient of
a distribution. A competent tax adviser should be consulted for further
information.
GENERAL
At the time the initial purchase payment is paid, a prospective purchaser
must specify whether he or she is purchasing a Non-Qualified Contract or a
Qualified Contract. If the initial premium is derived from an exchange or
surrender of another annuity contract, NEVLICO may require that the
prospective purchaser provide the information with regard to the federal
income tax status of the previous annuity contract. NEVLICO will require that
persons purchase separate Contracts if they desire to invest monies qualifying
for different annuity tax treatment under the Code. Each such separate
Contract would require the minimum initial purchase payment stated above.
Additional purchase payments under a Contract must qualify for the same
federal income tax treatment as the initial purchase payment under the
Contract; NEVLICO will not accept an additional purchase payment under a
Contract if the federal income tax treatment of such purchase payment would be
different from that of the initial purchase payment.
VOTING RIGHTS
The Company is the legal owner of the Eligible Fund shares held in the
Variable Account and has the right to vote those shares at meetings of the
Eligible Fund shareholders. However, to the extent required by Federal
securities law, the Company will give you, as Contract Owner, the right to
instruct the Company how to vote the shares that are attributable to your
Contract.
A-34
<PAGE>
Prior to annuitization, the number of votes as to which you have a right of
instruction is determined by applying your percentage interest in a sub-
account to the total number of votes attributable to the sub-account. After
annuitization, the number of votes attributable to your Contract is determined
by applying the percentage interest reflected by the reserve for your Contract
to the total number of votes attributable to the sub-account. After
annuitization the votes attributable to your Contract decrease as reserves
underlying the Contract decrease.
Contract Owners who are entitled to give voting instructions and the number
of shares as to which you have a right of instruction will be determined as of
the record date for the meeting. All Eligible Fund shares held in any sub-
account of the Variable Account or any other registered (or to the extent
voting privileges are granted by the issuing insurance company, unregistered)
separate accounts of the Company or any affiliate for which no timely
instructions are received will be voted for, against, or withheld from voting
on any proposition in the same proportion as the shares held in that sub-
account for all policies or contracts for which voting instructions are
received.
All Eligible Fund shares held by the general investment account (or any
unregistered separate account for which voting privileges are not extended) of
the Company or its affiliates will be voted in the same proportion as the
aggregate of (i) the shares for which voting instructions are received and
(ii) the shares that are voted in proportion to such voting instructions.
The SEC requires the Eligible Fund Boards of Trustees to monitor events to
identify conflicts that may arise from the sale of shares to variable life and
variable annuity separate accounts of affiliated and, if applicable,
unaffiliated insurance companies. Conflicts could arise as a result of changes
in state insurance law or Federal income tax law, changes in investment
management of any portfolio of the Eligible Funds, or differences between
voting instructions given by variable life and variable annuity contract
owners, for example. If there is a material conflict, the Boards of Trustees
will have an obligation to determine what action should be taken, including
the removal of the affected sub-account(s) from the Eligible Fund(s), if
necessary. If the Company believes any Eligible Fund action is insufficient,
the Company will consider taking other action to protect Contract Owners.
There could, however, be unavoidable delays or interruptions of operations of
the Variable Account that the Company may be unable to remedy.
DISTRIBUTION OF CONTRACTS
New England Securities, the principal underwriter of the Contracts, is a
broker-dealer registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of the National Association of Securities
Dealers, Inc. New England Securities may enter into selling agreements with
other broker-dealers registered under the Exchange Act whose registered
representatives are authorized under applicable law to sell variable annuity
contracts. The Company will pay compensation to the New England Securities
registered representatives or other broker-dealers involved in the sale of a
Contract. Such compensation generally will have a present value that does not
exceed 4% of purchase payments under the Contract (although a lower amount may
be paid in certain limited circumstances (such as sales of the Contracts to
persons over age 75)), and such compensation may be paid either as a
percentage of purchase payments at the time the Company receives them, as a
percentage of Contract Value on an ongoing basis, or in some combination of
both. The Company will generally pay compensation with a lower present value
as a percentage of purchase payments for Contracts purchased with an initial
purchase payment of $1,000,000 or more.
THE FIXED ACCOUNT
A Fixed Account option is included under Contracts issued in those states
where it has been approved by the state insurance department. In these states,
you may allocate net purchase payments and may transfer Contract Value in the
Variable Account to the Fixed Account, which is part of the Company's general
account. The Fixed Account offers diversification to a Variable Account
contract, allowing the Contract Owner to protect principal and earn, at least,
a guaranteed rate of interest.
A-35
<PAGE>
Because of exemptive and exclusionary provisions, interests in the Fixed
Account have not been registered under the Securities Act of 1933, and neither
the Fixed Account nor the general account has been registered as an investment
company under the Investment Company Act of 1940. Therefore, neither the
general account, the Fixed Account nor any interests therein are generally
subject to the provisions of these Acts, and the Company has been advised that
the staff of the Securities and Exchange Commission does not review
disclosures relating to the general account. Disclosures regarding the Fixed
Account may, however, be subject to certain generally applicable provisions of
the Federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
GENERAL DESCRIPTION OF THE FIXED ACCOUNT
The Company's general account consists of all assets owned by the Company
other than those in the Variable Account and the Company's other separate
accounts. The Company has sole discretion over the investment of assets in the
general account, including those in the Fixed Account. Contract Owners do not
share in the actual investment experience of the assets in the Fixed Account.
Instead, the Company guarantees that Contract Values in the Fixed Account will
earn interest at an effective annual rate of at least 3%. The Company is not
obligated to credit interest at a rate higher than 3%, although in its sole
discretion it may do so. Contract Values in the Fixed Account will earn
interest daily.
Any purchase payment or portion of Contract Value ("deposit") allocated to
the Fixed Account will earn interest at an annual rate determined by the
Company for that deposit for a 12 month period. At the end of each succeeding
12 month period, the Company will determine the interest rate that will apply
to that deposit plus accrued interest for the next 12 months. This renewal
rate may differ from the interest rate that is applied to new deposits made to
the Fixed Account on that same day.
CONTRACT VALUE AND FIXED ACCOUNT TRANSACTIONS
A Contract's total Contract Value will include its Contract Value in the
Variable Account and in the Fixed Account.
Unless you request otherwise, a partial surrender will reduce the Contract
Value in the sub-accounts of the Variable Account and the Fixed Account
proportionately. The annual Administration Contract Charge will be deducted
entirely from the Contract Value in the Variable Account, and not from the
Contract Value in the Fixed Account. (However, that charge is limited to the
lesser of $30 and 2% of the total Contract Value, including Contract Value in
the Fixed Account.) Except as described below, amounts in the Fixed Account
are subject to the same rights and limitations as are amounts in the Variable
Account with respect to transfers, surrenders and partial surrenders. The
following special rules apply to transfers involving the Fixed Account.
The amount of Contract Value which may be transferred from the Fixed Account
----------------------------------------------------------------------------
is limited to the greater of: 25% of the Contract Value in the Fixed Account
- ----------------------------------------------------------------------------
at the end of the first day of the Contract Year, and the amount of Contract
- ----------------------------------------------------------------------------
Value that was transferred from the Fixed Account in the previous Contract
- --------------------------------------------------------------------------
Year, except with the consent of the Company. (Also, after the transfer is
- --------------------------------------------------------------------------
made, the Contract Value may not be allocated among more than ten of the sub-
- -----------------------------------------------------------------------------
accounts and/or the Fixed Account.) The Company intends to restrict purchase
- -----------------------------------
payments and transfers of Contract Value into the Fixed Account: (1) if the
interest rate which would be credited to the deposit would be equivalent to an
annual effective rate of 3%; or (2) if the total Contract Value in the Fixed
Account exceeds a maximum amount published by the Company (currently
$500,000). In addition, the Company intends to restrict transfers of Contract
Value into the Fixed Account, and reserves the right to restrict purchase
payments into the Fixed Account, for 180 days following a transfer out of the
Fixed Account.
Amounts transferred to the sub-accounts from the Fixed Account will be on a
"last-in, first-out" basis; that is, they will be made in the reverse order in
which the deposits into the Fixed Account were made. Amounts surrendered from
the Fixed Account will be on a "first-in, first-out" basis.
The Company reserves the right to delay transfers, surrenders and partial
surrenders from the Fixed Account for up to six months.
FINANCIAL STATEMENTS
The financial statements of the Company and the Variable Account may be
found in the Statement of Additional Information.
A-36
<PAGE>
INVESTMENT EXPERIENCE INFORMATION
The tables below illustrate hypothetical average annual total returns for
each sub-account for the periods shown, based on the actual investment
experience of the New England Zenith Fund during those periods. For sub-
accounts investing in Eligible Funds that did not commence operations until
1994, returns have not been annualized. The tables do not represent what may
happen in the future.
The Variable Account was not established until July, 1994. The Contracts
were not available before , 1996. The Back Bay Advisors Bond Income and
Back Bay Advisors Money Market Series commenced operations on August 26, 1983.
The Westpeak Value Growth and Loomis Sayles Avanti Growth Series commenced
operations on April 30, 1993. The Small Cap Series commenced operations on May
2, 1994. The six other Eligible Funds did not commence operations until
October 31, 1994.
Calculations of average annual total return are based on the assumption that
a single investment of $1,000 was made at the beginning of each period shown.
The figures do not reflect the effect of any premium tax charge, which applies
in certain states, and which would reduce the results shown.
The average annual total return is related to surrender value and is
calculated as follows. The amount of the assumed $1,000 purchase payment for a
Contract issued at the beginning of the period is divided by the Accumulation
Unit Value of each sub-account at the beginning of the period shown to arrive
at the number of Accumulation Units purchased. The number of Accumulation
Units is reduced on each Contract anniversary to reflect deduction of the
annual $30 Administration Contract Charge from the Contract Value. Each such
$30 deduction reduces the number of units held under the Contract by an amount
equal to $30 divided by the Accumulation Unit Value on the date of the
deduction. The total number of units held under the Contract at the beginning
of the last Contract Year covered by the period shown is multiplied by the
Accumulation Unit Value on December 31, 1995 to arrive at the Contract Value
on that date. This Contract Value is then reduced by the applicable Contingent
Deferred Sales Charge and the portion of the $30 Administration Contract
Charge which would be deducted upon surrender on December 31, 1995 to arrive
at the surrender value. The average annual total return is the annual
compounded rate of return which would produce the surrender value on December
31, 1995. The average annual total returns assume that no premium tax charge
has been deducted.
AVERAGE ANNUAL TOTAL RETURN
For purchase payment allocated to the Back Bay Advisors Bond Income Series
<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
5 Years............................................................. %
10 years............................................................ %
Since Inception..................................................... %
For purchase payment allocated to the Back Bay Advisors Money Market Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
5 Years............................................................. %
10 years............................................................ %
Since Inception..................................................... %
For purchase payment allocated to the Westpeak Value Growth Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception..................................................... %
For purchase payment allocated to the Loomis Sayles Avanti Growth Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception..................................................... %
</TABLE>
A-37
<PAGE>
The tables below illustrate hypothetical cumulative total returns for each
sub-account for the periods shown. Cumulative total return is calculated like
average annual total return, above, except that the return for the period is
not annualized. Instead, the cumulative total return reflects the actual
investment experience of the Eligible Fund for the period from inception to
December 31, 1995, which in all cases is less than one year.
For purchase payment allocated to the Loomis Sayles Small Cap Series
<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Loomis Sayles Balanced Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Draycott International Equity Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Salomon Brothers U.S. Government
Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Venture Value Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
For purchase payment allocated to the Alger Equity Growth Series
<CAPTION>
PERIOD ENDING DECEMBER 31, 1995
-------------------------------
<S> <C>
1 Year.............................................................. %
Since Inception.....................................................
</TABLE>
Information is available illustrating the impact of fund performance on
annuity payouts.
The following chart illustrates how the average annual total return was
determined for the five year period ending December 31, 1995 for the Back Bay
Advisors Bond Income Series based on the assumptions used in the above table.
The units column below shows the number of accumulation units hypothetically
purchased by the $1000 investment in the Series in the first year. The units
are reduced on each Contract anniversary to reflect the deduction of the $30
Administration Contract Charge. The example assumes no premium tax charge is
deducted.
The unit values of the sub-accounts reflect the change in the net asset
value of the underlying Eligible Funds plus the reinvestment of dividends from
net investment income and of distributions from net realized gains, if any.
The unit values also reflect the deduction of the Mortality and Expense Risk
Charge.
A-38
<PAGE>
<TABLE>
<CAPTION>
AVERAGE
UNIT CONTRACT SURRENDER ANNUAL TOTAL
DATE UNITS VALUE VALUE VALUE RETURN
- ---- ----- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
December 31, 1990................... $ $ %
December 31, 1991................... %
December 31, 1992................... %
December 31, 1993................... %
December 31, 1994................... %
December 31, 1995...................
</TABLE>
The following charts illustrate what would have been the growth and value of
a $10,000 purchase payment if it had been invested in each of the Eligible
Funds on the first day of the first month after those Eligible Funds became
available: September 1, 1983 for the Back Bay Advisors Money Market and Back
Bay Advisors Bond Income Series; May 1, 1993 for the Westpeak Value Growth and
Loomis Sayles Avanti Growth Series; May 2, 1994 for the Loomis Sayles Small
Cap Series; and November 1, 1994 for the other series of the Zenith Fund. The
figures shown do not reflect the deduction of any premium tax charge on
surrender. During the period when the Contingent Deferred Sales Charge
applies, the percentage return on surrender value from year to year (after the
1st year) will be greater than the percentage return on Contract Value for the
same years. This is because the percentage return on surrender value reflects
not only investment experience but also the annual reduction in the applicable
Contingent Deferred Sales Charge. In the first chart, the Contract Value and
surrender value on each date shown are calculated in the manner described in
the preceding illustrations of average annual total return, assuming that no
premium tax charge is deducted on surrender.
In the second and third charts, the difference between the Contract Value or
surrender value at the beginning and at the end of each year is divided by the
beginning Contract Value or surrender value to arrive at the annual percentage
change. The cumulative return information set forth in these charts is
determined by taking the difference between the $10,000 investment and the
ending Contract Value or surrender value and dividing it by $10,000. The
annual effective rate of return in this illustration is calculated in the same
manner as the average annual total return described in the preceding
illustration, assuming that no premium tax charge is deducted on surrender.
$10,000 SINGLE PURCHASE PAYMENT CONTRACT
BACK BAY ADVISORS BOND INCOME AND BACK BAY ADVISORS MONEY MARKET SERIES ISSUED
SEPTEMBER 1, 1983
WESTPEAK VALUE GROWTH AND LOOMIS SAYLES AVANTI GROWTH SERIES ISSUED MAY 1,
1993
LOOMIS SAYLES SMALL CAP SERIES ISSUED MAY 2, 1994
OTHER ZENITH FUND SERIES ISSUED NOVEMBER 1, 1994
INVESTMENT RESULTS
<TABLE>
<CAPTION>
CONTRACT VALUE
-------------------------------------------------------------------------------------------------------
SALOMON
BACK BAY BACK BAY LOOMIS LOOMIS SALOMON BROTHERS
ADVISORS ADVISORS WESTPEAK SAYLES SAYLES LOOMIS DRAYCOTT BROTHERS STRATEGIC ALGER
BOND MONEY VALUE AVANTI SMALL SAYLES INTERNATIONAL U.S. BOND VENTURE EQUITY
INCOME MARKET GROWTH GROWTH CAP BALANCED EQUITY GOVERNMENT OPPORTUNITIES VALUE GROWTH
-------- -------- -------- ------ ------ -------- ------------- ---------- ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983............ $ $
1984............
1985............
1986............
1987............
1988............
1989............
1990............
1991............
1992............
1993............ $ $
1994............ $ $ $ $ $ $ $
1995............
</TABLE>
A-39
<PAGE>
<TABLE>
<CAPTION>
SURRENDER VALUE (1)
-------------------------------------------------------------------------------------------------------
SALOMON
BACK BAY BACK BAY LOOMIS LOOMIS SALOMON BROTHERS
ADVISORS ADVISORS WESTPEAK SAYLES SAYLES LOOMIS DRAYCOTT BROTHERS STRATEGIC ALGER
BOND MONEY VALUE AVANTI SMALL SAYLES INTERNATIONAL U.S. BOND VENTURE EQUITY
INCOME MARKET GROWTH GROWTH CAP BALANCED EQUITY GOVERNMENT OPPORTUNITIES VALUE GROWTH
-------- -------- -------- ------ ------ -------- ------------- ---------- ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983............ $ $
1984............
1985............
1986............
1987............
1988............
1989............
1990............
1991............
1992............
1993............ $ $
1994............ $ $ $ $ $ $ $
1995............
</TABLE>
ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)
<TABLE>
<CAPTION>
BACK BAY BACK BAY LOOMIS SALOMON
ADVISORS ADVISORS WESTPEAK LOOMIS SAYLES LOOMIS DRAYCOTT BROTHERS
BOND MONEY VALUE SAYLES AVANTI SMALL SAYLES INTERNATIONAL U.S.
INCOME MARKET GROWTH GROWTH CAP BALANCED EQUITY GOVERNMENT
-------- -------- -------- ------------- ------ -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... % %
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993................... % %
1994................... % % % %
1995...................
Cumulative Return.......
Annual Effective Rate of
Return.................
</TABLE>
<TABLE>
<CAPTION>
LEHMAN
SALOMON INTERMEDIATE
BROTHERS GOVERNMENT/
STRATEGIC ALGER DOW JONES S&P 500 CORPORATE CONSUMER
BOND VENTURE EQUITY INDUSTRIAL STOCK BOND PRICE
OPPORTUNITIES VALUE GROWTH AVERAGE(2) INDEX(3) INDEX(4) INDEX(5)
------------- ------- ------ ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... % % % %
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993...................
1994................... % % %
1995...................
Cumulative Return.......
Annual Effective Rate of
Return.................
</TABLE>
A-40
<PAGE>
ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)
<TABLE>
<CAPTION>
BACK BAY BACK BAY LOOMIS LOOMIS SALOMON
ADVISORS ADVISORS WESTPEAK SAYLES SAYLES LOOMIS DRAYCOTT BROTHERS
BOND MONEY VALUE AVANTI SMALL SAYLES INTERNATIONAL U.S.
INCOME MARKET GROWTH GROWTH CAP BALANCED EQUITY GOVERNMENT
-------- -------- -------- ------ ------ -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... % %
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993...................
1994................... % % % %
1995...................
Cumulative Return.......
Annual Effective Rate of
Return.................
</TABLE>
<TABLE>
<CAPTION>
LEHMAN
SALOMON INTERMEDIATE
BROTHERS GOVERNMENT/
STRATEGIC ALGER DOW JONES S&P 500 CORPORATE CONSUMER
BOND VENTURE EQUITY INDUSTRIAL STOCK BOND PRICE
OPPORTUNITIES VALUE GROWTH AVERAGE(2) INDEX(3) INDEX(4) INDEX(5)
------------- ------- ------ ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... % % % %
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993...................
1994................... % % %
1995...................
Cumulative Return.......
Annual Effective Rate of
Return.................
</TABLE>
- --------
NOTES:
(1) The Contract Values, surrender values, and annual percentage change figures
assume reinvestment of dividends and capital gain distributions. The
Contract Values are net of all deductions and expenses other than any
applicable Contingent Deferred Sales Charge or premium tax charge. Each
surrender value equals the Contract Value less any applicable Contingent
Deferred Sales Charge and a pro rata portion of the annual $30
Administration Contract Charge, but does not reflect a deduction for the
premium tax charge. (See "Administration Charges, Contingent Deferred Sales
Charge and Other Deductions."). 1983 figures for the Back Bay Advisors Bond
Income and Back Bay Advisors Money Market Series are from September 1
through December 31, 1983. 1993 figures for the Westpeak Value Growth and
Loomis Sayles Avanti Growth Series are from May 1, 1993 through December
31, 1993. 1994 figures for the Loomis Sayles Small Cap Series are from May
2 through December 31, 1994. 1994 figures for all other series of the
Zenith Fund are from November 1 through December 31, 1994.
(2) The Dow Jones Industrial Average is a market value-weighted and unmanaged
index of 30 large industrial stocks traded on the New York Stock Exchange.
The annual percentage change figures have been adjusted to reflect
reinvestment of dividends. 1983 figures are from September 1 through
December 31, 1983.
A-41
<PAGE>
(3) The S&P 500 Stock Index is an unmanaged weighted index of the stock
performance of 500 industrial, transportation, utility and financial
companies. The annual percentage change figures have been adjusted to
reflect reinvestment of dividends. 1983 figures are from September 1
through December 31, 1983.
(4) The Lehman Intermediate Government/Corporate Bond Index is a subset of the
Lehman Government/Corporate Bond Index covering all issues with maturities
between 1 and 10 years which is composed of taxable, publicly-issued, non-
convertible debt obligations issued or guaranteed by the U.S. Government
or its agencies and another Lehman index that is composed of taxable,
fixed rate publicly-issued, investment grade non-convertible corporate
debt obligations. 1983 figures are from September 1 through December 31,
1983.
(5) The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices
of goods and services. 1983 figures are from September 1 through December
31, 1983.
The Variable Account may update the performance history of one or more of
its sub-accounts on a quarterly basis by illustrating the one, five, and ten
year growth (or the growth since inception, if less than one year) of a
$10,000 single payment using the same method of calculation described on page
A-40, but using the periods ending with the date of the quarterly
illustration. Such illustrations will show the Contract Value at the end of
the period and the cumulative return and annual effective rate of return for
the period. The illustration may also include the cumulative return and annual
effective rate of return of an appropriate securities index and the Consumer
Price Index for the same period.
The Variable Account will make available illustrations showing historical
Contract Values and the annual effective rate of return, based upon
hypothetical purchase payment amounts and frequencies, which can be selected
by the client. The method of calculation described on page A-40 will be used,
but the illustration will reflect the effect of any premium tax charge
applicable in the state where the illustration is delivered. The beginning
date of the illustration can be selected by the client. Contract Values will
be shown as of the end of each calendar year in the period and as of the end
of the most recent calendar quarter.
Historical investment performance may also be illustrated by showing the
percentage change in the Accumulation Unit Value and annual effective rate of
return of a sub-account without reflecting the deduction of any Contingent
Deferred Sales Charge or the annual $30 Administration Contract Charge, both
of which have the effect of reducing historical performance. The percentage
change in unit value and annual effective rate of return of each sub-account
may be shown from inception of the Eligible Fund to the date of the report and
for the 1, 5, and 10 year periods ending with the date of the report. The
percentage change in unit value and annual effective rate of return also may
be compared with the percentage change and annual effective rate for the Dow
Jones Industrial Average and S&P 500 Stock Index, unmanaged indices of stock
performance described in Notes (2) and (3) to the preceding illustration of
Annual Percentage Change in Contract Value and Annual Percentage Change in
Surrender Value for a $10,000 Single Purchase Payment Contract. The percentage
change is calculated by dividing the difference in unit or index values at the
beginning and end of the period by the beginning unit or index value. See the
Statement of Additional Information for a description of the method for
calculating the annual effective rate of return in this illustration.
