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File Number 33-85496
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
POST-EFFECTIVE AMENDMENT NUMBER 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
(Name of Trust)
The Minnesota Mutual Life Insurance Company
(Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
(Depositor's Principal Executive Offices)
Dennis E. Prohofsky
Senior Vice President, General Counsel and Secretary
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
(Agent for Service)
Copy to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson St., N.W.
Suite 405 West
Washington, D.C. 20007
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
---
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Regulation 270.24f-2 under the Investment Company Act of 1940,
Registrant has previously elected to register an indefinite number of its common
shares under the Securities Act of 1933. The Rule 24f-2 Notice for Registrant's
most recent fiscal year was filed on February 26, 1997.
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MINNESOTA MUTUAL
VARIABLE UNIVERSAL LIFE ACCOUNT
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
1. Cover Page
2. Cover Page; General Descriptions, The Minnesota Mutual Life
Insurance Company, Variable Universal Life Account
3. Not Applicable
4. Distribution of Policies
5. General Descriptions, Variable Universal Life Account
6. General Descriptions, Variable Universal Life Account
7. General Descriptions, Variable Universal Life Account
8. Financial Statements
9. Legal Proceedings
10. Summary; Detailed Information About the Variable Universal Life
Insurance Policy; Charges; Voting Rights
11. Summary; Detailed Information About the Variable Universal Life
Insurance Policy; General Descriptions, MIMLIC Series Fund, Inc.,
Fidelity Variable Insurance Fund, and Fidelity Variable Insurance
Fund II
12. Summary; Detailed Information About the Variable Universal Life
Insurance Policy; General Descriptions, MIMLIC Series Fund, Inc.,
Fidelity Variable Insurance Fund, and Fidelity Variable Insurance
Fund II
13. Detailed Information About the Variable Universal Life Insurance
Policy; Charges
14. Detailed Information About the Variable Universal Life Insurance
Policy; Applications and Policy Issue
15. Detailed Information About the Variable Universal Life Insurance
Policy; Policy Premiums
16. Account Values
17. Summary; Detailed Information About the Variable Universal Life
Insurance Policy; Account Values
18. General Descriptions, MIMLIC Series Fund, Inc., Fidelity Variable
Insurance Products Fund, and Fidelity Variable Insurance Products
Fund II
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19. General Matters Relating to the Policy
20. Not Applicable
21. Account Values; Policy Loans
22. Not Applicable
23. Not Applicable
24. General Matters Relating to the Policy; General Provisions of the
Group Contract
25. General Descriptions, The Minnesota Mutual Life Insurance Company
26. Not Applicable
27. General Descriptions, The Minnesota Mutual Life Insurance Company
28. Trustees and Principal Officers of Minnesota Mutual
29. General Descriptions, The Minnesota Mutual Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. General Descriptions, The Minnesota Mutual Life Insurance Company
36. Not Applicable
37. Not Applicable
38. Distribution of Policies
39. Distribution of Policies
40. Not Applicable
41. Distribution of Policies
42. Not Applicable
43. Not Applicable
44. Detailed Information About the Variable Universal Life Insurance
Policy; Policy Values
45. Not Applicable
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46. Not Applicable
47. Detailed Information About the Variable Universal Life Insurance
Policy; Policy Loans; Surrender
48. Not Applicable
49. Not Applicable
50. General Descriptions, Variable Universal Life Account
51. Summary; Detailed Information About the Variable Universal Life
Insurance Policy; Policy Charges
52. Summary; General Descriptions, Variable Universal Life Account;
MIMLIC Series Fund, Inc.; Fidelity Variable Insurance Products
Fund; Fidelity Variable Insurance Products Fund II
53. Federal Tax Status
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements
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Variable Universal Life Insurance Policy
This prospectus describes Variable Universal Life Insurance Policies issued by
The Minnesota Mutual Life Insurance Company ("Minnesota Mutual") which are
designed for use in group-sponsored insurance programs. In circumstances where
a group contract is issued, certificates setting forth or summarizing the
rights of the owners and/or insureds will be issued under the group contract.
Individual policies can also be issued in connection with group-sponsored
insurance programs in circumstances where a group contract is not issued. The
terms of the certificate issued under a group contract and the individual
policy are substantially the same and are collectively referred to in this
prospectus as "policy" or "policies." If rights of an owner of an individual
policy differ from those of an owner of a certificate issued under a group
contract, those rights will be disclosed separately.
The policies are designed to provide life insurance protection and at the same
time provide flexibility to vary premium payments under the policies. This
flexibility allows the owner to provide for changing insurance needs under a
single insurance policy. An owner also has the opportunity to allocate net
premiums among several investment portfolios with different investment
objectives.