From time to time the Company may advertise (in sales literature or
advertising material) performance rankings of the sub-accounts of the Variable
Account assigned by independent services, such as Variable Annuity Research
and Data Services ("VARDS"). VARDS monitors and ranks the performance of
variable annuity accounts on an industry-wide basis in each of the major
categories of investment objectives. The performance analysis prepared by
VARDS ranks accounts on the basis of total return calculated using
Accumulation Unit Values. Thus, the effect of the Contingent Deferred Sales
Charge and $30 Administration Contract Charge assessed under the Contracts is
not taken into consideration.
From time to time, articles discussing the Variable Account's investment
experience, performance rankings and other characteristics may appear in
national publications. Some or all of these publishers or ranking services
(including, but not limited to, Lipper Analytical Services, Inc. and
Morningstar) may publish their own rankings or performance reviews of variable
contract separate accounts, including the Variable Account. References to,
reprints or portions of reprints of such articles or rankings may be used by
the Company as sales literature or advertising material and may include
rankings that indicate the names of other variable contract separate accounts
and their investment experience.
A-42
<PAGE>
APPENDIX A
CONSUMER TIPS
DOLLAR COST AVERAGING
Dollar cost averaging allows a person to take advantage of the historical
long-term stock market results, assuming that they continue, although it does
not guarantee a profit or protect against a loss. If an investor follows a
program of dollar cost averaging on a long-term basis and the stock fund
selected performs at least as well as the S&P 500 has historically, it is
likely although not guaranteed that the price at which shares are surrendered,
for whatever reason, will be higher than the average cost per share.
An investor using dollar cost averaging invests the same amount of money in
the same professionally managed fund at regular intervals over a long period
of time. Dollar cost averaging keeps an investor from investing too much when
the price of shares is high and too little when the price is low. When the
price of shares is low, the money invested buys more shares. When it is high,
the money invested buys fewer shares. If the investor has the ability and
desire to maintain this program over a long period of time (for example, 20
years), and the stock fund chosen follows the historical upward market trends,
the price at which the shares are sold should be higher than their average
cost. The price could be lower, however, if the fund chosen does not follow
these historical trends.
Investors contemplating the use of dollar cost averaging should consider
their ability to continue the on-going purchases so that they can take
advantage of periods of low price levels.
DIVERSIFICATION
Diversifying investment choices can enhance returns, by providing a wider
opportunity for safe returns, and reduce risks, by spreading the chance of
loss. Holding a single investment requires of that investment a safe return
because a loss may risk the entire investment. By diversifying, on the other
hand, an investor can more safely take a chance that some investments will
under-perform and that others will over-perform. Thus an investor can
potentially earn a better-than-average rate of return on a diversified
portfolio than on a single safe investment. This is because, although portions
of a diversified investment may be totally lost, other portions may perform at
above-average rates that more than compensate for the loss.
MISCELLANEOUS
<TABLE>
<C> <S>
Toll-free telephone service: --A recording of daily unit values is available
by calling 1-800-333-2501.
--Fund transfers and changes of future purchase
payment allocations can be made by calling 1-
800-777-5897 (Not available for fund transfers
under Contracts issued in New York.)
Written Communications: --All communications and inquiries regarding
address changes, premium payments, billing,
fund transfers, surrenders, maturities and any
other processing matters relating to your
Contract should be directed to:
New England Annuities
P.O. Box 642
Boston, Mass 02117
</TABLE>
A-43
<PAGE>
APPENDIX B
CONTINGENT DEFERRED SALES CHARGE
The following example illustrates how the Contingent Deferred Sales Charge
would apply if the commuted value of amounts that have been placed under
certain payment options is later withdrawn. As described in the prospectus in
the section "Contingent Deferred Sales Charge", no Contingent Deferred Sales
Charge will apply if at any time more than 30 days from issue of the Contract
you apply the proceeds to a variable or fixed payment option involving a life
contingency or, for a minimum specified period of 15 years, to either the
Variable Income for a Specified Number of Years Option or the Variable Income
Payments to Age 100 Option, or a comparable fixed option. However, if you
subsequently withdraw the commuted value of amounts placed under any of those
options, the Company will deduct from the amount you receive a portion of the
Contingent Deferred Sales Charge that was waived, based on the ratio of: (1)
the number of whole months remaining on the date of withdrawal until the date
when the Contingent Deferred Sales Charge would expire, to (2) the number of
whole months that were remaining when the proceeds were applied to the option,
until the date when the Contingent Deferred Sales Charge would expire.
As an example, assume that $100,000 of Contract Value (net of any premium
tax charge and Administration Contract Charge) is applied to the Variable
Income for a Specified Number of Years Option for a 20 year period. Assume
further that the proceeds are derived from a $30,000 purchase payment made ten
years ago, a $30,000 purchase payment made exactly two years ago, and
investment earnings, and that the Contingent Deferred Sales Charge waived on
application of the proceeds to the payment option was $600. If the Payee
surrenders the commuted value of the proceeds under option six months later,
the Contingent Deferred Sales Charge would be $450 (representing the $600
waived at annuitization multiplied by 18/24, where 18 is the number of whole
months currently remaining until the Contingent Deferred Sales Charge would
expire, and 24 is the number of whole months that remained at the time of
annuitization until the Contingent Deferred Sales Charge would expire).
A-44
<PAGE>
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Services to the Variable Account.......................................... II-3
Performance Comparisons................................................... II-3
Calculation of Performance Data........................................... II-3
Net Investment Factor..................................................... II-14
Annuity Payments.......................................................... II-14
Hypothetical Illustrations of Annuity Income Payouts...................... II-15
Historical Illustrations of Annuity Income Payouts........................ II-19
Experts................................................................... II-22
Legal Matters............................................................. II-22
Financial Statements...................................................... II-23
</TABLE>
If you would like to obtain a copy of the Statement of Additional
Information, please complete the request for below and mail to:
New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
Please send a copy of the Statement of Additional
Information of New England Variable Annuity Separate
Account to:
_______________________________________________________
Name
_______________________________________________________
Street
_______________________________________________________
City State Zip
A-45
<PAGE>
NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
ISSUED BY NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
(PART B)
, 1996
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated , 1996 and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained by writing to New England Securities Corporation ("New England
Securities") 399 Boylston Street, Boston, Massachusetts 02116.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Services to the Variable Account.......................................... II-3
Performance Comparisons................................................... II-3
Calculation of Performance Data........................................... II-3
Net Investment Factor..................................................... II-14
Annuity Payments.......................................................... II-14
Hypothetical Illustrations of Annuity Income Payouts...................... II-15
Historical Illustrations of Annuity Income Payouts........................ II-19
Experts................................................................... II-22
Legal Matters............................................................. II-22
Financial Statements...................................................... II-23
</TABLE>
II-2
<PAGE>
SERVICES TO THE VARIABLE ACCOUNT
New England Mutual Life Insurance Company ("The New England") maintains the
books and records of the Variable Account and provides issuance and other
administrative services for the Contracts. Coopers & Lybrand, located at One
International Place, Boston, Massachusetts 02109, conducts an annual audit of
the Variable Account's financial statements. Coopers & Lybrand performs this
function as one of its services as independent accountant for the Company.
Principal Underwriter. New England Securities Corporation ("New England
Securities"), an affiliate of the Company, serves as principal underwriter for
the Variable Account pursuant to a distribution agreement between the Company
and New England Securities. The Contracts are offered continuously and may be
sold by registered representatives of broker-dealers that have selling
agreements with New England Securities as well as by the Company's life
insurance agents and insurance brokers who are registered representatives of
New England Securities. The Company pays commissions, none of which are
retained by New England Securities, in connection with sales of the Contracts.
PERFORMANCE COMPARISONS
Articles and releases, developed by the Company, the Eligible Funds (as
defined in the Prospectus) and other parties, about the Account or the
Eligible Funds regarding performance, rankings, statistics and analyses of the
Account's, the individual Eligible Funds' and fund groups' asset levels and
sales volumes, statistics and analyses of industry sales volumes and asset
levels, and other characteristics may appear in publications, including, but
not limited to, those publications listed in Appendix A to this Statement. In
particular, some or all of these publications may publish their own rankings
or performance reviews including the Account or the Eligible Funds. References
to or reprints of such articles may be used in the Company's promotional
literature. Such literature may refer to personnel of the advisers, who have
portfolio management responsibility, and their investment style. The
references may allude to or include excerpts from articles appearing in the
media.
The advertising and sales literature of the Contract and the Account may
refer to historical, current and prospective economic trends and may include
historical and current performance and total returns of investment
alternatives.
In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and
prospective Contractholders. These materials may include, but are not limited
to, discussions of college planning, retirement planning, reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
CALCULATION OF PERFORMANCE DATA
The average annual total return of a Contract is defined and illustrated on
pages A- to A- of the prospectus in the section entitled "Investment
Experience Information". The average annual total return is the annual
compounded rate of return which would produce the surrender value at the end
of the period.
As discussed on page A- of the prospectus in the third to the last
paragraph of the section entitled "Investment Experience Information", the
Variable Account may illustrate historical investment performance by showing
the percentage change in unit value and the annual effective rate of return of
each sub-account of the Variable Account for every calendar year since
inception of the corresponding Eligible Funds to the date of the illustration
and for the 10, 5 and 1 year periods ending with the date of the illustration.
Examples of such illustrations follow. Such illustrations do not reflect the
impact of any Contingent Deferred Sales Charge or the annual $30
Administration Contract Charge. The method of calculating the percentage
change in unit value is described on page A- of the prospectus. The annual
effective rate of return in these illustrations is calculated by dividing the
unit value at the end of the period by the unit value at the beginning of the
period, raising this quantity to the power of 1/n (where n is the number of
years in the period), and then subtracting 1.
Set forth on the following pages are illustrations of the percentage change
in unit value information and annual effective rate of return information
discussed above that may appear in the Variable Account's Annual and Semi-
Annual Reports and in other illustrations of historical investment
performance. Such illustrations do not reflect the impact of any Contingent
Deferred Sales Charge or the annual $30 Administration Contract Charge.
II-3
<PAGE>
ZENITH BACK BAY ADVISORS BOND INCOME SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ---------
<S> <C> <C>
August 26, 1983......................................... 1.000000 --
December 31, 1983....................................... %
December 31, 1984....................................... %
December 31, 1985....................................... %
December 31, 1986....................................... %
December 31, 1987....................................... %
December 31, 1988....................................... %
December 31, 1989....................................... %
December 31, 1990....................................... %
December 31, 1991....................................... %
December 31, 1992....................................... %
December 31, 1993....................................... %
December 31, 1994....................................... %
December 31, 1995.......................................
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
------------ ---------
<S> <C> <C>
12 years, 4 months ended December 31, 1995.............. % %
10 years ended December 31, 1995........................ % %
5 years ended December 31, 1995......................... % %
1 year ended December 31, 1995.......................... % %
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-4
<PAGE>
ZENITH BACK BAY ADVISORS MONEY MARKET SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
August 26, 1983............................................ 1.000000 --
December 31, 1983.......................................... %
December 31, 1984.......................................... %
December 31, 1985.......................................... %
December 31, 1986.......................................... %
December 31, 1987.......................................... %
December 31, 1988.......................................... %
December 31, 1989.......................................... %
December 31, 1990.......................................... %
December 31, 1991.......................................... %
December 31, 1992.......................................... %
December 31, 1993.......................................... %
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
12 years, 4 months ended December 31, 1995................... % %
10 years ended December 31, 1995............................. % %
5 years ended December 31, 1995.............................. % %
1 year ended December 31, 1995............................... % %
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-5
<PAGE>
ZENITH LOOMIS SAYLES AVANTI GROWTH SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
April 30, 1993............................................. 1.000000 --
December 31, 1993.......................................... %
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
2 years, 8 months ended December 31, 1995.................... % %
1 year ended December 31, 1995............................... % %
</TABLE>
ZENITH WESTPEAK VALUE GROWTH SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
April 30, 1993............................................. 1.000000 --
December 31, 1993.......................................... %
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
2 years, 8 months ended December 31, 1995.................... % %
1 year ended December 31, 1995............................... % %
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-6
<PAGE>
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
May 1, 1994................................................ 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 8 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
ZENITH LOOMIS SAYLES BALANCED SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
ZENITH DRAYCOTT INTERNATIONAL EQUITY SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-7
<PAGE>
ZENITH SALOMON BROTHERS U.S. GOVERNMENT SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
ZENITH SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
ZENITH VENTURE VALUE SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-8
<PAGE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994........................................... 1 --
December 31, 1994.......................................... %
December 31, 1995..........................................
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
1 year, 2 months ended December 31, 1995..................... %
1 year ended December 31, 1995...............................
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge or the annual $30 Administration Contract Charge.
II-9
<PAGE>
NET INVESTMENT FACTOR
The Company determines the net investment factor ("Net Investment Factor")
for any sub-account on each day on which the New York Stock Exchange is open
for trading as follows:
(1) The Company takes the net asset value per share of the Eligible Fund
held in the sub-account determined as of the close of regular trading on
the New York Stock Exchange on a particular day.
(2) Next, the Company adds the per share amount of any dividend or
capital gains distribution made by the Eligible Fund since the close of
regular trading on the New York Stock Exchange on the preceding trading
day.
(3) This total amount is then divided by the net asset value per share of
the Eligible Fund as of the close of regular trading on the New York Stock
Exchange on the preceding trading day.
(4) Finally, the Company subtracts the daily charges for the Mortality
and Expense Risk Charge since the close of regular trading on the New York
Stock Exchange on the preceding trading day. (See "Administration Charges,
Contingent Deferred Sales Charge and Other Deductions" in the prospectus.)
On an annual basis, the total deduction for such charges equals 1.00% of
the daily net asset value of the Variable Account.
ANNUITY PAYMENTS
At annuitization, the Contract Value is applied toward the purchase of
monthly variable annuity payments. The amount of these payments will be
determined on the basis of (i) annuity purchase rates not lower than the rates
set forth in the Life Income Tables contained in the Contract that reflect the
age of the Payee at annuitization, (ii) the assumed interest rate selected,
(iii) the type of payment option selected, and (iv) the investment performance
of the Eligible Fund selected.
When a variable payment option is selected, the Contract proceeds will be
applied at annuity purchase rates, which vary depending on the particular
option selected and the age of the Payee, to calculate the basic payment level
purchased by the Contract Value. With respect to Contracts issued in New York
or Oregon for use in situations not involving an employer-sponsored plan,
annuity purchase rates used to calculate the basic payment level will also
reflect the sex of the Payee when the payment option involves a life
contingency. The impact of the choice of option and the sex and age of the
Payee on the level of annuity payments is described in the prospectus under
"Amount of Variable Annuity Payments".
The amount of the basic payment level is determined by applying the
applicable annuity purchase rate to the amount applied from each sub-account
to provide the annuity. This basic payment level is converted into annuity
units, the number of which remains constant. Each monthly annuity payment is
in an amount equal to that number of annuity units multiplied by the
applicable annuity unit value for that payment (described below). The
applicable annuity unit value for each sub-account will change from day to day
depending upon the investment performance of the sub-account, which in turn
depends upon the investment performance of the Eligible Fund in which the sub-
account invests.
The selection of an assumed interest rate ("Assumed Interest Rate") will
affect both the basic payment level and the amount by which subsequent
payments increase or decrease. The basic payment level is calculated on the
assumption that the Net Investment Factors applicable to the Contract will be
equivalent on an annual basis to a net investment return at the Assumed
Interest Rate. If this assumption is met following the date any payment is
determined, then the amount of the next payment will be exactly equal to the
amount of the preceding payment. If the actual Net Investment Factors are
equivalent to a net investment return greater than the Assumed Interest Rate,
the next payment will be larger than the preceding one; if the actual Net
Investment Factors are equivalent to a net investment return smaller than the
Assumed Interest Rate, then the next payment will be smaller than the
preceding payment. The definition of the Assumed Interest Rate, and the effect
of the level of the Assumed Interest Rate on the amount of monthly payments is
explained in the prospectus under "Amount of Variable Annuity Payments".
The number of annuity units credited under a variable payment option is
determined as follows:
(1) The proceeds under a deferred Contract, or the net purchase payment
under an immediate Contract (at such time as immediate Contracts may be made
available), are applied at the Company's annuity purchase rates for the
selected
II-10
<PAGE>
Assumed Interest Rate to determine the basic payment level. (The amount of
Contract Value or Death Proceeds applied will be reduced by any applicable
Contingent Deferred Sales Charge, Administration Contract Charge and the
amount of any outstanding loan plus accrued interest.)
(2) The number of annuity units is determined by dividing the amount of the
basic payment level by the applicable annuity unit value(s) next determined
following the date of application of proceeds (in the case of a deferred
Contract) or net purchase payment (in the case of an immediate Contract.)
The dollar amount of the initial payment will be at the basic payment level
(if the initial payment is due more than 14 days after the proceeds are
applied, the Company will add interest to that initial payment.) The dollar
amount of each subsequent payment is determined by multiplying the number of
annuity units by the applicable annuity unit value which is determined at
least 14 days before the payment is due.
The value of an annuity unit for each sub-account depends on the Assumed
Interest Rate and on the Net Investment Factors applicable at the time of
valuation. The initial annuity unit values were set at $1.00 effective on or
about the date on which shares of the corresponding Eligible Funds were first
publicly available. The Net Investment Factor and, therefore, changes in the
value of an annuity unit under a variable payment option, reflect the
deduction of the Mortality and Expense Risk Charge and Administration Asset
Charge. (See "Net Investment Factor" above.)
The annuity unit value for each sub-account is equal to the corresponding
annuity unit value for the sub-account previously determined multiplied by the
applicable Net Investment Factor for that sub-account for the New York Stock
Exchange trading day then ended, and further multiplied by the assumed
interest factor ("Assumed Interest Factor") for each day of the valuation
period. The Assumed Interest Factor represents the daily equivalent of the
Contract's annual Assumed Interest Rate. In the calculation of annuity unit
values, the Assumed Interest Factor has the effect of reducing the Net
Investment Factor by an amount equal to the daily equivalent of the Contract's
Assumed Interest Rate. The result of this adjustment is that if the Net
Investment Factor for a valuation period is greater (when expressed as an
annual net investment return) than the Assumed Interest Rate, the annuity unit
value will increase. If the Net Investment Factor for the period is less (when
expressed as an annual net investment return) than the Assumed Interest Rate,
the annuity unit value will decrease. At an Assumed Interest Rate of 3.5%, the
Assumed Interest Factor is .9999058. Assumed Interest Factors for other
Assumed Interest Rates are computed on a consistent basis.
An illustration of annuity income payments under various hypothetical and
historical rates appears in the tables on pages through below. The monthly
equivalents of the hypothetical annual net returns of 0%, %, 6%, 8% and 10%
shown in the tables at pages and are 0%, %, %, % and %.
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on assets in the selected
portfolios were a uniform gross annual rate of 0%, %, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, %,
6%, 8% or 10%, but fluctuated over and under those averages throughout the
years.
The tables reflect the daily charge to the Subaccounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.00%.
The amounts shown in the tables also take into account the portfolios'
management fees and operating expenses which are assumed to be at an annual
rate of % of the average daily net assets of the Eligible Funds. Actual fees
and expenses of the portfolios associated with your Contract may be more or
less than %, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status".
II-11
<PAGE>
The tables show both the gross rate and the net rate. The difference between
gross and net rates represents the % for mortality and expense risk and
administrative charges and the assumed % for investment management and
operating expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly %.
Two tables follow. The first table assumes that 100% of the Contract Value
is allocated to a variable annuity income option, the second assumes that 50%
of the Contract Value is placed under a fixed annuity income option, using the
fixed crediting rate NEVLICO offered on the fixed annuity income option at the
date of the illustration. Both illustrations assume that the final value of
the accumulation account is $100,000 and is applied at age 65 to purchase a
life annuity for a guaranteed period of 10 years certain and life thereafter.
When part of the Contract Value has been allocated to the fixed annuity
income option, the guaranteed minimum annuity income payment resulting from
this allocation is also shown. The illustrated variable annuity income
payments are determined through the use of standard mortality tables and an
assumed interest rate of 3.5% per year. Thus, actual performance greater than
3.5% per year will result in increasing annuity income payments and actual
performance less than 3.5% per year will result in decreasing annuity income
payments. We offer alternative Assumed Interest Rates from which you may
select. Fixed annuity income payments remain constant. Initial monthly annuity
income payments under a fixed annuity income payout are generally higher than
initial payments under a variable income payout option.
These tables show the monthly income payments for several hypothetical
constant assumed interest rates. Of course, actual investment performance will
not be constant and may be volatile. Actual monthly income amounts would
differ from those shown if the actual rate of return averaged the rate shown
over a period of years, but also fluctuated above or below those averages for
individual contract years. Upon request, and when you are considering an
annuity income option, we will furnish a comparable illustration based on your
individual circumstances.
II-12
<PAGE>
ANNUITY PAY-OUT ILLUSTRATION
(100% VARIABLE PAYOUT)
<TABLE>
<S> <C> <C> <C>
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE: $100,000
SEX: Unisex DATE OF ILLUSTRATION: / /95
ANNUITY OPTION SELECTED: Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAYMENTS: Monthly
</TABLE>
FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN
CONSTANT: 3.50%
VARIABLE MONTHLY ANNUITY INCOME PAYMENT ON THE DATE OF THE ILLUSTRATION: $
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
-------------------------------------------------
GROSS 0% % 6% 8% 10%
PAYMENT CALENDAR ----- --------- --------- --------- --------- ---------
YEAR YEAR AGE NET** % % % % %
- ------- -------- --- ----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1995 65
2 1996 66
3 1997 67
4 1998 68
5 1999 69
10 2004 74
15 2009 79
20 2014 84
</TABLE>
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE NEW ENGLAND OR THE
FUNDS THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period, payments
will be continued for the balance of the Certain Period. The cumulative
amount of income payments received under the annuity depends on how long the
Annuitant lives after the Certain Period. An annuity pools the mortality
experience of Annuitants. Annuitants who die earlier, in effect, subsidize
the payments for those who live longer.
** The illustrated Net Assumed Rates of Return reflect the deduction of
average fund expenses and the 1.00% Mortality and Expense Risk Charge from
the Gross Rates of Return.
II-13
<PAGE>
ANNUITY PAY-OUT ILLUSTRATION
(50% VARIABLE--50% FIXED PAYOUT)
<TABLE>
<S> <C> <C> <C>
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE: $100,000
SEX: Unisex DATE OF ILLUSTRATION: / /95
ANNUITY OPTION SELECTED: Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY MENTS: Monthly
</TABLE>
FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT AND 50% TO FIXED PAYOUT
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN
CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL NEVER
BE LESS THAN: $ . THE MONTHLY GUARANTEED PAYMENT OF $ IS BEING
PROVIDED BY THE $50,000 APPLIED UNDER THE FIXED ANNUITY OPTION.
<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
-----------------------------------------------------
GROSS 0% % 6% 8% 10%
PAYMENT CALENDAR ----- --------- --------- --------- --------- ---------
YEAR YEAR AGE NET** % % % % %
- ------- -------- --- ----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1995 65
2 1996 66
3 1997 67
4 1998 68
5 1999 69
10 2004 74
15 2009 79
20 2014 84
</TABLE>
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE NEW ENGLAND OR THE
FUNDS THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period, payments
will be continued for the balance of the Certain Period. The cumulative
amount of income payments received under the annuity depends on how long the
Annuitant lives after the Certain Period. An annuity pools the mortality
experience of Annuitants. Annuitants who die earlier, in effect, subsidize
the payments for those who live longer.
** The illustrated Net Assumed Rates of Return apply only to the variable
portion of the monthly payment and reflect the deduction of average fund
expenses and the 1.00% Mortality and Expense Risk Charge from the Gross
Rate of Return.
II-14
<PAGE>
HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. In comparison with hypothetical illustrations based
on a uniform annual rate of return, the table uses historical annual returns
to illustrate that monthly annuity income payments vary over time based on
fluctuations in annual returns.
The tables reflect the daily charge to the Subaccounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.00%.
The amounts shown in the tables also take into account the actual portfolios'
management fees and operating expenses. Actual fees and expenses of the
portfolios associated with your Contract may be more or less than the
historical fees, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status".
The following tables assume that 100% of the Contract Value is allocated to
a variable annuity income option, that the final value of the accumulation
account is $100,000 and is applied at age 65 to purchase a life annuity for a
guaranteed period of 10 years certain and life thereafter. The table assumes
that the Annuitant was age 65 in 1983, the year of inception for the Capital
Growth, Bond Income and Money Market portfolios, and that the Annuitant's age
had increased by the time the other portfolios became available. The
historical variable annuity income payments are based on an assumed interest
rate of 3.5% per year. Thus, actual performance greater than 3.5% per year
resulted in an increased annuity income payment and actual performance less
than 3.5% per year resulted in a decreased annuity income payment. We offer
alternative Assumed Interest Rates (AIR) from which you may select: 0% and 5%.
An AIR of 0% will result in a lower initial payment than a 3.5% or 5% AIR.
Similarly, an AIR of 5% will result in a higher initial premium than a 0% or
3.5% AIR.
The table illustrates the amount of the first monthly payment for each year
shown. During each year, the monthly payments would vary to reflect
fluctuations in the actual rate of return on the portfolios. Upon request, and
when you are considering an annuity income option, we will furnish a
comparable illustration based on your individual circumstances.
II-15
<PAGE>
ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)
<TABLE>
<S> <C> <C> <C>
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE: $100,000
SEX: Unisex DATE OF ILLUSTRATION: / /95
ANNUITY OPTION SELECTED: Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAYMENTS: Monthly
</TABLE>
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED: FOR AGE 65: $ ; AND FOR AGE 74: $ .
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN
CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH 100% OF THE CONTRACT VALUE
INVESTED IN:
<TABLE>
<CAPTION>
LOOMIS
BACK BAY BACK BAY SAYLES WESTPEAK
PAYMENT CALENDAR BOND MONEY AVANTI VALUE
YEAR YEAR AGE INCOME MARKET GROWTH GROWTH
- ------- -------- --- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
1 1984 65
2 1985 66
3 1986 67
4 1987 68
5 1988 69
6 1989 70
7 1990 71
8 1991 72
9 1992 73
10 1993 74
11 1994 75
12 1995 76
</TABLE>
INVESTMENT PERFORMANCE RESULTS CONTAINED IN THIS REPORT REPRESENT PAST
PERFORMANCE AND ARE NOT INDICATIVE OF FUTURE RETURNS. THE PERFORMANCE RESULTS
OF A CONTRACT MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY THE CONTRACT OWNER
AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED. SINCE IT IS HIGHLY
LIKELY THAT PERFORMANCE WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME
(BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE
MADE BY THE NEW ENGLAND OR THE FUNDS THAT THESE HISTORICAL RETURNS CAN BE
ACHIEVED
THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGES (1.00%), MANAGEMENT FEES AND OTHER EXPENSES (These may
vary from year to year. For the year ended December 31, 1994, they were: 0.54%
Back Bay Bond Income, 0.50% Back Bay Money Market, 0.85% Loomis Sayles Avanti
Growth, 0.85% Westpeak Value Growth, 1.00% Loomis Sayles Small Cap, 0.85%
Loomis Sayles Balanced, 1.30% Draycott International Equity, 0.70% Salomon US
Government, 0.85% Salomon Strategic Bond Opportunities, 0.90% Venture Value,
0.85% Alger Equity Growth.)
- --------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period, payments
will be continued for the balance of the Certain Period. The cumulative
amount of income payments received under the annuity depends on how long the
Annuitant lives after the Certain Period. An annuity pools the mortality
experience of Annuitants. Annuitants who die earlier, in effect, subsidize
the payments for those who live longer.
II-16
<PAGE>
ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)
<TABLE>
<S> <C> <C> <C>
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE: $100,000
SEX: Unisex DATE OF ILLUSTRATION: / /95
ANNUITY OPTION SELECTED: Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY MENTS: Monthly
</TABLE>
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED: FOR AGE 76: $ .
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN
CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH 100% OF THE CONTRACT VALUE
INVESTED IN:
<TABLE>
<CAPTION>
SALOMON
LOOMIS LOOMIS DRAYCOTT SALOMON STRATEGIC ALGER
PAYMENT CALENDAR SAYLES SAYLES INTERNATIONAL U.S. BOND VENTURE EQUITY
YEAR YEAR AGE SMALL CAP BALANCED EQUITY GOVERMENT OPPORTUNITIES VALUE GROWTH
- ------- -------- --- --------- -------- ------------- --------- ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 1994 76
13 1995 77
</TABLE>
INVESTMENT PERFORMANCE RESULTS CONTAINED IN THIS REPORT REPRESENT PAST
PERFORMANCE AND ARE NOT INDICATIVE OF FUTURE RETURNS. THE PERFORMANCE RESULTS
OF A CONTRACT MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY THE CONTRACT OWNER
AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED. SINCE IT IS HIGHLY
LIKELY THAT PERFORMANCE WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME
(BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE
MADE BY THE NEW ENGLAND OR THE FUNDS THAT THESE HISTORICAL RETURNS CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGES (1.00%),MANAGEMENT FEES AND OTHER EXPENSES (These may
vary from year to year. For the year ended December 31, 1994, they were: 0.54%
Back Bay Bond Income, 0.50% Back Bay Money Market, 0.85% Loomis Sayles Avanti
Growth, 0.85% Westpeak Value Growth, 1.00% Loomis Sayles Small Cap, 0.85%
Loomis Sayles Balanced, 1.30% Draycott International Equity, 0.70% Salomon US
Government, 0.85% Salomon Strategic Bond Opportunities, 0.90% Venture Value,
0.85% Alger Equity Growth.)
- --------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period, payments
will be continued for the balance of the Certain Period. The cumulative
amount of income payments received under the annuity depends on how long the
Annuitant lives after the Certain Period. An annuity pools the mortality
experience of Annuitants. Annuitants who die earlier, in effect, subsidize
the payments for those who live longer.
II-17
<PAGE>
EXPERTS
The financial statements of New England Variable Annuity Separate Account
included in this Statement of Additional Information have been included herein
in reliance on the Report of Coopers & Lybrand L.L.P., Independent
accountants, given on the authority of that firm as experts in accounting and
auditing. In addition, the financial statements of the Company included in
this Statement of Additional Information have been included herein in reliance
on the Report of Coopers & Lybrand L.L.P., given on the authority of that firm
as experts in accounting and auditing.
LEGAL MATTERS
Legal matters in connection with the Contracts described in this
registration statement have been passed on by H. James Wilson, General Counsel
and Secretary of the Company. Sutherland, Asbill & Brennan, Washington, D.C.,
have acted as special counsel on certain matters relating to the Federal
securities laws.
II-18
<PAGE>
FINANCIAL STATEMENTS
To be filed by amendment.
II-19
<PAGE>
APPENDIX A
ABC and affiliates Fortune Public Broadcasting
Atlanta Constitution Fox Newtwork and Service
Atlanta Journal affiliates Quinn, Jane Bryant
Austin American Fund Action (syndicated column)
Statesman Hartford Courant Registered
Baltimore Sun Houston Chronicle Representative
Barron's INC Research Magazine
Bond Buyer Indianapolis Star Resource
Boston Business Journal Institutional Investor Reuters
Boston Globe Investment Dealers Rukeyser's Business
Boston Herald Digest (syndicated column)
Broker World Investment Vision Sacramento Bee
Business Radio Network Investor's Daily San Francisco Chronicle
Business Week Journal of Commerce San Francisco Examiner
CBS and affiliates Kansas City Star San Jose Mercury
CFO LA Times Seattle Post-
Changing Times Leckey, Andrew Intelligencer
Chicago Sun Times (syndicated column) Seattle Times
Chicago Tribune Life Association News Smart Money
Christian Science Miami Herald St. Louis Post Dispatch
Monitor Milwaukee Sentinel St. Petersburg Times
Christian Science Money Standard & Poor's
Monitor News Service Money Maker Outlook
Cincinnati Enquirer Money Management Letter Standard & Poor's Stock
Cincinnati Post Morningstar Guide
CNBC National Public Radio Stanger's Investment
CNN National Underwriter Advisor
Columbus Dispatch NBC and affiliates Stockbroker's Register
Dallas Morning News New England Business Strategic Insight
Dallas Times-Herald New England Cable News Tampa Tribune
Denver Post New Orleans Times- Time
Des Moines Register Picayune Tobias, Andrew
Detroit Free Press New York Daily News (syndicated column)
Donoghues Money Fund New York Times UPI
Report Newark Star Ledger US News and World Report
Dorfman, Dan (syndicated Newsday USA Today
column) Newsweek Value Line
Dow Jones News Service Nightly Business Report Wall St. Journal
Economist Orange County Register Wall Street Letter
FACS of the Week Orlando Sentinel Wall Street Week
Financial News Network Pension World Washington Post
Financial Planning Pensions and Investments WBZ
Financial Services Week Personal Investor WBZ-TV
Financial World Philadelphia Inquirer WCVB-TV
Forbes Porter, Sylvia WEEI
Fort Worth Star-Telegram (syndicated column) WHDH
Portland Oregonian Worcester Telegram
Worth Magazine
WRKO
II-20
<PAGE>
NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements of the Registrant are to be filed by
amendment for inclusion in Part B of this Registration Statement:
Statement of Assets and Liabilities as of December 31, 199 .
Statement of Operations for the year ended December 31, 199 .
Statement of Changes in Net Assets for the years ended December 31, 199
and 199 .
Notes to Financial Statements.
The following financial statements of the Depositor are to be filed by
amendment for inclusion in Part B of this Registration Statement:
Balance Sheet as of December 31, 199 and 199 .
Statements of Operations for the years ended December 31, 199 and 199 .
Statement of Surplus for the years ended December 31, 199 and 199 .
Statements of Cash Flows for the years ended December 31, 199 and 199 .
Notes to Financial Statements.
(b) Exhibits
(1) Resolutions of Board of Directors of the Depositor authorizing the
Registrant are incorporated herein by reference to Registration
Statement on Form N-4 (No. 33-85442) filed on October 20, 1994.
(2) None
(3) (i) Form of Distribution Agreement is incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4
(No. 33-85442) filed on March 7, 1995.
(ii) Form of Selling Agreement with other broker-dealers is
incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-4 (No. 33-85442) filed March 7, 1995.
Additional form of Selling Agreement filed herewith.
(4) (i) Forms of Variable Annuity Contract (with and without Contingent
Deferred Sales Charge), and Application.
(ii) Forms of Endorsements (Living Benefits and Individual Retirement
Annuity).
(5) For Application, see (4)(i) above.
(6) (i) Copy of charter (Articles of Incorporation) is incorporated herein
by reference to Registration Statement on Form N-4 (No. 33-85442) filed
on October 20, 1994.
(ii) By-laws of Depositor are incorporated herein by reference to
Registration Statement on Form N-4 (No. 33-85442) filed on October 20,
1994.
(7) None
(8) Form of Administrative Services Agreement is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registration Statement on
Form N-4 (No. 33-85442) filed on March 7, 1995.
(9) Opinion and consent of H. James Wilson, Esq.
(10) (i) Consent of Coopers & Lybrand to be filed by amendment.
(ii) Consent of Sutherland, Asbill & Brennan to be filed by amendment.
III-1
<PAGE>
(11) None
(12) None
(13) Schedule of computations for performance quotations to be filed by
amendment.
(14) Powers of Attorney are incorporated by reference to Registration
Statement on Form N-4 (No. 33-85442) filed on October 20, 1994.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS & OFFICES POSITIONS & OFFICES
BUSINESS ADDRESS WITH DEPOSITOR WITH REGISTRANT
------------------ ------------------- -------------------
<C> <S> <C>
Edward C. Hall Director, Vice President--Administration --
Kernan F. King Director --
Robert E. Schneider Director --
Robert A. Shafto Chairman of the Board, Director, President and Chief Executive Officer --
Daniel J. Toran Director --
H. James Wilson Director, General Counsel and Secretary --
Frederick K. Zimmermann Director, Vice President--Investments --
William A. Campagna Vice President--Broker/Dealer Distribution --
Rodney J. Chandler Chief Actuary --
John F. Guthrie Vice President--Portfolio Strategy --
Chester R. Frost Vice President--Controller --
Kenneth J. Schweiger Vice President--Bank Distribution --
John G. Small, Jr. Vice President and Chief Underwriter --
Philip G. Sullivan Vice President and Medical Director --
Marie C. Swift Counsel and Assistant Secretary --
Newton H. Thompson, III Vice President and Treasurer --
</TABLE>
- --------
* Principal Business Address: 501 Boylston Street, Boston, MA 02116
III-2
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The following lists provide information regarding the entities under Common
Control with the Depositor. The Depositor is a wholly-owned, direct subsidiary
of New England Mutual Life Insurance Company ("Company"), which is organized
under the laws of Massachusetts. The Depositor is organized under the laws of
Delaware. No person is controlled by or under common control with Registrant.
DIRECT SUBSIDIARIES OF NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
(UNDER COMMON CONTROL WITH DEPOSITOR)
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
COMPANY ORGANIZATION COMPANY PRINCIPAL BUSINESS
- ------- ------------ ----------- ------------------
<S> <C> <C> <C>
Boylston Capital MA 100% investment advisory and management
Advisors, Inc. services
- --New England Portfolio MA 100% investment advisor to insurance
Advisors, Inc. company Separate Account investors
COAC Co., Inc. MA 100% holding company for corporation with
interests in real estate joint
ventures and partnerships
CRB Co. Inc. MA 100% real estate investment holding
corporation
CRH Companies, Inc. MA 100% limited partner of general partner of
publicly offered limited partnership
- --South Sarasota Retail FL 100% real estate investment holding
Corp. corporation (inactive)
Exeter Reassurance Bermuda 100% reinsurance
Lyon/Copley Development CA 100% general partner in general account
Corporation joint ventures
Mercadian Capital L.P. DE limited dealer in interest rate and currency
partner swaps
95%
- --Mercadian Securities U.K. 95% holding company (inactive)
(Holdings) U.K. Ltd
- --Mercadian Securities U.K. 95% broker-dealer (inactive)
International Ltd
Mercadian Funding L.P. DE limited party to investment and repurchase
partnership agreements with tax-exempt bond
interest issuers
95%
- --Mercadian Funding Inc. DE 100% party to investment and repurchase
owned agreements with tax-exempt bond
by issuers
Mercadian
Funding
L.P.
NEL Partnership MA 100% general partner of private limited
Investments I, Inc. partnership
NELRECO Troy, Inc. MA 100% real estate investment holding,
developing, leasing corp. (inactive)
Newbury Insurance Bermuda 100% issuer of life insurance agent's
Companies, Limited professional liability insurance
New England Investment MA 100% general partner of New England
Companies, Inc. Investment Companies, L.P.
</TABLE>
III-3
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
COMPANY ORGANIZATION COMPANY PRINCIPAL BUSINESS
- ------- ------------ ---------- ------------------
<S> <C> <C> <C>
New England Investment DE 64.98% investment adviser and holding co. for
Companies, L.P. the Insurance co.'s investment related
operating affiliates
New England Life MA 100% issuer of commercial mortgage-backed
Mortgage Funding securities
Corporation
New England Pension and DE 100% insurance
Annuity Company
New England Securities MA 100% broker-dealer
Corporation
- --Hereford Insurance MA 100% insurance agency
Agency, Inc.
New England Variable DE 100% insurance
Life Insurance Company
Omega Reinsurance AZ 100% insurance
Corporation
TNE Advisers, Inc. MA 100% investment advisers
TNE Funding Corporation DE 100% issuer of commercial mortgage-backed
securities
TNE Information Systems MA 100% software
</TABLE>
The above list does not include real estate joint ventures and partnerships
of which the New England Mutual Life Insurance Company is an investment
partner. Also, does not include approximately 70 nonoperating subsidiaries of
COAC Co., Inc. which generally have as their sole assets certain real estate
partnership interests. The Depositor has no subsidiaries.
SUBSIDIARIES OF NEW ENGLAND INVESTMENT COMPANIES, L.P.
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
COMPANY ORGANIZATION COMPANY PRINCIPAL BUSINESS
- ------- ------------ ----------- ------------------
<S> <C> <C> <C>
Back Bay Advisors, Inc. MA 64.98% general partner of investment adviser
Back Bay Advisors, L.P. DE 64.98% investment adviser
Capital Growth MA NEIC, L.P. investment adviser
Management Limited owns 58%
Partnership limited
partnership
interest
Copley Real Estate MA 64.98% real estate manager and adviser
Advisors, Inc.
- --Copley Advisors, Inc. MA 64.98% investment adviser
- --Copley Properties MA 64.98% general partner of publicly offered
Company, Inc. limited partnership
- --Copley Properties MA 64.98% general partner of publicly offered
Company II, Inc. limited partnership
- --Copley Properties MA 64.98% managing general partner of publicly
Company III, Inc. offered limited partnership
- --Copley Securities MA 64.98% Massachusetts securities corporation
Corporation (buys, sells, holds, securities
exclusively for own account)
</TABLE>
III-4
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
COMPANY ORGANIZATION COMPANY PRINCIPAL BUSINESS
- ------- ------------ ---------- ------------------
<S> <C> <C> <C>
- --Copley Properties MA 64.98% general partner of publicly offered
Company II, Inc. limited partnership
- --Copley Properties MA 64.98% managing general partner of publicly
Company III, Inc. offered limited partnership
- --Copley Securities MA 64.98% Massachusetts securities corporation
Corporation (buys, sells, holds, securities
exclusively for own account)
- --CTR Corporation MA 64.98% real estate investment
- --Eighth Copley MA 64.98% real estate investment holding,
Corporation developing and leasing corporation
- --Fifth Copley MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Fifth Singleton MA 64.98% general partner of private limited
Corporation partnership
- --First Income MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Fourth Copley MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Fourth Income MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Fourth Singleton MA 64.98% (inactive) organized for use in
Corporation connection with limited partnership
- --New England Investment DE 64.98% insurance agent and marketer of
Associates, Inc. financial products and services to
institutional investors
- --Second Income MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Seventh Copley MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Sixth Copley MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Sixth Singleton MA 64.98% general partner of private limited
Corporation partnership
- --Third Income MA 64.98% general partner of publicly offered
Corporation limited partnership
- --Third Singleton MA 64.98% general partner of private limited
Corporation partnership
Draycott Partners, Ltd. MA 64.98% investment adviser
FundTech Services, L.P. DE 64.98% broker-dealer
Loomis, Sayles & MA 64.98% general partner of investment adviser
Company, Inc.
Loomis, Sayles & DE 64.98% investment adviser
Company, L.P.
Marlborough Capital MA 64.98% general partner of investment manager
Advisors, Inc.
Marlborough Capital DE 64.98% investment manager
Advisors, L.P.
MC Management, Inc. MA 64.98% general partner of MC Management, L.P.
MC Management, L.P. DE 64.98% general and limited partner of limited
partnership that serves as general
partner of private investment
partnership
NEF Corporation MA 64.98% general partner of mutual fund
wholesale broker-dealer, transfer
agent and of investment adviser
NEIC Holdings, Inc. MA 64.98% holding company
New England Funds, L.P. DE 64.98% mutual fund wholesale broker-dealer
R & T Asset Management, MA 64.98% general partner investment advisers
Inc.
Reich & Tang Asset DE 64.98% investment adviser
Management, L.P.
Reich & Tang DE 64.98% mutual fund wholesale broker-dealer
Distributors, L.P. and transfer agent
Westpeak Investment MA 64.98% general partner of investment adviser
Advisors, Inc.
Westpeak Investment DE 64.98% investment adviser
Advisors, L.P.