The policy provides for (1) a net cash value that can be obtained by
surrendering the policy; (2) policy loans; and (3) a death benefit payable at
the insured's death. As long as a policy remains in force and there are no
outstanding policy loans, the death benefit payable on the insured's death
will not be less than the current face amount of the policy. The insurance
under a policy will remain in force so long as its net cash value is
sufficient to pay certain monthly charges imposed in connection with the
policy. All charges assessed under the policy are fully described under the
heading "Charges" on page 22 of this prospectus. The policy also contains a
cancellation right which is fully described under the heading "Free Look" on
page 21 of this prospectus.
The owner may allocate net premiums to one or more of the sub-accounts of a
separate account of Minnesota Mutual called the Variable Universal Life
Account (herein "separate account"). Net premiums may also be allocated to a
guaranteed account of Minnesota Mutual. To the extent of the investment of a
policy in the separate account, the account value will vary with the
investment experience of the sub-accounts of the separate account. There is no
guaranteed minimum value associated with the separate account and its sub-
accounts.
The separate account, through its sub-accounts, invests its assets in shares
of MIMLIC Series Fund, Inc., Fidelity's Variable Insurance Products Fund, and
Fidelity's Variable Insurance Products Fund II (the "Funds"). The MIMLIC
Series Fund, Inc. has seventeen Portfolios which are available to policy
owners for the allocation of premiums or for transfers. They are: the Growth
Portfolio, the Bond Portfolio, the Money Market Portfolio, the Asset
Allocation Portfolio, the Mortgage Securities Portfolio, the Index 500
Portfolio, the Capital Appreciation Portfolio, the International Stock
Portfolio, the Small Company Portfolio, the Value Stock Portfolio, the
Maturing Government Bond Portfolio with
PROSPECTUS
MINNESOTA MUTUAL
VARIABLE UNIVERSAL
LIFE ACCOUNT
[LOGO OF MINNESOTA MUTUAL APPEARS HERE]
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a target maturity of 2010, the Macro-Cap Value Portfolio, the Index 400 Mid-
Cap Portfolio, the Small Company Value Portfolio, the Micro-Cap Value
Portfolio, the Micro-Cap Growth Portfolio, and the International Bond
Portfolio. Although the Macro-Cap Value, the Index 400 Mid-Cap, the Small
Company Value, the Micro-Cap Value, the Micro-Cap Growth, and the
International Bond Portfolios are included in this prospectus, they will not
be available until October 1, 1997. Although the Maturing Government Bond
Portfolios with target maturities of 1998, 2002, and 2006 are included in this
prospectus, they are not available for premium allocations or transfers
effective May 1, 1997.
Fidelity's Variable Insurance Products Fund has two Portfolios which are
available to the Variable Universal Life Account. They are the High Income
Portfolio and the Equity-Income Portfolio. Fidelity's Variable Insurance
Products Fund II has one Portfolio which is available to the Variable
Universal Life Account. It is the Contrafund Portfolio. There is no guaranteed
minimum value associated with the separate account and its sub-accounts.
It may not be advantageous to purchase a policy as a replacement for another
type of life insurance or as a means to obtain additional insurance protection
if the purchaser already owns another flexible premium variable life insurance
policy.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS OF MIMLIC
SERIES FUND, INC., AND UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR FIDELITY'S
VARIABLE INSURANCE PRODUCTS FUNDS. THIS PROSPECTUS SHOULD BE READ CAREFULLY
AND RETAINED FOR FUTURE REFERENCE.
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 Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
Ph 612/665-3500
http://www.minnesotamutual.com
Dated: May 1, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Special Terms.............................................................. 2
Summary.................................................................... 3
Condensed Financial Information............................................ 10
General Descriptions....................................................... 11
The Minnesota Mutual Life Insurance Company.............................. 11
Variable Universal Life Account.......................................... 11
MIMLIC Series Fund, Inc.................................................. 11
Fidelity Variable Insurance Products Funds............................... 12
Additions, Deletions or Substitutions.................................... 13
The Guaranteed Account................................................... 13
General Description.................................................... 13
Guaranteed Account Value............................................... 14
Information About the Policy............................................... 14
Applications and Policy Issue............................................ 14
Policy Premiums.......................................................... 14
Death Benefit............................................................ 16
Change in Face Amount.................................................... 17
Payment of Death Benefit Proceeds........................................ 17
Account Values........................................................... 18
Policy Loans............................................................. 20
Surrender and Partial Surrender.......................................... 21
Transfers................................................................ 22
Dollar Cost Averaging.................................................... 22
Free Look................................................................ 23
Conversion Right to an Individual Policy................................. 23
Continuation of Group Coverage........................................... 24
Charges.................................................................. 24
Premium Expense Charges................................................ 24
Account Value Charges.................................................... 25
Monthly Deduction...................................................... 25
Partial Surrender Transaction Charge................................... 26
Transfer Charge........................................................ 26
Separate Account Charges................................................. 26
Fund Charges............................................................. 26
Guarantee of Certain Charges............................................. 27
Additional Benefits...................................................... 27
General Matters Relating to the Policy................................... 28
General Provisions of the Group Contract................................. 31
Other Matters.............................................................. 31
Federal Tax Status....................................................... 31
Trustees and Principal Officers of Minnesota Mutual...................... 35
Voting Rights............................................................ 36
Distribution of Policies................................................. 36
Legal Matters............................................................ 37
Legal Proceedings........................................................ 37
Experts.................................................................. 37
Registration Statement................................................... 37
Financial Statements of Minnesota Mutual Variable Universal Life Account... 38
Financial Statements of The Minnesota Mutual Life Insurance Company and
Subsidiaries.............................................................. 54
Appendix I-Illustrations of Account Values and Death Benefits.............. 76
Appendix II-Policy Loan Example............................................ 85
Appendix III-Advisory Fees and Portfolio Expenses.......................... 86
</TABLE>
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SPECIAL TERMS
As used in this prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The sum of the separate account value, guaranteed account value
and loan account value.