</TABLE>
III-5
<PAGE>
ITEM 27. NUMBER OF CONTRACTOWNERS
None
ITEM 28. INDEMNIFICATION
The depositor maintains a directors' and officers' liability policy with a
maximum coverage of $15 million under which the depositor and New England
Securities Corporation, the Registrant's underwriter (the "Underwriter"), as
well as certain other subsidiaries of the Depositor's parent, New England
Mutual Life Insurance Company, are named insureds. A provision in New England
Mutual Life Insurance Company's by-laws provides for the indemnification
(under certain circumstances) of individuals serving as directors, officers
and employees of certain organizations, including the Depositor and the
Underwriter. A provision in the depositor's bylaws provides for the
indemnification (under certain circumstances) of individuals serving as
directors, officers or employees of the depositor.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers or controlling persons (if any)
of the Underwriter or Depositor pursuant to the foregoing provisions or
otherwise, the Registrant 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, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Depositor or Underwriter of expenses incurred
or paid by a director, officer or controlling person of the Depositor or
Underwriter 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 or Underwriter will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question 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 UNDERWRITERS
(a) New England Securities Corporation also serves as principal underwriter
for:
New England Zenith Fund
New England Variable Annuity Fund I
New England Retirement Investment Account
New England Variable Life Separate Account
The New England Variable Account
(b) The directors and officers of the Registrant's principal underwriter,
New England Securities Corporation, and their addresses are as follows:
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES WITH OFFICES WITH
NAME PRINCIPAL UNDERWRITER REGISTRANT
---- -------------------------- -------------
<C> <S> <C>
Thomas W. McConnell* Director, President and CEO None
Kernan F. King** Chairman of Board, Director None
Beverly J. DeWitt** Assistant Secretary None
Anne M. Goggin** Vice President, General Counsel,
Secretary and Clerk None
Mark F. Greco* Vice President None
Laura A. Hutner* Vice President None
Peter G. Lahaie* Assistant Vice President, Chief
Financial Officer and Controller None
Albert R. Margeson, Jr.* Senior Vice President None
Robert F. Regan*** Vice President None
Jonathan M. Rozek* Vice President None
Robert E. Schneider** Director None
Michael E. Toland* Vice President, Chief Compliance
Officer, Assistant Secretary and
Assistant Clerk None
Principal Business Address: *399 Boylston Street, Boston, MA 02116
** 501 Boylston Street, Boston, MA 02117
*** 500 Boylston Street, Boston, MA 02117
</TABLE>
III-6
<PAGE>
(c)
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
NET
NAME OF UNDERWRITING COMPENSATION
PRINCIPAL DISCOUNTS & REDEMPTION OR BROKERAGE OTHER
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
- ----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Not Applicable
</TABLE>
Commissions are paid by the Company directly to agents who are registered
representatives of the principal underwriter, or to broker-dealers that have
entered into a selling agreement with the principal underwriter with respect
to sales of the Contracts.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The following companies will maintain possession of the documents required
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder:
(a) Registrant
(b) State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(c) New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
(d) New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
Registrant hereby makes the following undertakings:
(1) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
contained in the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts may be
accepted;
(2) To include either (a) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request a
Statement of Additional Information or (b) a postcard or similar written
communication affixed to or included in the prospectus that the applicant
can remove to send for a Statement of Additional Information; and
(3) To deliver a Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
III-7
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THE REGISTRANT, NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT HAS CAUSED
THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF, IN THE CITY OF BOSTON,
AND COMMONWEALTH OF MASSACHUSETTS ON THIS 11TH DAY OF DECEMBER, 1995.
New England Variable Annuity
Separate Account
By: New England Variable Life
Insurance Company (Depositor)
/s/ Rodney J. Chandler
By: _________________________________
RODNEY J. CHANDLER
CHIEF ACTUARY
Attest:
/s/ Marie C. Swift
_____________________________________
MARIE C. SWIFT
III-8
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THE DEPOSITOR, NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY HAS CAUSED
THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF, IN THE CITY OF BOSTON,
AND COMMONWEALTH OF MASSACHUSETTS, ON THIS 11TH DAY OF DECEMBER, 1995.
New England Variable Life Insurance
Company
By: /s/ Rodney J. Chandler
---------------------------------
RODNEY J. CHANDLER
CHIEF ACTUARY
Attest:
/s/ Marie C. Swift
- -------------------------------------
MARIE C. SWIFT
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
Robert A. Shafto* Chairman, President December 11, 1995
- ------------------------------------- and Chief Executive
ROBERT A. SHAFTO Officer
Chester R. Frost* Vice President, December 11, 1995
- ------------------------------------- Controller,
CHESTER R. FROST Principal Financial
Officer and
Principal
Accounting Officer
Edward C. Hall* Director December 11, 1995
- -------------------------------------
EDWARD C. HALL
Kernan F. King* Director December 11, 1995
- -------------------------------------
KERNAN F. KING
Robert E. Schneider* Director December 11, 1995
- -------------------------------------
ROBERT E. SCHNEIDER
Daniel J. Toran* Director December 11, 1995
- -------------------------------------
DANIEL J. TORAN
H. James Wilson* Director, General December 11, 1995
- ------------------------------------- Counsel, Secretary
H. JAMES WILSON
Frederick K. Zimmermann* Director December 11, 1995
- -------------------------------------
FREDERICK K. ZIMMERMANN
By: /s/ Rodney J. Chandler
---------------------------------
RODNEY J. CHANDLER
* Executed by Rodney J. Chandler on behalf of those indicated pursuant to a
Power of Attorney filed with Registration Statement on Form N-4 (33-85442)
filed on October 20, 1994.
III-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NO.
(ON
EXECUTED
COPY ONLY)
----------
<S> <C>
(1) Resolutions of Board of Directors of the Depositor authorizing
the Registrant are incorporated herein by reference to
Registration Statement on Form N-4 (33-85442) filed on October
20, 1994.
(2) None
(3) (i) Form of Distribution Agreement is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (33-85442) filed on March 7, 1995.
(ii) Form of Selling Agreement with other broker-dealers is
incorporated herein by reference to Pre-Effective Amendment No.
1 to Registration Statement on Form N-4 (33-85442) filed on
March 7, 1995. Additional Form of Selling Agreement filed
herewith.
(4) (i) Forms of Variable Annuity Contract (with and without
Contingent Deferred Sales Charge), and Application.
(ii) Forms of Endorsements (Living Benefits and Individual
Retirement Annuity).
(5) For Application, see (4)(i) above.
(6) (i) Copy of charter (Articles of Incorporation) is
incorporated herein by reference to Registration Statement on
Form N-4 (33-85442) filed on October 20, 1994.
(ii) By-laws of Depositor are incorporated herein by reference
to Registration Statement on Form N-4 (33-85442) filed on
October 20, 1994.
(7) None
(8) Form of Administrative Services Agreement is incorporated
herein by reference to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-4 (File No. 33-85442) filed
on March 7, 1995.
(9) Opinion and consent of H. James Wilson, Esq.
(10) (i) Consent of Coopers & Lybrand L.L.P. to be filed by
amendment.
(ii) Consent of Sutherland, Asbill & Brennan to be filed by
amendment.
(11) None
(12) None
(13) Schedule of computations for performance quotations to be
filed by amendment.
(14) Powers of Attorney are incorporated herein by reference to
Registration Statement on Form N-4 (33-85442) filed on October
20, 1994.
</TABLE>
III-10
<PAGE>
Exhibit 3(ii)
BROKER/DEALER'S AGREEMENT
New England Variable Life Insurance Company ("NEVLICO"), New England Securities
Corporation ("NES") and ________________________________________________________
("Broker/Dealer") hereby agree as follows:
1. NES is principal underwriter for variable annuity contracts issued by
NEVLICO pursuant to separate accounts of NEVLICO and for other contracts
issued by NEVLICO that are subject to registration under the Securities Act
of 1933.
2. Broker/Dealer desires to enter into a distribution agreement with NES and
to have its registered representatives appointed as agents of NEVLICO for
the purpose of selling the contract(s) (hereinafter "Contracts") for which
a Compensation Schedule has been attached to this Agreement.
3. Broker/Dealer certifies that it is a registered broker/dealer under the
Securities Exchange Act of 1934 and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"). Broker/Dealer
agrees to abide by all rules and regulations of the NASD and to comply with
all applicable state and federal laws and the rules and regulations of
authorized regulatory agencies affecting the sale of the Contracts.
4. Broker/Dealer will select persons associated with it who are to be
appointed as agents of NEVLICO to solicit applications for the Contracts in
conformance with applicable state and federal laws. No agent will be
permitted to solicit for sales of the Contracts in any state where NEVLICO
is not authorized to sell such contracts.
5. All solicitations for the Contracts will be made only by individuals who
are duly authorized agents of NEVLICO and registered representatives of
Broker/Dealer who possess the required licenses and appointments, and
Broker/Dealer will pay compensation only to such agents. Continued
solicitation for the Contracts shall be contingent upon the continued
qualification of such agents by possession of the required licenses and
appointments.
6. Broker/Dealer shall have the responsibility to train and supervise all
agents appointed under this Agreement and shall indemnify and hold harmless
the separate accounts, the eligible mutual funds and their directors and
trustees, NES, and NEVLICO from any loss, claim, damage or expenses on
account of any negligence, misconduct, breach of this Contract or wrongful
act by Broker/Dealer, its employees, representatives, and agents in
connection with the solicitation of Contracts.
7. Broker/Dealer shall review all applications for the Contracts (including
reviewing them for suitability), accept them on Broker/Dealer's behalf, and
promptly forward them to
<PAGE>
NEVLICO (at the address shown on the then current prospectus for the
Contracts) together with any purchase payments received with such
applications. NEVLICO has the right to reject any application for a
Contract and return any purchase payment made in connection therewith.
8. Broker/Dealer will offer and sell the Contracts only in accordance with the
terms and conditions of the then current prospectuses applicable to the
Contracts and the eligible mutual funds and will make no representations
not included in the prospectuses or in any authorized supplemental material
approved by NES and NEVLICO. Broker/Dealer shall not use or permit to be
used supplemental material or advertising media with regard to the
Contracts other than with the prior written approval of NES and NEVLICO.
9. Broker/Dealer is performing the acts covered by this Agreement in the
capacity of independent contractor and not as an agent or employee of
either NES or NEVLICO. Neither NES nor NEVLICO shall be liable for any
obligation, act or omission of Broker/Dealer.
10. Broker/Dealer shall be paid by NEVLICO (on behalf of NES) compensation for
the sale of Contracts as set forth in the attached Compensation
Schedule(s). NEVLICO has the right to charge back any such compensation
under the conditions stated in such Schedule(s). Any Compensation Schedule
can be changed by NES and NEVLICO as of a specific date, provided such date
is at least 10 days after the date the change is mailed to Broker/Dealer's
last known address. Any such change will apply only to business submitted
after the effective date of the change.
11. NEVLICO may offset against any claim for compensation herein any debts now
due or which may become due NEVLICO from Broker/Dealer or from a General
Agent affiliated with Broker/Dealer, and such debts shall be a first lien
against any compensation due Broker/Dealer hereunder. Broker/Dealer may not
offset against any such debts any compensation accrued or to accrue
hereunder but not yet payable to Broker/Dealer.
12. This Agreement shall take effect as of the date it is signed by NEVLICO,
which date is shown below. It shall continue in force from year to year
unless it is terminated. This Agreement may be terminated for any reason by
any party; such termination will become effective 60 days after the mailing
of a notice of termination to the other party's last known address. This
Agreement may be terminated by NES or NEVLICO for cause (i.e.
Broker/Dealer's violation of the terms of this Agreement); such termination
will become effective upon the mailing of notice of termination to the
Broker/Dealer's last known address. Failure of NES or NEVLICO to terminate
this Agreement upon knowledge of a cause shall not constitute a waiver of
the right to terminate at a later time for such cause. This Agreement shall
immediately terminate automatically if Broker/Dealer shall cease to be a
member of the NASD or to possess the requisite licenses and appointments,
and Broker/Dealer agrees to immediately notify NES and NEVLICO of such an
occurrence. No provisions of this Agreement other than numbers 6, 9, 10, 11
and 13 shall continue in force after any termination and the provisions of
number 10 shall be subject to any limitations contained in the Compensation
Schedule(s).
<PAGE>
13. This Agreement may not be assigned by Broker/Dealer except with the written
consent of NES and NEVLICO. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts.
New England Securities Corp.
-----------------------------------
(Name of Broker/Dealer)
BY: BY:
------------------------------- -------------------------------
(Signature of Authorized Person)
TITLE: TITLE:
---------------------------- -----------------------------
DATE: DATE:
----------------------------- ------------------------------
New England Variable Life Insurance Company
BY:
-------------------------------
TITLE:
----------------------------
DATE:
-----------------------------
<PAGE>
New England Variable
Life Insurance Company
- --------------------------------------------------------------------------------
Flexible Purchase Payment Deferred Variable Annuity Contract
- --------------------------------------------------------------------------------
Annuitant
JOHN ALDEN
Contract Number
Specimen
Payment Option
Variable Life Income, 10 Years Certain
- --------------------------------------------------------------------------------
New England Variable Life Insurance Company Agrees to pay monthly income to the
annuitant under the Payment Option shown in Section 1 starting on the Maturity
Date unless Death Proceeds or full Surrender Proceeds have been paid; and to
provide the other rights and benefits of the Contract.
These agreements are subject to all of the provisions of the Contract.
Signed on the Date of Issue for the Company at its Administrative Office,
501 Boylston Street
Boston, MA 02117
/s/ Robert A. Shafto
President
/s/ H. James Wilson
Secretary
Flexible Purchase Payment Deferred Variable Annuity Contract
. Monthly income is payable starting on the Maturity Date.
. The Death Proceeds are payable if an Owner dies before the Maturity Date,
unless the Contract is in force under a Payment Option or is continued under
the Continuation provision. (See Death Proceeds provision in Section 8.)
. Purchase payments can be paid to the Company before the Maturity Date,
before Death Proceeds are paid, and before full surrender, subject to the
Amount and Frequency provision in Section 3.
. Purchase payments can be increased or decreased from time to time, subject
to the Amount and Frequency provision in Section 3.
Please Read Your Contract Carefully
This is a legal contract between you and the Company.
Monthly payments and other values provided by this Contract, when based on the
investment performance of a separate investment account, are variable; they are
not guaranteed as to dollar amount.
Ten Day Right to Return the Contract
When the Contract is issued, you have 10 days after you receive it from the
Company to review it. Within those 10 days, you can return the Contract to the
Company or its Agent for any reason. If you return the Contract: any Contract
Value on the date you return the Contract will be paid to you; and the Contract
will be cancelled from the start.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract Provisions
Section
1 Contract Schedule
2 Contract
3 Purchase Payments
4 The Variable Account
5 The Fixed Account
6 Contract Value
7 Owner, Beneficiary and Contingent Annuitant
8 Payment of Benefits
9 Payment Options
10 Variable Payment Option Tables
. Riders, if any
. Copy of the Application
. Amendments and Endorsements
Alphabetical Guide
Section
6 Accumulation Units
6 Accumulation Unit Value
8 Amount of Variable Monthly Payments
6 Annual Administration Fee
7 Annuitant, Contingent
8 Annuity Unit
8 Annuity Unit Value
7 Assignments
8 Assumed Interest Factor
8 Assumed Interest Rate
7 Beneficiary
8 Benefits, Payment of
4 Change of Eligible Funds
2 Claims of Creditors
6 Contingent Deferred Sales Charges
7 Contingent Annuitant
2 Contract
1, 2 Contract Date
6 Contract Value
8 Death Proceeds
5 Fixed Account
9 Fixed Payment Options
1, 8 Maturity Date
8 Maturity Proceeds
6 Net Investment Factor
3 Net Purchase Payments
4 New England Zenith Fund
7 Owner
2 Periodic Reports
3 Purchase Payments
1 Schedule, Contract
8 Continuation
4 Sub-accounts
6 Surrender of the Contract
7 Suspension of Payments
4 Transfer Option
6 Valuation Dates
6 Valuation Periods
10 Variable Payment Option Tables
9 Variable Payment Options
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
1. Contract Schedule Owner and Beneficiary
As named in the Application or
as later changed. See the Owner
and Beneficiary Section of the
Contract.
- --------------------------------------------------------------------------------
Contract Number Annuitant's Sex Annuitant's Date of Birth
Specimen Male December 1, 1960
Contract Date Date of Issue Maturity Date
December 1, 1995 December 1, 1995 December 1, 2055
Payment Option at Maturity
Variable Life Income, 10 Years
Certain
- --------------------------------------------------------------------------------
Total Purchase Payments Per Year
Based on the Purchase Payment Mode and Amount
Shown in the Application: $10,000.00
Maximum Contingent Deferred Sales Charge (See Section 6): Each purchase payment
is subject to a Charge for 4 years from the date the payment is received by the
Company.
During Year Charge
1 4.0%
2 3.0%
3 2.0%
4 1.0%
Thereafter 0%
Maximum Daily Charge .0000273973
The daily deduction of .0000273973 is equal to .01 on an annual basis. The
deduction of .01 on an annual basis consists of: .007 for mortality risk
assumptions; and .003 for expense risk assumptions and an administrative
asset charge.
Contingent Annuitant. As named in the Application or as later changed. See the
Contingent Annuitant provision in Section 7.
<PAGE>
- --------------------------------------------------------------------------------
2. Contract
The Contract
This Annuity Contract is a legal contract between the Owner of the Contract
(called "you") and New England Variable Life Insurance Company (called the
"Company"). The Contract, which includes the attached Application, is the entire
contract between you and the Company. All Riders are listed in Section 1. A
change in or waiver of the provisions of the Contract must be signed by the
President or the Secretary of the Company to be valid.
Payments Under the Contract
All Contract amounts are in dollars of the United States of America. Payments by
the Company under the Contract will be made from the Administrative Office of
the Company.
Dates
Contract years, months and anniversaries are all measured from the Contract
Date. The Contract Date is shown in Section 1.
Claims of Creditors
The Contract and payments under it will be exempt from the claims of creditors
to the extent allowed by law.
Not Contestable
This Contract is not contestable.
Periodic Reports
The Company will send you an annual report which will show: the number of
Accumulation Units, if any, standing to the credit of the Contract; the
applicable Accumulation Unit Values; the Contract Value; and any other
information required by law or regulation.
The Company will send you all reports required by applicable laws and
regulations.
Expense and Mortality Experience
Regardless of the Company's expense and mortality experience, the maximum
charges specified in this Contract will not be increased.
Annuity Contract
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner or Beneficiary the benefit of any
federal or state law, rule or regulation. This includes, but is not limited to,
requirements for annuity contracts under the Internal Revenue Code (for example,
the requirements for distribution on the death of a holder) or the laws of any
state.
<PAGE>
- --------------------------------------------------------------------------------
3. Purchase Payments
Payment
Purchase payments are your payments to the Company for the Contract. Payments
are to be made at the Administrative Office of the Company. A receipt for
payment signed by the Secretary of the Company will be given on request. The
Contract will not be in force until the first purchase payment is paid.
Following payment of the first purchase payment, the Contract will be in force
by its terms; and failure to make subsequent purchase payments will not cause
the Contract to lapse.
The premium for any Rider is not a purchase payment for the Contract and is
payable in addition to the purchase payment.
Amount and Frequency
Your purchase payments can be made in any amounts, except that:
. No payment can be less than $250 except with the consent of the Company;
and
. The Company reserves the right to limit purchase payments in any contract
year to three times the amount per year shown, if the Purchase Payment Amount
in Section 1 is shown as an amount per year; and
. The Company reserves the right to limit purchase payments to the Purchase
Payment Amount, if the Purchase Payment Amount in Section 1 is shown as a
Single Payment.
No payment can be made:
. Within four years of the Maturity Date; or
. After a living Owner is age 86; or
. After the Annuitant is age 86, if the Contract is not owned by a person; or
. If the Contract is being continued under Beneficiary Continuation; or
. If the Contract is in force under a Payment Option.
You can arrange for purchase payments to be scheduled on dates which are the
first day of annual, semi-annual, or quarterly payment periods, or at any
other frequency agreed to by the Company.
Net Purchase Payments
A net purchase payment is equal to:
. The purchase payment paid;
LESS
. Any applicable state premium tax.
(See the State Premium Tax Charge provision of Section 6.)
<PAGE>
- --------------------------------------------------------------------------------
4. The Variable Account
The New England Variable Annuity Separate Account (called "the Account") is a
separate investment account established by the Company in accordance with
Delaware law. The assets of the Account are owned by the Company. The assets of
the Account will be used to provide values and benefits under this Contract and
similar contracts, but the Account is not chargeable with liabilities arising
out of any other business the Company may conduct.
Sub-Accounts
The Account consists of sub-accounts, each of which is invested in shares of one
investment company or series of an investment company (each called a "fund") in
which the Account invests. Shares of a fund are purchased for a sub-account at
their net asset value.
The Contract's first investment in the Account will be made as of the latest of:
. The Contract Date;
. The date the first purchase payment is received by the Company at its
Administrative Office; and
. The effective date of the election of a sub-account.
Each future net purchase payment allocated to the Account will be applied as of
the date it is received by the Company at its Administrative Office. Each
transfer to a sub-account will be applied as of the date the transfer request is
received by the Company at its Administrative Office. (See Transfer Option
provision.)
Each distribution of income, dividends and capital gains from a fund to the
Account will be reinvested for the benefit of the owners of the contracts at net
asset value in shares of the fund which made the distribution.
The Contract Value at any time cannot be allocated among more than 10 sub-
accounts, except with the consent of the Company; and the Fixed Account will be
counted in the limit of 10.
The values of a contract depend on: the investment performance of the funds in
which the sub-accounts are invested; and the interest credited to the Fixed
Account. You bear the investment risk for amounts invested in the sub-accounts
for your Contract.
Election of Sub-Accounts
You elect the sub-accounts in which the Contract Value is invested. The funds
that are available as of the Date of Issue are listed in the then current
prospectus for the Account.
Change in Funds
The Company can add or remove funds as sub-account investments as permitted by
law. When a change is made, the Company will send you: a revised prospectus for
the Account which will describe all of the funds then available under the
Contract; and any notice required by law.
When a fund is removed, the Company has the right to substitute a different fund
in which the sub-account will then invest the value of the removed fund.
Transfer Option
You can transfer the Contract's existing share of a sub-account to or from a
sub-account or the Fixed Account, subject to the Company's published rules for
transfers. While the Contract is in force other than under a Payment Option, the
Company reserves the right to: limit the number and amount of transfers in each
contract year; and to charge a fee for transfers. While a Variable Payment
Option is in effect, transfers of existing shares of a sub-account will be
subject to a limit of 1 in each contract year, except with the consent of the
Company. Requests for transfers can be made in writing or by telephone. The
Company is not responsible for the authenticity of transfer instructions
received by telephone.
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Rights Reserved by the Company
The Company reserves the right to take certain actions subject to compliance
with law and, if required, the approval of the owners of the contracts. These
actions are: (a) to create new investment accounts; (b) to combine any two or
more separate investment accounts, including the Account; (c) to invest some or
all of the assets of the Account in any other fund chosen by New England
Variable Life Insurance Company; (d) to remove a fund in which the sub-account
is invested or to substitute a different fund; (e) to operate the Account as a
management investment company and to charge investment advisory fees under the
Investment Company Act of 1940 or in any other form permitted by law; and (f) to
deregister the Account under the Investment Company Act of 1940 if registration
is no longer required.
5. The Fixed Account
The Fixed Account
The Fixed Account is part of the general account of the Company.
If you elect the Fixed Account, the first date on which money is applied to the
Fixed Account for the Contract is the latest of:
. The Contract Date;
. The date the first purchase payment is received by the Company at its
Administrative Office; and
. The effective date of the election of the Fixed Account.
Each future net purchase payment allocated to the Fixed Account will be applied
as of the date it is received by the Company at its Administrative Office. Each
transfer to the Fixed Account will be applied as of the date the transfer
request is received by the Company at its Administrative Office. (See the
Restriction of Payments and Transfers to the Fixed Account provision.)
For each transfer from the Fixed Account, the Contract's share of the Fixed
Account will be reduced by the amounts (plus the interest credited to the
amounts) most recently applied to the Fixed Account.
For each surrender from the Fixed Account, the Contract's share of the Fixed
Account will be reduced by the amounts (plus the interest credited to the
amounts) in the same order in which they were applied to the Fixed Account.
Fixed Account Interest
The rate of interest for each amount applied to the Fixed Account will be the
rate set by the Company in advance for the date the amount is applied to the
Fixed Account. This rate will apply for 12 months. Thereafter, each year a new
rate will apply to the amount plus the interest credited to the amount. The new
rate will be the renewal rate set by the Company in advance for that date and
will apply for 12 months. No rate will be less than the rate equivalent to an
annual effective rate of 3%.
Interest will be credited to the Fixed Account on a daily basis.
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Restriction of Payments and Transfers to the Fixed Account
The Company reserves the right to restrict payments and transfers to the Fixed
Account for the Contract:
. If the effective annual rate of interest that would apply to the payment or
transfer is 3%; or
. If the Contract's value in the Fixed Account equals or exceeds the
Company's published maximum for Fixed Account investments.
For 180 days from the date of any transfer out of the Fixed Account: you cannot
make any transfers to the Fixed Account; and the Company reserves the right to
restrict payments to the Fixed Account for the Contract.
Transfers Out of the Fixed Account
Each contract year you can transfer a limited portion of the Contract's value in
the Fixed Account to the sub-accounts, subject to the Company's published limits
on the number and amount of transfers. (See Section 4.) Requests for transfers
can be made in writing or by telephone. The Company is not responsible for the
authenticity of transfer instructions received by telephone. Except with the
consent of the Company, the transfer will be limited to the greater of: 25% of
the Contract's value in the Fixed Account at the end of the first day of the
contract year; and the amount transferred out of the Fixed Account in the prior
contract year.
For 180 days from the date of any transfer out of the Fixed Account, you cannot
make any transfers to the Fixed Account.
Election of the Fixed Account
You can elect to have future net purchase payments applied to the Fixed Account.
You can change the election for future net purchase payments at any time by
notice to the Company in writing. (See the Restriction of Payments and Transfers
to the Fixed Account provision.)
Postponement of Surrenders, Partial Surrenders and Transfers From the Fixed
Account
The Company can postpone for six months from the date of request: the payment of
the portion of the Contract's Surrender Proceeds and partial surrender proceeds
which is in the Fixed Account; and transfers from the Fixed Account. The
effective date of the transfer is the date on which values are transferred from
the Fixed Account to the sub-account.
6. Contract Value
Contract Value
On or before the Maturity Date and while the Contract is in force other than
under a Payment Option, the Contract Value is equal to: the number of
Accumulation Units standing to the credit of the Contract multiplied by the
applicable Accumulation Unit Value(s); plus the Contract's value in the Fixed
Account.
The Contract Value is not increased by the cash value of any Rider, unless
stated in the Rider.
The Contract's Value in the Fixed Account is equal to (a) plus (b) minus (c);
where
. (a) is equal to the portion of the net purchase payments applied to the
Fixed Account;
PLUS
the total of transfers into the Fixed Account for the Contract;
. (b) is equal to any interest credited for the Contract to the Fixed
Account; and
. (c) is equal to the total of partial surrenders made from the Fixed
Account for the Contract;
PLUS
the total of transfers out of the Fixed Account for the Contract;
PLUS
the total of any charges deducted for transfers and partial surrenders from
the Fixed Account for the Contract.
Purchase Payments Allocated to the Account
Each net purchase payment allocated to the Account will be credited in the
form of Accumulation Units to the sub-accounts you elect. The number of
Accumulation Units credited to a sub-account will be equal to the portion of the
net purchase payment credited to that sub-account divided by the Accumulation
Unit Value for that sub-account for the applicable Valuation Period.
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Accumulation Unit Value
An Accumulation Unit Value is determined for each sub-account for each Valuation
Period. The Accumulation Unit Value of each sub-account for its first Valuation
Period was set at $1.00 taking into account the performance history of the
underlying fund. Each Accumulation Unit Value for each later Valuation Period is
equal to:
. The Net Investment Factor for that Valuation Period;
TIMES
. The Accumulation Unit Value for the immediately preceding Valuation Period.
The Net Investment Factor depends on the investment performance of the sub-
accounts elected and can be greater or less than one. Therefore, the
Accumulation Unit Value can increase or decrease.
Net Investment Factor
The Net Investment Factor for each sub-account for each Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result; where:
. (a) is equal to the net asset value per share of the fund held in the sub-
account as of the end of that Valuation Period;
PLUS
the per share amount of all dividend and capital gains distributions made by
the fund held in the sub-account if the ex-dividend date occurs during that
Valuation Period;
PLUS or MINUS
. a per share charge or credit for any reserve for taxes which the Company
determines to apply to the sub-account and to this Contract;
. (b) is equal to the net asset value per share of the fund held in the sub-
account for the immediately preceding Valuation Period;
PLUS or MINUS
. a per share charge or credit for any reserve for taxes which the Company
determines to apply to the sub-account and to this Contract; and
. (c) is equal to the Maximum Daily Charge as shown in Section 1 times the
number of days in that Valuation Period.
Valuation Periods and Valuation Dates
Values for a date depend on the time of day for which they are to be determined;
they will be determined with respect to each sub-account as of the next
occurring end of a Valuation Period. A Valuation Period for each sub-account is
a period:
. Which starts on a Valuation Date at the time of day specified by the
applicable fund for determining the net asset value of its shares; and
. Which ends on the next succeeding Valuation Date at that time of day.
Each day the New York Stock Exchange is open for trading is a Valuation Date.
Annual Fees
The Company will charge an annual Administration Fee equal to the lesser of: 2%
of the Contract Value; $30; and the Contract's value in the sub-accounts. The
fee for a contract year will be charged on the first day of the next contract
year unless:
. The Contract Value is at least $50,000 at the end of the contract year; or
. The total purchase payments made less surrenders taken in the contract year
were at least $1,000 and the Contract Value at the end of the prior contract
year was at least $25,000; or
. The Contract is in force under a Payment Option; or
. The Contract is being continued under Beneficiary Continuation.
If the Contract is surrendered or matures on a date which is not a contract
anniversary, the charge will be the pro rata portion of the fee for the period
beyond the most recent contract anniversary.
The fee will be charged against the sub-accounts proportionately. The portion of
the fee charged to each sub-account will reduce the number of Accumulation Units
standing to the credit of the Contract in that sub-account.
The fee will not be charged against the Fixed Account.
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Surrender of the Contract
While the Contract is in force other than under a Payment Option, you can
surrender the Contract at any time prior to the Maturity Date by notice to the
Company in writing. Upon surrender, the Contract will terminate. The Surrender
Proceeds will be equal to: the Contract Value as of the Surrender Date; less any
Administration Fee; less any Contingent Deferred Sales Charge; and less any
State Premium Tax Charge. Unless a later date is specified in the request (see
Payment of Benefits, Section 8), the Surrender Date is the date on which the
Company receives at its Administrative Office:
. Written request in proper form for surrender and payment in one sum; or
. Written request in proper form for surrender and payment under one of the
Payment Options.
You can also make a partial surrender, but the consent of the Company will be
required if: the remaining Contract Value would be less than $2,500; or if the
amount of the partial surrender is less than the Company's published minimum. A
partial surrender will reduce the Contract's share of the sub-accounts and the
Fixed Account proportionately, unless you request otherwise. A partial surrender
will reduce the Minimum Guaranteed Death Benefit (see Section 8) proportionately
to the reduction in the Contract Value.
Contingent Deferred Sales Charges
A Contingent Deferred Sales Charge will apply to certain partial or full
surrender transactions.
When one of these transactions occurs, the Company will determine if a Charge
applies. If a Charge applies, the Charge will be calculated as if purchase
payments were surrendered in the same order in which they were made. The Charge
is equal to the sum of: each purchase payment to be considered surrendered in
the calculation; times the appropriate percentage from the table in Section 1.
The total purchase payments subject to a Charge in the future will not be
decreased as a result of the surrender of the Free Surrender Amount (see below).
No Charge will be deducted in the event of:
. Maturity of the Contract; or
. Payment of the Death Proceeds; or
. Surrender 30 days or more from the Contract Date, if the proceeds are
applied: for a period of at least 15 years to the Income for Specified Number
of Years Option or to the Income Payment to Age 100 Option; or to the Life
Income Option; or to the Life Income for Two Lives Option.
In each contract year, the Free Surrender Amount will be exempt from any
Contingent Deferred Sales Charge. The Free Surrender Amount is equal to the
greater of: 10% of the Contract Value on the first day of the contract year; and
the excess of the Contract Value over purchase payments subject to the
Contingent Deferred Sales Charge on the date of surrender.
State Premium Tax Charge
A State Premium Tax Charge, as required by law, will be deducted from: proceeds
applied to a Payment Option; Death Proceeds; and partial and full surrenders.
The charge will equal the proceeds times the appropriate state premium tax
rates. The Company reserves the right, as an alternative, to deduct state
premium taxes from purchase payments, rather than from proceeds (See the Net
Purchase Payment provision of Section 3.)
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7. Owner, Beneficiary and Contingent Annuitant
Owner
The Owner of the Contract is named in the Application (see copy attached); but
with the consent of the Company, the Owner can be changed. The new Owner will
succeed to all rights of the Owner, including the right to make a further change
of Owner. Joint Owners can be named. In this Contract "you" means the Owner,
whether an Owner is a natural person (called a "person"), a partnership, a
corporation, a fiduciary or any other legal entity. At the death of an Owner,
Death Proceeds will be paid unless the Contract is continued under the
Continuation provision.
If an Owner is not a person, the Annuitant will be treated as the Owner for
the purposes of the Death Proceeds provision. (See Section 8.)
Beneficiary
The Death Proceeds will be paid to the Beneficiary if an Owner dies before the
Maturity Date, unless the Contract is in force under a Payment Option or is
continued under the Continuation provision. The Beneficiary is named in the
Application (see copy attached); but the Beneficiary can be changed before the
Death Proceeds become payable. The Beneficiary has no rights in the Contract
until the death of an Owner. A person must be living when the Death Proceeds
become payable to qualify as Beneficiary. If none survives and the Contract had
joint Owners, the proceeds will be paid to the surviving Owner; otherwise, the
proceeds will be paid to the estate of the Owner. The Beneficiary can also be a
corporation, a partnership, a fiduciary, or any other legal entity.
Change of Owner or Beneficiary
A change of Owner or Beneficiary must be in written form satisfactory to the
Company, and must be dated and signed by the Owner making the change. The change
will be subject to all payments made and actions taken by the Company under the
Contract before the signed change form is received by the Company at its
Administrative Office.
Assignments
An absolute assignment of the Contract by the Owner is a change of Owner and
Beneficiary to the assignee; but upon an absolute assignment after the
Annuitant's death, the Contingent Annuitant must be an Owner of the Contract. A
collateral assignment of the Contract by the Owner is not a change of Owner or
Beneficiary; but their rights will be subject to the terms of the assignment.
Assignments will be subject to all payments made and actions taken by the
Company before a signed copy of the assignment form is received by the Company
at its Administrative Office. The Company will not be responsible for
determining whether or not an assignment is valid.
Designation of Owner and Beneficiary
A numbered sequence can be used to name successive Beneficiaries. Co-
Beneficiaries will receive equal shares unless otherwise stated. Joint Owners
have equal rights under the Contract.
In naming Owners or Beneficiaries, unless otherwise stated:
. "Child" includes an adopted or posthumous child;
. "Provision for issue" means that if a Beneficiary is not living when Death
Proceeds are paid, the share of that Beneficiary will be taken by his or her
living issue by right of representation; and
. A family relation such as "wife", "husband", or "child" means the relation
to the Annuitant.
At the time for payment of benefits the Company can rely on an affidavit of any
Owner or other responsible person to determine family relations or members of a
class.
Contingent Annuitant
A Contingent Annuitant must be named in the Application: if the Annuitant is not
an Owner of the Contract; and if an Owner is a person. The Contingent Annuitant
must be an Owner of the Contract. The Contingent Annuitant cannot be changed
after the death of the Annuitant.
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Death of Annuitant
If the Owner is a person and if the Annuitant dies before the Contract is in
force under a Payment Option, the Contract will continue for the benefit of the
Contingent Annuitant. The Maturity Date will then be the contract anniversary on
which the older Owner will be the maximum maturity age allowed by the Company.
If the Owner is not a person, the Annuitant will be treated as Owner for the
purposes of the Death Proceeds provision. (See Section 8.)
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8. Payment of Benefits
Maturity Date
The Maturity Date is shown in Section 1.
Maturity Proceeds
The Maturity Proceeds will be equal to: the Contract Value on the Maturity Date;
less any Administration Fee; and less any State Premium Tax Charge (see Section
6).
If the annuitant who is to receive monthly income benefits under the Contract is
living on the Maturity Date, the Company will apply the Maturity Proceeds to the
Payment Option shown in Section 1, with that individual as Payee.
Before the Maturity Date you can elect in writing that on the Maturity Date the
Maturity Proceeds will instead be:
. Paid in one sum; or
. Applied to any other Payment Option.
Death Proceeds
If an Owner is not a person, the Annuitant will be treated as the Owner for the
purposes of the Death Proceeds provision.
If an Owner dies before the Maturity Date, the Company will pay a death benefit
to the Beneficiary, unless the Contract is in force under a Payment Option or is
continued under the Continuation provision. The Death Proceeds will equal the
greater of:
. The Contract Value as of the Death Valuation Date; and
. The Minimum Guaranteed Death Benefit.
On the date the first purchase payment for the Contract is received, the Minimum
Guaranteed Death Benefit is equal to the purchase payment. Thereafter, the
Minimum Guaranteed Death Benefit will be: increased by any purchase payment
made; and decreased by the percentage of any Contract Value surrendered.
Also, on the seventh anniversary and every seventh year anniversary thereafter,
except as noted below, the Minimum Guaranteed Death Benefit will be
recalculated. On each of these days the Minimum Guaranteed Death Benefit is
equal to the greater of: the Minimum Guaranteed Death Benefit before the
recalculation; and the Contract Value on the date of recalculation. If the Owner
is not a person, the Minimum Guaranteed Death Benefit will be recalculated until
the Annuitant is age 76. If the Contract is jointly owned, and both Owners are
living, the Minimum Guaranteed Death Benefit will be recalculated until an Owner
is age 71. Otherwise, it will be recalculated until the Owner is age 76.
The Death Valuation Date is the later of:
. The date on which the Company receives at its Administrative Office proof
of death of that Owner; and
. The date on which the Company receives at its Administrative Office election
of continuation of the contract or of payment in one sum or under a Payment
Option; provided that if no election has been received by the end of the 90th
day after the date proof of death was received, the Company will deem the
following to have been elected on the 90th day: Spousal Continuation, if the
surviving spouse qualifies for this right; or otherwise, Beneficiary
Continuation, if the Beneficiary qualifies for this right; or otherwise,
payment in one sum.
The Death Proceeds will be paid in one sum unless: all or part of the proceeds
is applied to a Payment Option; or the Contract is continued under the
Continuation provision. The obligations of the Company are subject to all
payments made and actions taken by the Company before receipt by the Company at
its Administrative Office of proof of the death.
Death Proceeds cannot be applied to the Variable Life Income for Two Lives
Option or to the Variable Income Payment to Age 100 Option.
Upon payment of Death Proceeds, the Contract will terminate.
Death of Owner on or After the Maturity Date
If the Owner dies on or after the Maturity Date and before the entire interest
has been distributed to the annuitant, then the entire remaining interest must
be distributed at least as quickly as under the method of distribution being
used on the date of death of the Owner.
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Continuation
The Company offers two types of Continuation rights: Spousal Continuation; and
Beneficiary Continuation.
The Company must receive written notice of the election of one of these
continuation rights by the end of the 90th day after it received proof of death.
If the surviving spouse qualifies for Spousal Continuation and has not elected a
method of payment for the Death Proceeds by the end of the 90 day period,
election of Spousal Continuation will be deemed to have been elected on the 90th
day. If a Beneficiary who does not qualify for Spousal Continuation but does
qualify for Beneficiary Continuation, has not elected a method of payment for
the Death Proceeds by the end of the 90 day period: election of Beneficiary
Continuation will be deemed to have been elected on the 90th day; and the
Contract will be continued for that Beneficiary; and the continued Contract will
have a Maturity Date equal to the fifth anniversary of the Owner's death.
Spousal Continuation
The Contract can be continued under Spousal Continuation if the surviving spouse
is less than the maximum maturity age allowed by the Company and if:
(a) There are two joint owners and they are married to each other; and
One of the joint owners dies before the Contract is in force under a
Payment Option; and
Both joint owners were the only named primary Beneficiaries on the date of
death; or
(b) The Owner is a person; and
The Owner dies; and
The Owner's spouse is the only named primary Beneficiary on the Owner's
date of death.
If the Contract is continued under Spousal Continuation: the Death Proceeds will
not be paid; the surviving spouse will be the Owner; the surviving spouse will
be the Annuitant, if the deceased Owner had been the Annuitant; and the
surviving spouse will be the Contingent Annuitant, if the deceased Owner had
been the Contingent Annuitant. The Maturity Date will then be the contract
anniversary on which the surviving spouse (or Annuitant if older) will be the
maximum maturity age allowed by the Company. No Contingent Deferred Sales Charge
will apply to the Contract if: the Maturity Date is changed as a result of the
election of Spousal Continuation; and a purchase payment was made less than four
years from the new Maturity Date.
Beneficiary Continuation
When Death Proceeds become payable, the Beneficiary can elect: a one sum payment
of the Death Proceeds; or the continuance of the Contract with a Maturity Date
equal to the fifth anniversary of the Owner's death (see below); or a Payment
Option. Payments under the Payment Option: must be payable for the life of the
Beneficiary or for a term which is not longer than the life expectancy of the
Beneficiary; and must start within one year after the death of the Owner.
The Contract can be continued under Beneficiary Continuation by a Beneficiary
whose share of the Death Proceeds is at least equal to the Company's published
minimum for this right.
If the Contract is continued under Beneficiary Continuation: the Death Proceeds
will not be paid to any Beneficiary continuing his/her share of the Proceeds;
the Death Proceeds continued in the Contact will be allocated in the same
proportion as the Contract Value was allocated to the sub-accounts and Fixed
Account on the Death Valuation Date: each Beneficiary will have the right to
make transfers and partial and full surrenders of his/her share of the Contract;
the Maturity Date will be the fifth anniversary of the Owner's death and cannot
be changed; no purchase payments can be made; no Contingent Deferred Sales
Charge will apply to the Contract; no Annual Fee will be deducted; and the Death
Benefit during the period of continuation for each Beneficiary will be equal to
the Beneficiary's share of the Contract Value on his/her Death Valuation Date.
The Death Valuation Date is the date on which the Company receives at its
Administrative Office proof of death of the Beneficiary. The Death Benefit
payable at the Beneficiary's death will be paid in a one sum payment.
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On the Maturity Date each living Beneficiary will receive his/her share of the
Contract Value in a one sum payment and the Contract will terminate.
During the continuation period the Beneficiary can elect: to receive his/her
share of the Contract in a one sum payment; or to apply his/her share of the
Contract to a Payment Option. Payments under the Payment Option: must be payable
for the life of the Beneficiary or for a term which is not longer than the life
expectancy of the Beneficiary; and must start within one year after the death of
the Owner.
Suspension of Payments
The Company can suspend payment of any amounts due under the Contract when
permitted under applicable Federal laws, rules and regulations.
Election of Payment Options; Option Date
The election of a Payment Option and the naming of the Payee must be in written
form satisfactory to the Company. You can make or change or revoke the election
before the Death Proceeds become payable or the Maturity Date, whichever occurs
first. The Option Date is the effective date of the Payment Option, as stated in
the form on which you made your choice.
Payee
A Payee is a person, a corporation, a partnership, a fiduciary or any other
legal entity entitled to receive payment in one sum or under a Payment Option.
Election By Payees
Any proceeds payable upon surrender or maturity of the Contract can be applied
to any Payment Option at the election of the Payee. Any Death Proceeds can be
applied to a Variable Income for Specified Number of Years or Variable Life
Income Payment Option at the election of the Payee. Further, subject to the
consent of the Company, any Payee who is entitled to receive proceeds in one sum
at the death of a prior Payee, or upon withdrawal of the proceeds, can elect to
apply the proceeds to a Payment Option.
Rights of Payees
A Payee under the Variable Income for a Specified Number of Years and the
Variable Income Payment to Age 100 Payment Options has the right to change to
the Variable Life Income Payment Option.
A Payee under the Variable Income for a Specified Number of Years and the
Variable Income Payment to Age 100 Payment Options has the right to withdraw the
commuted value of payments certain. See the third paragraph of the Contingent
Deferred Sales Charge provision in Section 6. If the Charge was waived when the
Surrender Proceeds were applied to the Payment Option, the commuted value will
be reduced by a portion of the Charge that was waived. The amount deducted from
the commuted value will equal: (a) the Charge that was waived; TIMES (b) the
number of whole months remaining from the date of the commutation until the date
when the Charge would be zero; DIVIDED BY the number of whole months that were
remaining when the Surrender Proceeds were applied to the Payment Option until
the date when the Charge would be zero.
The Payee under the Variable Life Income with Years Certain or the Variable Life
Income for Two Lives with Years Certain Payment Options can withdraw the
commuted value of the payments certain. See the third paragraph of the
Contingent Deferred Sales Charge provision. If the Charge was waived when the
Surrender Proceeds were applied to the Payment Option, the commuted value will
be reduced by a portion of the Charge that was waived. The amount deducted from
the commuted value will equal: (a) the Charge that was waived; TIMES (b) the
number of whole months remaining from the date of the commutation until the date
when the Charge would be zero; DIVIDED BY the number of whole months that were
remaining when the Surrender Proceeds were applied to the Payment Option until
the date when the Charge would be zero.
No Payee can assign or withdraw the commuted value of payments under any Fixed
Payment Option.
Payments in One Sum
Amounts payable in one sum will be payable:
. As of the Surrender Date in case of surrender;
. As of the Death Valuation Date in case of the payment of Death Proceeds;
. As of the Maturity Date in case of maturity;
. As of the date the request is received by the Company at its Administrative
Office in case of request for withdrawal of amounts under Payment Options; or
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. As of the date proof of death of the Payee is received by the Company at its
Administrative Office in case of an amount to be paid in one sum at the death
of the Payee.