ATTAINED AGE: The issue age of the insured plus the number of completed policy
years.
BENEFICIARY: The person(s) named in an application for insurance or by later
designation to receive policy proceeds in the event of the insured's death. A
beneficiary may be changed as set forth in the policy and this prospectus.
CERTIFICATE: A document issued to the owner of a policy issued under a group
contract setting forth or summarizing the owner's rights and benefits.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACTHOLDER: The entity that is issued a group contract.
ELIGIBLE MEMBER: A member of the group seeking insurance who meets the
requirements stated on the specification pages of the group contract or policy
to be an owner and/or insured of a policy under the group-sponsored program.
FACE AMOUNT: The minimum amount of death benefit proceeds paid upon the death
of the insured, so long as the policy remains in force and there are no
outstanding policy loans. The face amount is shown on the specifications page
attached to the policy.
FUNDS: The mutual fund or separate investment portfolio within a series mutual
fund which we have designated as an eligible investment for the Variable
Universal Life Account, currently, MIMLIC Series Fund, Inc. and its
Portfolios, Fidelity's Variable Insurance Products Fund and its Portfolios,
and Fidelity's Variable Insurance Products Fund II and its Portfolio.
GENERAL ACCOUNT: All of our assets other than those in the Variable Universal
Life Account or in other separate accounts established by us.
GROUP CONTRACT: A Variable Universal Life Insurance Policy issued to the
contractholder.
GROUP SPONSOR: The employer, association or organization that is sponsoring a
program of insurance for the group members.
GUARANTEED ACCOUNT: Assets other than the loan account value that are
attributable to a policy and held in our general account.
GUARANTEED ACCOUNT VALUE: The sum of all net premiums and transfers allocated
to the guaranteed account and interest and dividends declared thereon, minus
amounts transferred to the separate account or removed in connection with a
partial surrender or policy loan and minus charges assessed against the
guaranteed account value.
INDIVIDUAL INSURANCE: Insurance provided under a group contract or under an
individual policy issued in connection with a group-sponsored insurance
program on a group member or a member's spouse.
INSURED: The person whose life is covered by life insurance under a policy.
This term may include a group member and a member's spouse.
ISSUE AGE: The insured's age at his or her last birthday as of the issue date.
ISSUE DATE: The effective date of an insured's coverage under a policy.
LOAN ACCOUNT: The portion of the general account attributable to policy loans
under policies of this type.
LOAN ACCOUNT VALUE: Assets held in our general account as collateral for
outstanding policy loans under a policy, together with accrued interest.
MATURITY DATE: The 95th birthday of the insured or a later birthday which is
established for policies issued under the group-sponsored insurance program.
MEMBER: An individual belonging to the group seeking insurance.
MONTHLY ANNIVERSARY: The first day of each calendar month on, or following,
the issue date.
NET CASH VALUE: The account value of a policy less any outstanding policy
loans and accrued policy loan interest charged and less any charges due. It is
the amount an owner may obtain through surrender of the policy.
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OWNER: The owner of a policy, as designated in the application or as
subsequently changed. An owner may be changed as set forth in the policy and
this prospectus.
POLICY: Either the certificate or the individual policy offered by us and
described in this prospectus.
POLICY ANNIVERSARY: The same day and month in each succeeding year as the
policy date, or the same day and month in each succeeding year as the date
agreed to between the contractholder and us. The policy anniversary is shown on
the specifications page attached to the policy.
POLICY DATE: The first day of the calendar month on, or following, the issue
date. This is the date from which policy years and policy months are measured.