An amount payable in one sum from the Account will be paid within 7 days of
the date it is payable, subject to the Suspension of Payments provision.
Limitations
If instalments under an Option would be less than the Company's published
minimum, proceeds can be applied to a Payment Option only with the consent of
the Company.
Variable Life Income Options
Variable Life Income Options are based on the age of the Payee on the Payee's
birthday nearest the Option Date and on the Assumed Interest Rate selected. The
Company will require proof of age. The Life Income Payments will be based on
rates not less than the rates shown in the Variable Life Income Tables (Section
10).
Amount of Variable Monthly Payments
The amount of the first monthly payment under a Variable Payment Option is
equal to:
. The number of thousands of dollars of proceeds applied to the Option;
TIMES
. The monthly payment rate per $1,000 for the Option.
The amount of each later monthly payment is equal to the number of Annuity Units
times the applicable Annuity Unit Values for the most recent Valuation Period
which ended at least 14 days prior to the date the payment is due.
Annuity Units; Annuity Unit Values
The number of Annuity Units credited under a Variable Payment Option is equal to
the amount of the first monthly payment divided by the applicable Annuity Unit
Value(s) as of the Option Date. The number of Annuity Units remains constant;
except that: (a) the number is adjusted to reflect different Annuity Unit Values
upon transfer of an interest of the Contract in a sub-account to another sub-
account; and (b) the number decreases by one-third at the death of the first
Payee under the Joint and 2/3 to Survivor Variable Life Income Option.
The Annuity Unit Values depend on the Assumed Interest Rate and on the Net
Investment Factor. An Annuity Unit Value is determined for each sub-account for
each Valuation Period. The Annuity Unit Value of each sub-account for its first
Valuation Period was set at $1.00 taking into account the performance history of
the underlying investment company. Each Annuity Unit Value for each later
Valuation Period is equal to:
. The Annuity Unit Value for the immediately preceding Valuation Period;
TIMES
. The Net Investment Factor for that Valuation Period;
TIMES
. The daily Assumed Interest Factor for each day in that Valuation Period.
The Net Investment Factor depends on the investment performance of the funds
held in the sub-accounts elected. The Net Investment Factor multiplied by the
Assumed Interest Factor can be greater or less than one. Therefore, the Annuity
Unit Values can increase or decrease.
Choice of an Assumed Interest Rate
The amount of each monthly payment under a Variable Payment Option depends on an
Assumed Interest Rate. In the election of any of these Options, the effective
annual Assumed Interest Rate chosen can be:
. 0%; or
. 3 1/2%; or
. 5%, if allowed by applicable law or regulation.
If no choice is made, an effective annual interest rate of 3 1/2% will be used
as the Assumed Interest Rate. The rates shown in Sections 9 and 10 for the
Options are based on the 3 1/2% rate. The daily Assumed Interest Factor derived
from an effective annual Assumed Interest Rate of 3 1/2% is 0.9999058.
<PAGE>
- --------------------------------------------------------------------------------
Correction of Benefits if Age Incorrect
If the age of the Payee under a Life Income Option has not been correctly
stated, the benefits will be corrected to the amounts which the proceeds would
have provided for the correct age. Any amount by which the payments by the
Company have been too large or too small, with interest at an effective annual
interest rate of 6% per year compounded yearly, will be:
. Charged against the next payment or payments if the payments have been too
large; or
. Added to the next payment if the payments have been too small.
Death of Payee
Amounts to be paid after the death of a Payee under a Payment Option will be
paid as due to the successor Payee. If there is no successor Payee, amounts to
be paid in one sum, or the commuted value of any unpaid payments certain, will
be paid in one sum to the estate of the last Payee to die.
Commutation Rate for Variable Payment Options
The interest rate used to compute the commuted value of any unpaid payments
certain will be the Assumed Interest Rate. Each payment under a Variable Payment
Option will be assumed to be equal to the number of Annuity Units times the
applicable Annuity Unit Value.
See the third paragraph of the Contingent Deferred Sales Charge provision in
Section 6. If the Charge was waived when the Surrender Proceeds were applied to
the Payment Option, the commuted value will be reduced by a portion of the
Charge that was waived. The amount deducted from the commuted value will equal:
(a) the Charge that was waived; TIMES (b) the number of whole months remaining
from the date of the commutation until the date when the Charge would be zero;
DIVIDED BY the number of whole months that were remaining when the Surrender
Proceeds were applied to the Payment Option until the date when the Charge would
be zero.
<PAGE>
- --------------------------------------------------------------------------------
9. Payment Options
Fixed Payment Options
All or any part of the contract proceeds can be applied to Fixed Payment
Options, subject to Section 8, to provide payments which do not depend on the
investment performance of the Account. The proceeds to be applied to Fixed
Payment Options will be transferred to the general account of the Company. The
Fixed Payment Option rates will not be less than rates based on an effective
annual interest rate of 3% per year; and on mortality: using a 50/50 male/female
weighting; based on the Individual Annuitant Mortality Table for 1983; and with
projection on Scale G to the year 2000 and then on Scale B Modified to the year
2035.
Variable Payment Options
All or part of any contract proceeds can be applied to any one of the following
Variable Payment Options, subject to Section 8, Payment of Benefits.
Variable Income for Specified Number of Years
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue for the number of years chosen. The number of
years chosen cannot be more than 30.
Variable Life Income
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue:
. During the life of the Payee, with no payment after the death of the Payee,
called "Variable Life Income, No Refund"; or
. During the life of the Payee, but for at least 10 years, called "Variable
Life Income, 10 Years Certain"; or
. During the life of the Payee, but for at least 20 years, called "Variable
Life Income, 20 Years Certain".
Variable Life Income for Two Lives
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue:
. While either of two Payees is living, called "Joint and Survivor Variable
Life Income"; or
. While either of two Payees is living, but for at least 10 years, called
"Joint and Survivor Variable Life Income, 10 Years Certain"; or
. While two Payees are living, and after the death of one Payee while the
other Payee is living, two-thirds of the monthly amount that would be payable
if both Payees were living, called "Joint and 2/3 to Survivor Variable Life
Income".
Variable Income Payment to Age 100
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue for a whole number of years. The number of years
chosen must equal 100 minus the Payee's age on the Option Date.
<PAGE>
- --------------------------------------------------------------------------------
10. Variable Payment Option Tables
Variable Life Income Tables
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Life Income Options are shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Life Income
- --------------------------------------------------------------------------------
10 20
Age of No Years Years
Payee Refund Certain Certain
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
55 $4.36 $4.34 $4.25
56 4.43 4.40 4.31
57 4.51 4.48 4.37
58 4.59 4.55 4.43
59 4.67 4.63 4.49
60 4.77 4.72 4.55
61 4.86 4.81 4.62
62 4.97 4.91 4.68
63 5.08 5.01 4.75
64 5.20 5.12 4.82
65 5.32 5.23 4.89
66 5.46 5.35 4.96
67 5.60 5.47 5.02
68 5.76 5.60 5.09
69 5.93 5.74 5.15
70 6.10 5.89 5.22
71 6.30 6.04 5.27
72 6.50 6.19 5.33
73 6.72 6.36 5.38
74 6.96 6.52 5.43
75 7.21 6.69 5.48
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Life Income for Two Lives
- --------------------------------------------------------------------------------
Age of One Age of Other Payee
Payee 55 60 65 70 75
- --------------------------------------------------------------------------------
Joint and Survivor
<S> <C> <C> <C> <C> <C>
55 $3.92 $4.04 $4.13 $4.21 $4.27
60 4.04 4.20 4.35 4.48 4.59
65 4.13 4.35 4.58 4.79 4.97
70 4.21 4.48 4.79 5.10 5.39
75 4.27 4.59 4.97 5.39 5.83
80 4.30 4.66 5.10 5.63 6.24
- --------------------------------------------------------------------------------
Joint and Survivor, 10 Years Certain
55 $3.92 $4.04 $4.13 $4.21 $4.26
60 4.04 4.20 4.35 4.48 4.58
65 4.13 4.35 4.58 4.78 4.95
70 4.21 4.48 4.78 5.09 5.36
75 4.26 4.58 4.95 5.36 5.77
80 4.30 4.64 5.08 5.58 6.13
- --------------------------------------------------------------------------------
Joint and 2/3 to Survivor
55 $4.20 $4.37 $4.55 $4.76 $4.98
60 4.37 4.56 4.78 5.03 5.29
65 4.55 4.78 5.05 5.35 5.68
70 4.76 5.03 5.35 5.73 6.15
75 4.98 5.29 5.68 6.15 6.68
80 5.21 5.57 6.02 6.59 7.26
- ----------------------------------------------------------------------------
</TABLE>
Payments for other ages will be quoted by the Company on request.
The Variable Life Income rates shown above are based on an effective annual
Assumed Interest Rate of 3 1/2% per year; and on mortality: using a 50/50
male/female weighting; based on the Individual Annuitant Mortality Table for
1983; and with projection on Scale G to the year 2000 and then on Scale B
Modified to the year 2035.
Variable Income Tables
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Income Options are shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Income for Specified Number of Years
- --------------------------------------------------------------------------------
Years Payment Years Payment Years Payment
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $84.65 11 $9.09 21 $5.56
2 43.05 12 8.46 22 5.39
3 29.19 13 7.94 23 5.24
4 22.27 14 7.49 24 5.09
5 18.12 15 7.10 25 4.96
6 15.35 16 6.76 26 4.84
7 13.38 17 6.47 27 4.73
8 11.90 18 6.20 28 4.63
9 10.75 19 5.97 29 4.53
10 9.83 20 5.75 30 4.45
- --------------------------------------------------------------------------------
</TABLE>
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Income Options are based on an effective annual Assumed Interest Rate of 3 1/2%.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Income Payment to Age 100
- --------------------------------------------------------------------------------
Years Payment Years Payment Years Payment
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $84.65 15 $7.10 28 $4.63
2 43.05 16 6.76 29 4.53
3 29.19 17 6.47 30 4.45
4 22.27 18 6.20 31 4.37
5 18.12 19 5.97 32 4.29
6 15.35 20 5.75 33 4.22
7 13.38 21 5.56 34 4.15
8 11.90 22 5.39 35 4.09
9 10.75 23 5.24 36 4.03
10 9.83 24 5.09 37 3.98
11 9.09 25 4.96 38 3.92
12 8.46 26 4.84 39 3.88
13 7.94 27 4.73 40 3.83
14 7.49
- --------------------------------------------------------------------------------
</TABLE>
Payments for other periods will be quoted by the Company on request.
<PAGE>
- --------------------------------------------------------------------------------
Amendments and Endorsements (To be made only by the Company)
<PAGE>
- --------------------------------------------------------------------------------
New England Variable Life
Insurance Company
Administrative Office
501 Boylston Street
Boston, Massachusetts 02117
Flexible Purchase Payment Deferred Variable Annuity Contract
. Monthly income is payable starting on the Maturity Date.
. The Death Proceeds are payable if an Owner dies before the Maturity Date,
unless the Contract is in force under a Payment Option or is continued under
the Continuation provision. (See Death Proceeds provision in Section 8.)
. Purchase payments can be paid to the Company before the Maturity Date,
before Death Proceeds are paid, and before full surrender, subject to the
Amount and Frequency provision in Section 3.
. Purchase payments can be increased or decreased from time to time, subject
to the Amount and Frequency provision in Section 3.
- --------------------------------------------------------------------------------
<PAGE>
New England Variable
Life Insurance Company
- --------------------------------------------------------------------------------
Flexible Purchase Payment Deferred Variable Annuity Contract
- --------------------------------------------------------------------------------
Annuitant
JOHN ALDEN
Contract Number
Specimen
Payment Option
Variable Life Income, 10 Years Certain
- --------------------------------------------------------------------------------
New England Variable Life Insurance Company Agrees to pay monthly income to the
annuitant under the Payment Option shown in Section 1 starting on the Maturity
Date unless Death Proceeds or full Surrender Proceeds have been paid; and to
provide the other rights and benefits of the Contract.
These agreements are subject to all of the provisions of the Contract.
Signed on the Date of Issue
for the Company at its
Administrative Office,
501 Boylston Street
Boston, MA 02117
/s/ Robert A. Shafto
President
/s/ H. James Wilson
Secretary
Flexible Purchase Payment Deferred Variable Annuity Contract
. Monthly income is payable starting on the Maturity Date.
. The Death Proceeds are payable if an Owner dies before the Maturity Date,
unless the Contract is in force under a Payment Option or is continued under
the Continuation provision. (See Death Proceeds provision in Section 8.)
. Purchase payments can be paid to the Company before the Maturity Date,
before Death Proceeds are paid, and before full surrender, subject to the
Amount and Frequency provision in Section 3.
. Purchase payments can be increased or decreased from time to time, subject
to the Amount and Frequency provision in Section 3.
Please Read Your Contract Carefully
This is a legal contract between you and the Company.
Monthly payments and other values provided by this Contract, when based on the
investment performance of a separate investment account, are variable; they are
not guaranteed as to dollar amount.
Ten Day Right to Return the Contract
When the Contract is issued, you have 10 days after you receive it from the
Company to review it. Within those 10 days, you can return the Contract to the
Company or its Agent for any reason. If you return the Contract: any Contract
Value on the date you return the Contract will be paid to you; and the Contract
will be cancelled from the start.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract Provisions
Section
1 Contract Schedule
2 Contract
3 Purchase Payments
4 The Variable Account
5 The Fixed Account
6 Contract Value
7 Owner, Beneficiary and Contingent Annuitant
8 Payment of Benefits
9 Payment Options
10 Variable Payment Option Tables
. Riders, if any
. Copy of the Application
. Amendments and Endorsements
Alphabetical Guide
Section
6 Accumulation Units
6 Accumulation Unit Value
8 Amount of Variable Monthly Payments
6 Annual Administration Fee
7 Annuitant, Contingent
8 Annuity Unit
8 Annuity Unit Value
7 Assignments
8 Assumed Interest Factor
8 Assumed Interest Rate
7 Beneficiary
8 Benefits, Payment of
4 Change of Eligible Funds
2 Claims of Creditors
7 Contingent Annuitant
2 Contract
1,2 Contract Date
6 Contract Value
8 Death Proceeds
5 Fixed Account
9 Fixed Payment Options
1,8 Maturity Date
8 Maturity Proceeds
6 Net Investment Factor
3 Net Purchase Payments
4 New England Zenith Fund
7 Owner
2 Periodic Reports
3 Purchase Payments
1 Schedule, Contract
8 Continuation
4 Sub-accounts
6 Surrender of the Contract
7 Suspension of Payments
4 Transfer Option
6 Valuation Dates
6 Valuation Periods
10 Variable Payment Option Tables
9 Variable Payment Options
<PAGE>
- --------------------------------------------------------------------------------
1. Contract Schedule Owner and Beneficiary
As named in the Application or
as later changed. See the Owner
and Beneficiary Section of the
Contract.
- --------------------------------------------------------------------------------
Contract Number Annuitant's Sex Annuitant's Date of Birth
Specimen Male December 1, 1960
Contract Date Date of Issue Maturity Date
December 1, 1995 December 1, 1995 December 1, 2055
Payment Option at Maturity
Variable Life Income, 10 Years
Certain
- --------------------------------------------------------------------------------
Total Purchase Payments Per Year
Based on the Purchase Payment Mode and Amount
Shown in the Application: $1,000,000.00
Maximum Daily Charge .0000273973
The daily deduction of .0000273973 is equal to .01 on an annual basis.
The deduction of .01 on an annual basis consists of: .007 for mortality
risk assumptions; and .003 for expense risk assumptions and an
administrative asset charge.
Contingent Annuitant. As named in the Application or as later changed. See the
Contingent Annuitant provision in Section 7.
<PAGE>
- --------------------------------------------------------------------------------
2. Contract
The Contract
This Annuity Contract is a legal contract between the Owner of the Contract
(called "you") and New England Variable Life Insurance Company (called the
"Company"). The Contract, which includes the attached Application, is the entire
contract between you and the Company. All Riders are listed in Section 1. A
change in or waiver of the provisions of the Contract must be signed by the
President or the Secretary of the Company to be valid.
Payments Under the Contract
All Contract amounts are in dollars of the United States of America. Payments by
the Company under the Contract will be made from the Administrative Office of
the Company.
Dates
Contract years, months and anniversaries are all measured from the Contract
Date. The Contract Date is shown in Section 1.
Claims of Creditors
The Contract and payments under it will be exempt from the claims of creditors
to the extent allowed by law.
Not Contestable
This Contract is not contestable.
Periodic Reports
The Company will send you an annual report which will show: the number of
Accumulation Units, if any, standing to the credit of the Contract; the
applicable Accumulation Unit Values; the Contract Value; and any other
information required by law or regulation.
The Company will send you all reports required by applicable laws and
regulations.
Expense and Mortality Experience
Regardless of the Company's expense and mortality experience, the maximum
charges specified in this Contract will not be increased.
Annuity Contract
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner or Beneficiary the benefit of any
federal or state law, rule or regulation. This includes, but is not limited to,
requirements for annuity contracts under the Internal Revenue Code (for example,
the requirements for distribution on the death of a holder) or the laws of any
state.
<PAGE>
- --------------------------------------------------------------------------------
3. Purchase Payments
Payment
Purchase payments are your payments to the Company for the Contract. Payments
are to be made at the Administrative Office of the Company. A receipt for
payment signed by the Secretary of the Company will be given on request. The
Contract will not be in force until the first purchase payment is paid.
Following payment of the first purchase payment, the Contract will be in force
by its terms; and failure to make subsequent purchase payments will not cause
the Contract to lapse.
The premium for any Rider is not a purchase payment for the Contract and is
payable in addition to the purchase payment.
Amount and Frequency
Your purchase payments can be made in any amounts, except that:
. No payment can be less than $250 except with the consent of the Company;
and
. The Company reserves the right to limit purchase payments in any contract
year to three times the amount per year shown, if the Purchase Payment
Amount in Section 1 is shown as an amount per year; and
. The Company reserves the right to limit purchase payments to the Purchase
Payment Amount, if the Purchase Payment Amount in Section 1 is shown as a
Single Payment.
No payment can be made:
. After a living Owner is age 86; or
. After the Annuitant is age 86, if the Contract is not owned by a person; or
. If the Contract is being continued under Beneficiary Continuation; or
. If the Contract is in force under a Payment Option.
You can arrange for purchase payments to be scheduled on dates which are the
first day of annual, semi-annual, or quarterly payment periods, or at any other
frequency agreed to by the Company.
Net Purchase Payments
A net purchase payment is equal to:
. The purchase payment paid;
LESS
. Any applicable state premium tax.
(See the State Premium Tax Charge provision of Section 6.)
<PAGE>
- --------------------------------------------------------------------------------
4. The Variable Account
New England Variable Annuity Separate Account
The New England Variable Annuity Separate Account (called "the Account") is a
separate investment account established by the Company in accordance with
Delaware law. The assets of the Account are owned by the Company. The assets of
the Account will be used to provide values and benefits under this Contract and
similar contracts, but the Account is not chargeable with liabilities arising
out of any other business the Company may conduct.
Sub-Accounts
The Account consists of sub-accounts, each of which is invested in shares of one
investment company or series of an investment company (each called a "fund") in
which the Account invests. Shares of a fund are purchased for a sub-account at
their net asset value.
The Contract's first investment in the Account will be made as of the latest of:
. The Contract Date;
. The date the first purchase payment is received by the Company at its
Administrative Office; and
. The effective date of the election of a sub-account.
Each future net purchase payment allocated to the Account will be applied as of
the date it is received by the Company at its Administrative Office. Each
transfer to a sub-account will be applied as of the date the transfer request is
received by the Company at its Administrative Office. (See Transfer Option
provision.)
Each distribution of income, dividends and capital gains from a fund to the
Account will be reinvested for the benefit of the owners of the contracts at net
asset value in shares of the fund which made the distribution.
The Contract Value at any time cannot be allocated among more than 10 sub-
accounts, except with the consent of the Company; and the Fixed Account will be
counted in the limit of 10.
The values of a contract depend on: the investment performance of the funds in
which the sub-accounts are invested; and the interest credited to the Fixed
Account. You bear the investment risk for amounts invested in the sub-accounts
for your Contract.
Election of Sub-Accounts
You elect the sub-accounts in which the Contract Value is invested. The funds
that are available as of the Date of Issue are listed in the then current
prospectus for the Account.
Change in Funds
The Company can add or remove funds as sub-account investments as permitted by
law. When a change is made, the Company will send you: a revised prospectus for
the Account which will describe all of the funds then available under the
Contract; and any notice required by law.
When a fund is removed, the Company has the right to substitute a different fund
in which the sub-account will then invest the value of the removed fund.
Transfer Option
You can transfer the Contract's existing share of a sub-account to or from a
sub-account or the Fixed Account, subject to the Company's published rules for
transfers. While the Contract is in force other than under a Payment Option, the
Company reserves the right to: limit the number and amount of transfers in each
contract year; and to charge a fee for transfers. While a Variable Payment
Option is in effect, transfers of existing shares of a sub-account will be
subject to a limit of 1 in each contract year, except with the consent of the
Company. Requests for transfers can be made in writing or by telephone. The
Company is not responsible for the authenticity of transfer instructions
received by telephone.
<PAGE>
- --------------------------------------------------------------------------------
Rights Reserved by the Company
The Company reserves the right to take certain actions subject to compliance
with law and, if required, the approval of the owners of the contracts. These
actions are: (a) to create new investment accounts; (b) to combine any two or
more separate investment accounts, including the Account; (c) to invest some or
all of the assets of the Account in any other fund chosen by New England
Variable Life Insurance Company; (d) to remove a fund in which the sub-account
is invested or to substitute a different fund; (e) to operate the Account as a
management investment company and to charge investment advisory fees under the
Investment Company Act of 1940 or in any other form permitted by law; and (f) to
deregister the Account under the Investment Company Act of 1940 if registration
is no longer required.
5. The Fixed Account
The Fixed Account
The Fixed Account is part of the general account of the Company.
If you elect the Fixed Account, the first date on which money is applied to the
Fixed Account for the Contract is the latest of:
. The Contract Date;
. The date the first purchase payment is received by the Company at its
Administrative Office; and
. The effective date of the election of the Fixed Account.
Each future net purchase payment allocated to the Fixed Account will be applied
as of the date it is received by the Company at its Administrative Office. Each
transfer to the Fixed Account will be applied as of the date the transfer
request is received by the Company at its Administrative Office. (See the
Restriction of Payments and Transfers to the Fixed Account provision.)
For each transfer from the Fixed Account, the Contract's share of the Fixed
Account will be reduced by the amounts (plus the interest credited to the
amounts) most recently applied to the Fixed Account.
For each surrender from the Fixed Account, the Contract's share of the Fixed
Account will be reduced by the amounts (plus the interest credited to the
amounts) in the same order in which they were applied to the Fixed Account.
Fixed Account Interest
The rate of interest for each amount applied to the Fixed Account will be the
rate set by the Company in advance for the date the amount is applied to the
Fixed Account. This rate will apply for 12 months. Thereafter, each year a new
rate will apply to the amount plus the interest credited to the amount. The new
rate will be the renewal rate set by the Company in advance for that date and
will apply for 12 months. No rate will be less than the rate equivalent to an
annual effective rate of 3%.
Interest will be credited to the Fixed Account on a daily basis.
<PAGE>
- --------------------------------------------------------------------------------
Restriction of Payments and Transfers to the Fixed Account
The Company reserves the right to restrict payments and transfers to the Fixed
Account for the Contract:
. If the effective annual rate of interest that would apply to the payment or
transfer is 3%; or
. If the Contract's value in the Fixed Account equals or exceeds the Company's
published maximum for Fixed Account investments.
For 180 days from the date of any transfer out of the Fixed Account: you cannot
make any transfers to the Fixed Account; and the Company reserves the right to
restrict payments to the Fixed Account for the Contract.
Transfers Out of the Fixed Account
Each contract year you can transfer a limited portion of the Contract's value in
the Fixed Account to the sub-accounts, subject to the Company's published limits
on the number and amount of transfers. (See Section 4.) Requests for transfers
can be made in writing or by telephone. The Company is not responsible for the
authenticity of transfer instructions received by telephone. Except with the
consent of the Company, the transfer will be limited to the greater of: 25% of
the Contract's value in the Fixed Account at the end of the first day of the
contract year; and the amount transferred out of the Fixed Account in the prior
contract year.
For 180 days from the date of any transfer out of the Fixed Account, you cannot
make any transfers to the Fixed Account.
Election of the Fixed Account
You can elect to have future net purchase payments applied to the Fixed Account.
You can change the election for future net purchase payments at any time by
notice to the Company in writing. (See the Restriction of Payments and Transfers
to the Fixed Account provision.)
Postponement of Surrenders, Partial Surrenders and Transfers From the Fixed
Account
The Company can postpone for six months from the date of request: the payment of
the portion of the Contract's Surrender Proceeds and partial surrender proceeds
which is in the Fixed Account; and transfers from the Fixed Account. The
effective date of the transfer is the date on which values are transferred from
the Fixed Account to the sub-account.
6. Contract Value
Contract Value
On or before the Maturity Date and while the Contract is in force other than
under a Payment Option, the Contract Value is equal to: the number of
Accumulation Units standing to the credit of the Contract multiplied by the
applicable Accumulation Unit Value(s); plus the Contract's value in the Fixed
Account.
The Contract Value is not increased by the cash value of any Rider, unless
stated in the Rider.
The Contract's Value in the Fixed Account is equal to (a) plus (b) minus (c);
where
. (a) is equal to the portion of the net purchase payments applied to the
Fixed Account;
PLUS
the total of transfers into the Fixed Account for the Contract;
. (b) is equal to any interest credited for the Contract to the Fixed
Account; and
. (c) is equal to the total of partial surrenders made from the Fixed
Account for the Contract;
PLUS
the total of transfers out of the Fixed Account for the Contract;
PLUS
the total of any charges deducted for transfers and partial surrenders from
the Fixed Account for the Contract.
Purchase Payments Allocated to the Account
Each net purchase payment allocated to the Account will be credited in the form
of Accumulation Units to the sub-accounts you elect. The number of Accumulation
Units credited to a sub-account will be equal to the portion of the net purchase
payment credited to that sub-account divided by the Accumulation Unit Value for
that sub-account for the applicable Valuation Period.
<PAGE>
- --------------------------------------------------------------------------------
Accumulation Unit Value
An Accumulation Unit Value is determined for each sub-account for each Valuation
Period. The Accumulation Unit Value of each sub-account for its first Valuation
Period was set at $1.00 taking into account the performance history of the
underlying fund. Each Accumulation Unit Value for each later Valuation Period is
equal to:
. The Net Investment Factor for that Valuation Period;
TIMES
. The Accumulation Unit Value for the immediately preceding Valuation Period.
The Net Investment Factor depends on the investment performance of the sub-
accounts elected and can be greater or less than one. Therefore, the
Accumulation Unit Value can increase or decrease.
Net Investment Factor
The Net Investment Factor for each sub-account for each Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result; where:
. (a) is equal to the net asset value per share of the fund held in the sub-
account as of the end of that Valuation Period;
PLUS
the per share amount of all dividend and capital gains distributions made by
the fund held in the sub-account if the ex-dividend date occurs during that
Valuation Period;
PLUS or MINUS
a per share charge or credit for any reserve for taxes which the Company
determines to apply to the sub-account and to this Contract;
. (b) is equal to the net asset value per share of the fund held in the sub-
account for the immediately preceding Valuation Period;
PLUS or MINUS
a per share charge or credit for any reserve for taxes which the Company
determines to apply to the sub-account and to this Contract; and
. (c) is equal to the Maximum Daily Charge as shown in Section 1 times the
number of days in that Valuation Period.
Valuation Periods and Valuation Dates
Values for a date depend on the time of day for which they are to be determined;
they will be determined with respect to each sub-account as of the next
occurring end of a Valuation Period. A Valuation Period for each sub-account is
a period:
. Which starts on a Valuation Date at the time of day specified by the
applicable fund for determining the net asset value of its shares; and
. Which ends on the next succeeding Valuation Date at that time of day.
Each day the New York Stock Exchange is open for trading is a Valuation Date.
Annual Fees
The Company will charge an annual Administration Fee equal to the lesser of: 2%
of the Contract Value; $30; and the Contract's value in the sub-accounts. The
fee for a contract year will be charged on the first day of the next contract
year unless:
. The Contract Value is at least $50,000 at the end of the contract year; or
. The total purchase payments made less surrenders taken in the contract year
were at least $1,000 and the Contract Value at the end of the prior contract
year was at least $25,000; or
. The Contract is in force under a Payment Option; or
. The Contract is being continued under Beneficiary Continuation.
If the Contract is surrendered or matures on a date which is not a contract
anniversary, the charge will be the pro rata portion of the fee for the period
beyond the most recent contract anniversary.
The fee will be charged against the sub-accounts proportionately. The portion of
the fee charged to each sub-account will reduce the number of Accumulation Units
standing to the credit of the Contract in that sub-account.
The fee will not be charged against the Fixed Account.
<PAGE>
- --------------------------------------------------------------------------------
Surrender of the Contract
While the Contract is in force other than under a Payment Option, you can
surrender the Contract at any time prior to the Maturity Date by notice to the
Company in writing. Upon surrender, the Contract will terminate. The Surrender
Proceeds will be equal to: the Contract Value as of the Surrender Date; less any
Administration Fee; and less any State Premium Tax Charge. Unless a later date
is specified in the request (see Payment of Benefits, Section 8), the Surrender
Date is the date on which the Company receives at its Administrative Office:
. Written request in proper form for surrender and payment in one sum; or
. Written request in proper form for surrender and payment under one of the
Payment Options.
You can also make a partial surrender, but the consent of the Company will be
required if: the remaining Contract Value would be less than $2,500; or if the
amount of the partial surrender is less than the Company's published minimum. A
partial surrender will reduce the Contract's share of the sub-accounts and the
Fixed Account proportionately, unless you request otherwise. A partial surrender
will reduce the Minimum Guaranteed Death Benefit (see Section 8) proportionately
to the reduction in the Contract Value.
State Premium Tax Charge
A State Premium Tax Charge, as required by law, will be deducted from: proceeds
applied to a Payment Option; Death Proceeds; and partial and full surrenders.
The charge will equal the proceeds times the appropriate state premium tax
rates. The Company reserves the right, as an alternative, to deduct state
premium taxes from purchase payments, rather than from proceeds. (See the Net
Purchase Payment provision of Section 3.)
<PAGE>
- --------------------------------------------------------------------------------
7. Owner, Beneficiary and Contingent Annuitant
Owner
The Owner of the Contract is named in the Application (see copy attached); but
with the consent of the Company, the Owner can be changed. The new Owner will
succeed to all rights of the Owner, including the right to make a further
change of Owner. Joint Owners can be named. In this Contract "you" means the
Owner, whether an Owner is a natural person (called a "person"), a
partnership, a corporation, a fiduciary or any other legal entity. At the
death of an Owner, Death Proceeds will be paid unless the Contract is
continued under the Continuation provision.
If an Owner is not a person, the Annuitant will be treated as the Owner for
the purposes of the Death Proceeds provision. (See Section 8.)
Beneficiary
The Death Proceeds will be paid to the Beneficiary if an Owner dies before the
Maturity Date, unless the Contract is in force under a Payment Option or is
continued under the Continuation provision. The Beneficiary is named in the
Application (see copy attached); but the Beneficiary can be changed before the
Death Proceeds become payable. The Beneficiary has no rights in the Contract
until the death of an Owner. A person must be living when the Death Proceeds
become payable to qualify as Beneficiary. If none survives and the Contract
had joint Owners, the proceeds will be paid to the surviving Owner; otherwise,
the proceeds will be paid to the estate of the Owner. The Beneficiary can also
be a corporation, a partnership, a fiduciary, or any other legal entity.
Change of Owner or Beneficiary
A change of Owner or Beneficiary must be in written form satisfactory to the
Company, and must be dated and signed by the Owner making the change. The
change will be subject to all payments made and actions taken by the Company
under the Contract before the signed change form is received by the Company at
its Administrative Office.
Assignments
An absolute assignment of the Contract by the Owner is a change of Owner and
Beneficiary to the assignee; but upon an absolute assignment after the
Annuitant's death, the Contingent Annuitant must be an Owner of the Contract.
A collateral assignment of the Contract by the Owner is not a change of Owner
or Beneficiary; but their rights will be subject to the terms of the
assignment. Assignments will be subject to all payments made and actions taken
by the Company before a signed copy of the assignment form is received by the
Company at its Administrative Office. The Company will not be responsible for
determining whether or not an assignment is valid.
Designation of Owner and Beneficiary
A numbered sequence can be used to name successive Beneficiaries. Co-
Beneficiaries will receive equal shares unless otherwise stated. Joint Owners
have equal rights under the Contract.
In naming Owners or Beneficiaries, unless otherwise stated:
. "Child" includes an adopted or posthumous child;
. "Provision for issue" means that if a Beneficiary is not living when Death
Proceeds are paid, the share of that Beneficiary will be taken by his or her
living issue by right of representation; and
. A family relation such as "wife", "husband", or "child" means the relation
to the Annuitant.
At the time for payment of benefits the Company can rely on an affidavit of any
Owner or other responsible person to determine family relations or members of a
class.
Contingent Annuitant
A Contingent Annuitant must be named in the Application: if the Annuitant is not
an Owner of the Contract; and if an Owner is a person. The Contingent Annuitant
must be an Owner of the Contract. The Contingent Annuitant cannot be changed
after the death of the Annuitant.
<PAGE>
- --------------------------------------------------------------------------------
Death of Annuitant
If the Owner is a person and if the Annuitant dies before the Contract is in
force under a Payment Option, the Contract will continue for the benefit of the
Contingent Annuitant. The Maturity Date will then be the contract anniversary on
which the older Owner will be the maximum maturity age allowed by the Company.
If the Owner is not a person, the Annuitant will be treated as Owner for the
purposes of the Death Proceeds provision. (See Section 8.)
<PAGE>
- --------------------------------------------------------------------------------
8. Payment of Benefits
Maturity Date
The Maturity Date is shown in Section 1.
Maturity Proceeds
The Maturity Proceeds will be equal to: the Contract Value on the Maturity Date;
less any Administration Fee; and less any State Premium Tax Charge (see Section
6).
If the annuitant who is to receive monthly income benefits under the Contract is
living on the Maturity Date, the Company will apply the Maturity Proceeds to the
Payment Option shown in Section 1, with that individual as Payee.
Before the Maturity Date you can elect in writing that on the Maturity Date the
Maturity Proceeds will instead be:
. Paid in one sum; or
. Applied to any other Payment Option.
Death Proceeds
If an Owner is not a person, the Annuitant will be treated as the Owner for the
purposes of the Death Proceeds provision.
If an Owner dies before the Maturity Date, the Company will pay a death benefit
to the Beneficiary, unless the Contract is in force under a Payment Option or is
continued under the Continuation provision. The Death Proceeds will equal the
greater of:
. The Contract Value as of the Death Valuation Date; and
. The Minimum Guaranteed Death Benefit.
On the date the first purchase payment for the Contract is received, the Minimum
Guaranteed Death Benefit is equal to the purchase payment. Thereafter, the
Minimum Guaranteed Death Benefit will be: increased by any purchase payment
made; and decreased by the percentage of any Contract Value surrendered.
Also, on the seventh anniversary and every seventh year anniversary thereafter,
except as noted below, the Minimum Guaranteed Death Benefit will be
recalculated. On each of these days the Minimum Guaranteed Death Benefit is
equal to the greater of: the Minimum Guaranteed Death Benefit before the
recalculation; and the Contract Value on the date of recalculation. If the Owner
is not a person, the Minimum Guaranteed Death Benefit will be recalculated until
the Annuitant is age 76. If the Contract is jointly owned, and both Owners are
living, the Minimum Guaranteed Death Benefit will be recalculated until an Owner
is age 71. Otherwise, it will be recalculated until the Owner is age 76.
The Death Valuation Date is the later of:
. The date on which the Company receives at its Administrative Office proof
of death of that Owner; and
. The date on which the Company receives at its Administrative Office
election of continuation of the contract or of payment in one sum or under a
Payment Option; provided that if no election has been received by the end of
the 90th day after the date proof of death was received, the Company will
deem the following to have been elected on the 90th day: Spousal
Continuation, if the surviving spouse qualifies for this right; or
otherwise, Beneficiary Continuation, if the Beneficiary qualifies for this
right; or otherwise, payment in one sum.
The Death Proceeds will be paid in one sum unless: all or part of the proceeds
is applied to a Payment Option; or the Contract is continued under the
Continuation provision. The obligations of the Company are subject to all
payments made and actions taken by the Company before receipt by the Company at
its Administrative Office of proof of the death.
Death Proceeds cannot be applied to the Variable Life Income for Two Lives
Option or to the Variable Income Payment to Age 100 Option.
Upon payment of Death Proceeds, the Contract will terminate.
Death of Owner on or After the Maturity Date
If the Owner dies on or after the Maturity Date and before the entire interest
has been distributed to the annuitant, then the entire remaining interest must
be distributed at least as quickly as under the method of distribution being
used on the date of death of the Owner.
<PAGE>
- --------------------------------------------------------------------------------
Continuation
The Company offers two types of Continuation rights: Spousal Continuation; and
Beneficiary Continuation.
The Company must receive written notice of the election of one of these
continuation rights by the end of the 90th day after it received proof of death.
If the surviving spouse qualifies for Spousal Continuation and has not elected a
method of payment for the Death Proceeds by the end of the 90 day period,
election of Spousal Continuation will be deemed to have been elected on the 90th
day. If a Beneficiary who does not qualify for Spousal Continuation but does
qualify for Beneficiary Continuation, has not elected a method of payment for
the Death Proceeds by the end of the 90 day period: election of Beneficiary
Continuation will be deemed to have been elected on the 90th day; and the
Contract will be continued for that Beneficiary; and the continued Contract will
have a Maturity Date equal to the fifth anniversary of the Owner's death.
Spousal Continuation
The Contract can be continued under Spousal Continuation if the surviving spouse
is less than the maximum maturity age allowed by the Company and if:
(a) There are two joint owners and they are married to each other; and
One of the joint owners dies before the Contract is in force under a
Payment Option; and
Both joint owners were the only named primary Beneficiaries on the date of
death; or
(b) The Owner is a person; and
The Owner dies; and
The Owner's spouse is the only named primary Beneficiary on the Owner's
date of death.
If the Contract is continued under Spousal Continuation: the Death Proceeds will
not be paid; the surviving spouse will be the Owner; the surviving spouse will
be the Annuitant, if the deceased Owner had been the Annuitant; and the
surviving spouse will be the Contingent Annuitant, if the deceased Owner had
been the Contingent Annuitant. The Maturity Date will then be the contract
anniversary on which the surviving spouse (or Annuitant if older) will be the
maximum maturity age allowed by the Company.
Beneficiary Continuation
When Death Proceeds become payable, the Beneficiary can elect: a one sum payment
of the Death Proceeds; or the continuance of the Contract with a Maturity Date
equal to the fifth anniversary of the Owner's death (see below); or a Payment
Option. Payments under the Payment Option: must be payable for the life of the
Beneficiary or for a term which is not longer than the life expectancy of the
Beneficiary; and must start within one year after the death of the Owner.
The Contract can be continued under Beneficiary Continuation by a Beneficiary
whose share of the Death Proceeds is at least equal to the Company's published
minimum for this right.
If the Contract is continued under Beneficiary Continuation: the Death Proceeds
will not be paid to any Beneficiary continuing his/her share of the Proceeds;
the Death Proceeds continued in the Contact will be allocated in the same
proportion as the Contract Value was allocated to the sub-accounts and Fixed
Account on the Death Valuation Date: each Beneficiary will have the right to
make transfers and partial and full surrenders of his/her share of the Contract;
the Maturity Date will be the fifth anniversary of the Owner's death and cannot
be changed; no purchase payments can be made; no Annual Fee will be deducted;
and the Death Benefit during the period of continuation for each Beneficiary
will be equal to the Beneficiary's share of the Contract Value on his/her Death
Valuation Date. The Death Valuation Date is the date on which the Company
receives at its Administrative Office proof of death of the Beneficiary. The
Death Benefit payable at the Beneficiary's death will be paid in a one sum
payment.
<PAGE>
- --------------------------------------------------------------------------------
On the Maturity Date each living Beneficiary will receive his/her share of the
Contract Value in a one sum payment and the Contract will terminate.
During the continuation period the Beneficiary can elect: to receive his/her
share of the Contract in a one sum payment; or to apply his/her share of the
Contract to a Payment Option. Payments under the Payment Option: must be payable
for the life of the Beneficiary or for a term which is not longer than the life
expectancy of the Beneficiary; and must start within one year after the death of
the Owner.
Suspension of Payments
The Company can suspend payment of any amounts due under the Contract when
permitted under applicable Federal laws, rules and regulations.
Election of Payment Options; Option Date
The election of a Payment Option and the naming of the Payee must be in written
form satisfactory to the Company. You can make or change or revoke the election
before the Death Proceeds become payable or the Maturity Date, whichever occurs
first. The Option Date is the effective date of the Payment Option, as stated in
the form on which you made your choice.
Payee
A Payee is a person, a corporation, a partnership, a fiduciary or any other
legal entity entitled to receive payment in one sum or under a Payment Option.
Election By Payees
Any proceeds payable upon surrender or maturity of the Contract can be applied
to any Payment Option at the election of the Payee. Any Death Proceeds can be
applied to a Variable Income for Specified Number of Years or Variable Life
Income Payment Option at the election of the Payee. Further, subject to the
consent of the Company, any Payee who is entitled to receive proceeds in one sum
at the death of a prior Payee, or upon withdrawal of the proceeds, can elect to
apply the proceeds to a Payment Option.
Rights of Payees
A Payee under the Variable Income for a Specified Number of Years and the
Variable Income Payment to Age 100 Payment Options has the right to change to
the Variable Life Income Payment Option.
A Payee under the Variable Income for a Specified Number of Years, the Variable
Income Payment to Age 100, the Variable Life Income with Years Certain or the
Variable Life Income for Two Lives with Years Certain Payment Options can
withdraw the commuted value of the payments certain.
No Payee can assign or withdraw the commuted value of payments under any Fixed
Payment Option.
Payments in One Sum
Amounts payable in one sum will be payable:
. As of the Surrender Date in case of surrender;
. As of the Death Valuation Date in case of the payment of Death Proceeds;
. As of the Maturity Date in case of maturity;
. As of the date the request is received by the Company at its Administrative
Office in case of request for withdrawal of amounts under Payment Options;
or
<PAGE>
- --------------------------------------------------------------------------------
. As of the date proof of death of the Payee is received by the Company at its
Administrative Office in case of an amount to be paid in one sum at the
death of the Payee.
An amount payable in one sum from the Account will be paid within 7 days of the
date it is payable, subject to the Suspension of Payments provision.
Limitations
If instalments under an Option would be less than the Company's published
minimum, proceeds can be applied to a Payment Option only with the consent of
the Company.
Variable Life Income Options
Variable Life Income Options are based on the age of the Payee on the Payee's
birthday nearest the Option Date and on the Assumed Interest Rate selected.
The Company will require proof of age. The Life Income Payments will be based
on rates not less than the rates shown in the Variable Life Income Tables
(Section 10).
Amount of Variable Monthly Payments
The amount of the first monthly payment under a Variable Payment Option is
equal to:
. The number of thousands of dollars of proceeds applied to the Option;
TIMES
. The monthly payment rate per $1,000 for the Option.
The amount of each later monthly payment is equal to the number of Annuity Units
times the applicable Annuity Unit Values for the most recent Valuation Period
which ended at least 14 days prior to the date the payment is due.
Annuity Units; Annuity Unit Values
The number of Annuity Units credited under a Variable Payment Option is equal to
the amount of the first monthly payment divided by the applicable Annuity Unit
Value(s) as of the Option Date. The number of Annuity Units remains constant;
except that: (a) the number is adjusted to reflect different Annuity Unit Values
upon transfer of an interest of the Contract in a sub-account to another sub-
account; and (b) the number decreases by one-third at the death of the first
Payee under the Joint and 2/3 to Survivor Variable Life Income Option.
The Annuity Unit Values depend on the Assumed Interest Rate and on the Net
Investment Factor. An Annuity Unit Value is determined for each sub-account for
each Valuation Period. The Annuity Unit Value of each sub-account for its first
Valuation Period was set at $1.00 taking into account the performance history of
the underlying investment company. Each Annuity Unit Value for each later
Valuation Period is equal to:
. The Annuity Unit Value for the immediately preceding Valuation Period;
TIMES
. The Net Investment Factor for that Valuation Period;
TIMES
. The daily Assumed Interest Factor for each day in that Valuation Period.
The Net Investment Factor depends on the investment performance of the funds
held in the sub-accounts elected. The Net Investment Factor multiplied by the
Assumed Interest Factor can be greater or less than one. Therefore, the Annuity
Unit Values can increase or decrease.
Choice of an Assumed Interest Rate
The amount of each monthly payment under a Variable Payment Option depends on an
Assumed Interest Rate. In the election of any of these Options, the effective
annual Assumed Interest Rate chosen can be:
. 0%; or
. 3 1/2%; or
. 5%, if allowed by applicable law or regulation.
If no choice is made, an effective annual interest rate of 3 1/2% will be used
as the Assumed Interest Rate. The rates shown in Sections 9 and 10 for the
Options are based on the 3 1/2% rate. The daily Assumed Interest Factor derived
from an effective annual Assumed Interest Rate of 3 1/2% is 0.9999058.
<PAGE>
- --------------------------------------------------------------------------------
Correction of Benefits if Age Incorrect
If the age of the Payee under a Life Income Option has not been correctly
stated, the benefits will be corrected to the amounts which the proceeds would
have provided for the correct age. Any amount by which the payments by the
Company have been too large or too small, with interest at an effective annual
interest rate of 6% per year compounded yearly, will be:
. Charged against the next payment or payments if the payments have been too
large; or
. Added to the next payment if the payments have been too small.
Death of Payee
Amounts to be paid after the death of a Payee under a Payment Option will be
paid as due to the successor Payee. If there is no successor Payee, amounts to
be paid in one sum, or the commuted value of any unpaid payments certain, will
be paid in one sum to the estate of the last Payee to die.
Commutation Rate for Variable Payment Options
The interest rate used to compute the commuted value of any unpaid payments
certain will be the Assumed Interest Rate. Each payment under a Variable Payment
Option will be assumed to be equal to the number of Annuity Units times the
applicable Annuity Unit Value.
<PAGE>
- --------------------------------------------------------------------------------
9. Payment Options
Fixed Payment Options
All or any part of the contract proceeds can be applied to Fixed Payment
Options, subject to Section 8, to provide payments which do not depend on the
investment performance of the Account. The proceeds to be applied to Fixed
Payment Options will be transferred to the general account of the Company. The
Fixed Payment Option rates will not be less than rates based on an effective
annual interest rate of 3% per year; and on mortality: using a 50/50 male/female
weighting; based on the Individual Annuitant Mortality Table for 1983; and with
projection on Scale G to the year 2000 and then on Scale B Modified to the year
2035.
Variable Payment Options
All or part of any contract proceeds can be applied to any one of the following
Variable Payment Options, subject to Section 8, Payment of Benefits.
Variable Income for Specified Number of Years
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue for the number of years chosen. The number of
years chosen cannot be more than 30.
Variable Life Income
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue:
. During the life of the Payee, with no payment after the death of the Payee,
called "Variable Life Income, No Refund"; or
. During the life of the Payee, but for at least 10 years, called "Variable
Life Income, 10 Years Certain"; or
. During the life of the Payee, but for at least 20 years, called "Variable
Life Income, 20 Years Certain".
Variable Life Income for Two Lives
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue:
. While either of two Payees is living, called "Joint and Survivor Variable
Life Income"; or
. While either of two Payees is living, but for at least 10 years, called
"Joint and Survivor Variable Life Income, 10 Years Certain"; or
. While two Payees are living, and after the death of one Payee while the
other Payee is living, two-thirds of the monthly amount that would be
payable if both Payees were living, called "Joint and 2/3 to Survivor
Variable Life Income".
Variable Income Payment to Age 100
The Company will make variable monthly payments. Payments will start on the
Option Date and will continue for a whole number of years. The number of years
chosen must equal 100 minus the Payee's age on the Option Date.
<PAGE>
- --------------------------------------------------------------------------------
10. Variable Payment Option Tables
Variable Life Income Tables
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Life Income Options are shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Life Income
- --------------------------------------------------------------------------------
10 20
Age of No Years Years
Payee Refund Certain Certain
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
55 $4.36 $4.34 $4.25
56 4.43 4.40 4.31
57 4.51 4.48 4.37
58 4.59 4.55 4.43
59 4.67 4.63 4.49
60 4.77 4.72 4.55
61 4.86 4.81 4.62
62 4.97 4.91 4.68
63 5.08 5.01 4.75
64 5.20 5.12 4.82
65 5.32 5.23 4.89
66 5.46 5.35 4.96
67 5.60 5.47 5.02
68 5.76 5.60 5.09
69 5.93 5.74 5.15
70 6.10 5.89 5.22
71 6.30 6.04 5.27
72 6.50 6.19 5.33
73 6.72 6.36 5.38
74 6.96 6.52 5.43
75 7.21 6.69 5.48
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Life Income for Two Lives
- --------------------------------------------------------------------------------
Age of One Age of Other Payee
Payee 55 60 65 70 75
- --------------------------------------------------------------------------------
Joint and Survivor
<S> <C> <C> <C> <C> <C>
55 $3.92 $4.04 $4.13 $4.21 $4.27
60 4.04 4.20 4.35 4.48 4.59
65 4.13 4.35 4.58 4.79 4.97
70 4.21 4.48 4.79 5.10 5.39
75 4.27 4.59 4.97 5.39 5.83
80 4.30 4.66 5.10 5.63 6.24
- --------------------------------------------------------------------------------
Joint and Survivor, 10 Years Certain
55 $3.92 $4.04 $4.13 $4.21 $4.26
60 4.04 4.20 4.35 4.48 4.58
65 4.13 4.35 4.58 4.78 4.95
70 4.21 4.48 4.78 5.09 5.36
75 4.26 4.58 4.95 5.36 5.77
80 4.30 4.64 5.08 5.58 6.13
- --------------------------------------------------------------------------------
Joint and 2/3 to Survivor
55 $4.20 $4.37 $4.55 $4.76 $4.98
60 4.37 4.56 4.78 5.03 5.29
65 4.55 4.78 5.05 5.35 5.68
70 4.76 5.03 5.35 5.73 6.15
75 4.98 5.29 5.68 6.15 6.68
80 5.21 5.57 6.02 6.59 7.26
- ----------------------------------------------------------------------------
</TABLE>
Payments for other ages will be quoted by the Company on request.
The Variable Life Income rates shown above are based on an effective annual
Assumed Interest Rate of 3 1/2% per year; and on mortality: using a 50/50
male/female weighting; based on the Individual Annuitant Mortality Table for
1983; and with projection on Scale G to the year 2000 and then on Scale B
Modified to the year 2035.
Variable Income Tables
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Income Options are shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Income for Specified Number of Years
- --------------------------------------------------------------------------------
Years Payment Years Payment Years Payment
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $84.65 11 $9.09 21 $5.56
2 43.05 12 8.46 22 5.39
3 29.19 13 7.94 23 5.24
4 22.27 14 7.49 24 5.09
5 18.12 15 7.10 25 4.96
6 15.35 16 6.76 26 4.84
7 13.38 17 6.47 27 4.73
8 11.90 18 6.20 28 4.63
9 10.75 19 5.97 29 4.53
10 9.83 20 5.75 30 4.45
- --------------------------------------------------------------------------------
</TABLE>
Guaranteed first monthly payments per $1,000 of proceeds applied to the Variable
Income Options are based on an effective annual Assumed Interest Rate of 3 1/2%.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Variable Income Payment to Age 100
- --------------------------------------------------------------------------------
Years Payment Years Payment Years Payment
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $84.65 15 $7.10 28 $4.63
2 43.05 16 6.76 29 4.53
3 29.19 17 6.47 30 4.45
4 22.27 18 6.20 31 4.37
5 18.12 19 5.97 32 4.29
6 15.35 20 5.75 33 4.22
7 13.38 21 5.56 34 4.15
8 11.90 22 5.39 35 4.09
9 10.75 23 5.24 36 4.03
10 9.83 24 5.09 37 3.98
11 9.09 25 4.96 38 3.92
12 8.46 26 4.84 39 3.88
13 7.94 27 4.73 40 3.83
14 7.49
- --------------------------------------------------------------------------------
</TABLE>
Payments for other periods will be quoted by the Company on request.
<PAGE>
- --------------------------------------------------------------------------------
Amendments and Endorsements (To be made only by the Company)
<PAGE>
- --------------------------------------------------------------------------------
New England Variable Life
Insurance Company
Administrative Office
501 Boylston Street
Boston, Massachusetts 02117
Flexible Purchase Payment Deferred Variable Annuity Contract
. Monthly income is payable starting on the Maturity Date.
. The Death Proceeds are payable if an Owner dies before the Maturity Date,
unless the Contract is in force under a Payment Option or is continued under
the Continuation provision. (See Death Proceeds provision in Section 8.)
. Purchase payments can be paid to the Company before the Maturity Date,
before Death Proceeds are paid, and before full surrender, subject to the
Amount and Frequency provision in Section 3.
. Purchase payments can be increased or decreased from time to time, subject
to the Amount and Frequency provision in Section 3.
- --------------------------------------------------------------------------------
<PAGE>
Application to New England Variable Life Insurance Company (NEVLICO),
Boston, Massachusetts for a Variable Annuity
For Company Use Only
No. ________________
- --------------------------------------------------------------------------------
1 Annuitant
- --------------------------------------------------------------------------------
Name (Print as it should appear in the contract)
- -------------------------------------------------------------------------------
Street Address
- -------------------------------------------------------------------------------
City State Zip
Social Security [_][_][_] [_][_] [_][_][_][_]
Date of
Birth [_][_] [_][_] [_][_]
month day year
Sex: [_] Male [_] Female
- --------------------------------------------------------------------------------
2 Owner(s) [_] Individual [_] Trust/Corporation [_] Joint Owners
a.
- --------------------------------------------------------------------------------
First Middle Last
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip
Social Security/T.I.N. [_][_][_] [_][_] [_][_][_][_]
Date of
Birth [_][_] [_][_] [_][_] Sex: [_] Male [_] Female
month day year
- --------------------------------------------------------------------------------
b.
- --------------------------------------------------------------------------------
First Middle Last
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip
Social Security [_][_][_] [_][_] [_][_][_][_]
Date of
Birth [_][_] [_][_] [_][_] Sex: [_] Male [_] Female
month day year
- --------------------------------------------------------------------------------
3 Beneficiary (For a Trust, Trustee is Beneficiary)
Primary: Spouse of [_] 2a [_] 2b [_] NA
- --------------------------------------------------------------------------------
Name Social Security Number
Secondary: Spouse of [_] 2a [_] 2b [_] NA
- --------------------------------------------------------------------------------
Name Social Security Number
- --------------------------------------------------------------------------------
4 Contingent Annuitant
If jointly owned and neither Owner is the Annuitant, indicate which Owner is to
be the Contingent Annuitant:
[_] 2a [_] 2b
If individually owned and the Owner and Annuitant are different, the Owner is
the Contingent Annuitant.
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5 Type of contract
[_] IRA Rollover [_] Retirement Savings
[_] IRA [_] SEP [_] Other:__________________
Apply toward _____ tax yr.
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6 Purchase Payment(s)
A Single payment of $_____________ and
a) Bill $______________ or b) [_] MSA No. _________________
[_] Monthly [_] Quarterly
[_] Semi-annual [_] Annual [_] ACH (Automated Clearinghouse)
Billing Address: [_] 2a [_] 2b
[_] Other:
(if applicable)
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7 Allocation
Please allocate my payment(s) as follows: (use whole percentages)
Back Bay Advisors Bond Income ____%
Back Bay Advisors Money Market ____%
Loomis Sayles Avanti Growth ____%
Westpeak Value Growth ____%
Loomis Sayles Small Cap ____%
Salomon Brothers U.S. Government ____%
Loomis Sayles Balanced ____%
Alger Equity Growth ____%
Draycott International Equity ____%
Venture Value ____%
Salomon Brothers Strategic Bond Opportunities ____%
Fixed Account ____%
____%
____%
Minimum allocation is 10%. Total 100%
----
NEV APP-31-94 AGS
<PAGE>
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8 Additional Information
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9 Trust Data
Date of Trust [_][_] [_][_] [_][_]
month day year
Trust T.I.N. [_][_][_] [_][_] [_][_][_][_]
Name of Trustee(s)
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Administrative Office Use:
Additions and Amendments
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10 Maturity
Maturity Date will be age 85 if the contract is issued in PA or NY. Otherwise,
the Maturity Date will be age 95. The age at Maturity is based on the oldest of
the Owner(s) and the Annuitant.
No deposits will be accepted within 7 years of the Maturity Date, except in PA
and NY, or beyond age 85.
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11 Signatures
Will the annuity applied for replace one or more existing annuity or life
insurance contracts? [_] No [_] Yes (explain in section 8)
ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE
OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO A FIXED DOLLAR
AMOUNT.
[_] RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED.
General. To the best of my knowledge and belief, the answers recorded are true
and complete. My agreement in writing is required to any change made by the
Company as to information in the Application.
When the Contract Takes Effect. The contract will take effect as of the latest
of: (a) the date of the Application; (b) the date the first purchase payment and
first premium for any riders are paid; and (c) any date of issue that is
requested; provided that this Application can be approved by the Company as
submitted.
Signed at________________________ On________________ _________________________
City, State (month/day/year) Owner Signature
_________________________
Joint Owner Signature
Do you have reason to believe that replacement or change of any existing
insurance or annuity may be involved? [_] Yes [_] No
Does Annuitant appear to be in good health and mentally competent? (If No, give
details in separate memo) [_] Yes [_] No
_______________________________________ ______________________________________
Registered Representative Signature State License Identification Number
Accepted by the Company at the Administrative Office by: _______________________
Principal Signature
Date: _______________________
(month/day/year)
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ALL PURCHASE PAYMENTS MUST BE MADE PAYABLE TO THE COMPANY: Do Not Make Checks
Payable To The Registered Representative Or Leave The Payee Blank.
<PAGE>
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Endorsement
As of the Endorsement Date the following provision is added to the Contract
Value section, if the Covered Person meets the Company's underwriting
requirements.
*Waiver of Contingent Deferred Sales Charge
The Company will waive any Contingent Deferred Sales Charge upon full or partial
surrender of the Contact if:
(a) The Covered Person has a medical condition that is expected to result in
death within six months; or
(b) The Covered Person has been confined to an Eligible Nursing Home for at
least 90 days and is expected to stay there until death; or
(c) The Covered Person is less than age 65, became permanently and totally
disabled since the Date of Issue of this Contract and is receiving
disability benefits from the Social Security Administration.
A Covered Person must be less than age 65 on the Date of Issue of this Contract
and is: an Owner of the Contract, if the Owner is a person and was an Owner on
the Date of Issue of this Contract; or the Annuitant, if the Owner is not a
person.
An Eligible Nursing Home is an institution or special nursing unit of a
hospital: which is located in the United States of America; and which meets at
least one of the following requirements.
. It is Medicare approved as a provider of skilled nursing care services; or
. It is licensed as a skilled nursing home or as an intermediate care facility
by the state in which it is located; or
. It meets all the requirements listed below:
a. It is licensed as a nursing home by the state in which it is located;
b. Its main function is to provide skilled, intermediate or custodial
nursing care;
c. It is engaged in providing continuous room and board accommodations to
three or more persons;
d. It is under the supervision of a registered nurse or licensed practical
nurse;
e. It maintains a daily medical record of each patient; and
f. It maintains control and records for all medications dispensed.
Institutions which primarily provide residential facilities are not Eligible
Nursing Homes.
If you are requesting a waiver of the Contingent Deferred Sales Charge under
(a), you must provide the Company with: certification signed by a licensed
medical doctor that the Covered Person has a medical condition that is expected
to result in death within six months; and any other information needed by the
Company to process your request. The Company may require a second opinion by a
licensed medical doctor chosen by the Company, at the Company's expense and at
a place convenient to the covered Person who is terminally ill.
If you are requesting a waiver of the Contingent Deferred Sales Charge under (b)
you must provide the Company with: certification signed by a licensed medical
doctor that the Covered Person is expected to remain in the nursing home until
death; and any other information needed by the Company to process your request.
The certification must be supported by evidence satisfactory to the Company. The
Company may require a second opinion by a licensed medical doctor chosen by the
Company, at the Company's expense and at a place convenient to the Covered
Person who is in the nursing home."
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
/s/ Robert A. Shafto /s/ H. James Wilson
President Secretary
<PAGE>
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Endorsement: Individual Retirement Annuity
As of the Date of Issue of this Contract, this Endorsement is added to the
Contract. In the event of a conflict between this Endorsement and the Contract,
the provisions of the Endorsement will control.
In order to qualify this Contract as an Individual Retirement Annuity under
Section 408(b) of the Internal Revenue Code, (the "Code"), the following
restrictions apply.
1. The Owner of the Contract is the Annuitant; and the Owner of the Contract
CANNOT be changed. The Contract is for the exclusive benefit of the Owner or
the named Beneficiary.
2. Although this Contract is a Flexible Purchase Payment Contract, total
purchase payments for any taxable year CANNOT exceed $2,000, except in the
case of a rollover as permitted by the Code or a purchase payment in
accordance with a Simplified Employee Pension Program as described in
Section 408(k) of the Code. Purchase payments must be in cash.
3. The payment of dividends, if any, will be applied to the purchase of
additional benefits before the end of the calendar year following the
declaration of dividends under this Contract. Any refund of purchase
payments (other than those attributable to excess contributions) will be
applied, before the close of the calendar year following the year of the
refund, toward the payment of future purchase payments or the purchase of
additional benefits.
4. The entire interest of the Owner must be distributed to the Owner not later
than the first day of April following the calendar year in which the Owner
attains age 70 1/2; or it must be applied not later than the first day of
April following the calendar year in which the Owner attains age 70 1/2 to a
Payment Option of the Contract for:
(a) The life of the Owner or the lives of the Owner and named Payee; or
(b) A period which is not longer than the life expectancy of the Owner or
the joint life and last survivor expectancy of the Owner and the named
Payee.
Life expectancy and joint and last survivor expectancy are computed by use
of the return multiples contained in section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, the Owner's life expectancy
may be recalculated no more frequently than annually; however, the life
expectancy of a non-spouse Beneficiary may not be recalculated.
In no event will the payments under the Payment Option selected by the Owner
be less than the minimum distribution amount and/or the incidental benefit
amount required under Section 401(a)(9) of the Code as applied to individual
retirement annuities.
If the spouse of the Owner is not the Beneficiary the method of distribution
selected by the Owner must assure that at least 50% of the present value of
the amount available for distribution is paid within the life expectancy of
the Owner.
5. If the Owner's entire interest is to be distributed in other than a lump
sum, then the amount to be distributed each year (commencing with the
required beginning date and each year thereafter) must be at least an amount
equal to the quotient obtained by dividing the Owner's entire interest by
the life expectancy of the Owner or joint and last survivor expectancy of
the Owner and Beneficiary.
6. If the Owner dies before distribution of his or her interest starts, the
Death Proceeds must be distributed in accordance with one of the following
rules.
(a) The Death Proceeds must be paid within 5 years after the death of the
Owner; or
(b) If the Owner's interest is payable to a Beneficiary designated by the
Owner and the Owner has not elected (a) above, then the entire interest
will be distributed in substantially equal installments over the life or
life expectancy of the Beneficiary commencing no later than one (1) year
after the date of the Owner's death, or paid within 5 years of the death
of the Owner at the election of the Beneficiary. The Beneficiary may
elect at any time to accelerate payment(s). If the Beneficiary is an
individual, the Beneficiary can elect any Payment Option listed in 4
above, with an Option Date not later than 1 year after the death of the
Owner; or
<PAGE>
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(c) If the Beneficiary is the Owner's surviving spouse, the spouse may elect
within the five year period commencing with the Owner's date of death to
receive equal or substantially equal payments over the life or life
expectancy of the surviving spouse commencing at any date prior to the date
on which the deceased Owner would have attained age 70 1/2. The surviving
spouse may accelerate these payments at any time by increasing the
frequency or amount of such payments. If the Beneficiary is the surviving
spouse of the Owner, the Beneficiary can elect any Payment Option listed in
4 above, with an Option Date not later than the date on which the Owner
would have attained age 70 1/2.
(d) If the Beneficiary is the surviving spouse of the Owner, the Beneficiary
can treat the Contract as his or her own individual retirement arrangement
by following the Company's procedure for this purpose, or by making a
rollover from the Contract.
Payments will be calculated by use of the return multiples specified in section
1.72-9 of the Income Tax Regulations, (Life expectancy of a surviving spouse may
be recalculated annually.) In the case of any other Beneficiary, life expectancy
will be calculated at the time payment first commences and payments for any
period of 12 consecutive months will be based on such life expectancy minus the
number of whole years passed since distribution first commenced.
Any amount paid to a child of the Owner will be treated as if it had been paid
to the surviving spouse if the remainder of the interest becomes payable to the
surviving spouse when the child reaches the age of majority.
7. If the Owner dies after distribution of his or her interest has commenced,
the remaining portion of such interest will continue to be distributed at
least as rapidly as under the method of distribution being used prior to
the Owner's death.
8. The entire interest of the Owner is nonforfeitable and nontransferable.
9. The Company will furnish annual calendar year reports concerning the status
of this Contract.
10. In order to continue to qualify this Contract under Section 408(b) of the
Code, the Company can amend this Endorsement to reflect changes in the
provisions of the Code and related regulations by sending an amendment to
the Owner.
New England Variable Life Insurance Company
Administrative Office:
501 Boylston Street, Boston, Massachusetts
/s/ Robert A. Shafto /s/ H. James Wilson
President Secretary
<PAGE>
New England Variable
Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
December 11, 1995
New England Variable Life Insurance Company
New England Variable Annuity Separate Account
501 Boylston Street
Boston, MA 02117
Gentlemen and Ladies:
In my capacity as General Counsel of New England Variable Life Insurance
Company (the "Company"), I am rendering the following opinion in connection with
the filing with the Securities and Exchange Commission of a Registration
Statement on Form N-4 under the Securities Act of 1933 and the Investment
Company Act of 1940. This Registration Statement is being filed with respect
to individual variable annuity contracts (the "Contracts") issued by New England
Variable Annuity Separate Account (the "Account").
In forming the following opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary and
appropriate.
It is my opinion that:
1. The Account is a separate investment account of the Company and is duly
created and validly existing pursuant to the laws of the State of
Delaware.
2. The Contracts, when issued in accordance with the Prospectus of the
Account and in compliance with applicable local law, are and will be
legal and binding obligations of the Company in accordance with their
terms.
3. Assets attributable to reserves and other contract liabilities and held
in the Account will not be chargeable with liabilities arising out of
any other business the Company may conduct.
I consent to the filing of this opinion as an exhibit to the above-
mentioned Registration Statement and to the inclusion of my name under the
caption "Legal Matters" in the Statement of Additional Information filed as part
of the Registration Statement on Form N-4.
Very truly yours,
H. James Wilson
General Counsel