POLICY MONTH: A calendar month.
POLICY YEAR: A period of one year measured from the policy date and from each
successive policy anniversary.
SEPARATE ACCOUNT: The Minnesota Mutual Variable Universal Life Account, a
separate investment account with twenty-three "sub-accounts" (each investing in
a different Portfolio of the Funds), the investment experience of each of which
is separate from that of our general account and our other assets.
SEPARATE ACCOUNT VALUE: The sum of all sub-account values.
SERIES FUND: The MIMLIC Series Fund, Inc., a mutual fund of the series type
which is an investment alternative for the Variable Universal Life Account.
SUB-ACCOUNT VALUE: The number of units of a sub-account credited to a policy
times the current unit value for that sub-account.
UNIT: An accounting device used to determine the interest of a policy in a sub-
account of the Variable Universal Life Account.
VALUATION DATE: Each date on which a Fund Portfolio is valued.
VALUATION PERIOD: The period between successive valuation dates measured from
the time of one determination to the next.
VIP: Fidelity's Variable Insurance Products Fund, a mutual fund of the series
type which is an investment alternative of the Variable Universal Life Account.
VIP II: Fidelity's Variable Insurance Products Fund II, a mutual fund of the
series type which is an investment alternative of the Variable Universal Life
Account.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
SUMMARY
The following summary is designed to answer certain general questions
concerning the policy and to give a brief overview of the more significant
policy features. This summary is not comprehensive and is qualified in its
entirety by the more specific information contained elsewhere in this
prospectus. Definitions of unfamiliar terms are provided on the preceding pages
under the heading "Special Terms".
WHAT IS A UNIVERSAL LIFE INSURANCE POLICY?
A universal life insurance policy is an adjustable benefit life insurance
policy which allows for the accumulation of cash values while the policy's life
insurance coverage remains in force and which permits the flexible payment of
premiums. An adjustable benefit policy has a stated face amount of insurance
payable in the event of the death of the insured, which is supported by the
deduction of specified monthly charges from the cash values. However, this
amount of insurance may be increased or decreased by the owner of the policy,
without the necessity of issuing a new policy for that owner. There are
limitations to these changes and we may require evidence of insurability before
requested increases go into effect. In addition, the coverage for an insured is
provided without specifying the frequency and amount of each premium payment
(as is the practice for scheduled premium life insurance policies). The time
and amount of the payment of premium may be determined by the owner and the
life insurance coverage will remain in force for an insured so long as monthly
charges may be deducted from the existing balance in the policy's net cash
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values. Subject to restrictions described herein, an owner may also make
payments in excess of that minimum amount required to keep a policy in force.
If cash values are insufficient for the payment of the required monthly
charges, then a premium payment is required or the life insurance coverage
provided to the owner by the policy will lapse.
A universal life insurance policy is intended for the use of persons who
wish to combine both life insurance and the accumulation of cash values. Such
a policy may be inappropriate for individuals seeking life insurance
protection which is the equivalent of term-type coverage.
WHAT MAKES THE POLICY "VARIABLE"?
The policy is termed "variable" because unlike a universal life policy which
provides for the accumulation of policy values at fixed rates determined by
the insurance company, variable universal life insurance policy values may be
invested in a separate account of ours called the Minnesota Mutual Variable
Universal Life Account ("separate account"), the sub-accounts of which invest
in corresponding Portfolios of the Funds. Thus, the owner's account value, to
the extent invested in the sub-account of the separate account, will vary with
the positive or negative investment experience of the corresponding Portfolios
of the Funds.
The account values of the policies, to the extent invested in sub-accounts
of the separate account, have no guaranteed minimum account value. Therefore,
the owner bears the risk that adverse investment performance may depreciate
the owner's investment in the policy. At the same time, the policy offers the
owner the opportunity to have the account value appreciate more rapidly than
it would under comparable fixed benefit policies by virtue of favorable
investment performance. In addition, under some policies, the death benefit
will also increase and decrease (but not below the guaranteed amount) with
investment experience.
Owners seeking the traditional insurance protections of a guaranteed account
value may allocate net premiums to the policy's guaranteed account option
which provides for guaranteed accumulation at a fixed rate of interest.
Additional information on this option may be found under the heading "The
Guaranteed Account" on page 12 of this prospectus.
WHAT VARIABLE INVESTMENT OPTIONS ARE AVAILABLE?
The separate account currently invests in twenty-three Portfolios of the
Funds. Although the Maturing Government Bond Portfolios with maturities of
1998, 2002, and 2006 are included in this prospectus, they are not available
for premium allocations or transfers effective May 1, 1997. These offer owners
the opportunity to invest in stocks, bonds, mortgage securities and money
market instruments. Owners who wish to actively manage the investment of their
account values may direct their funds to the Growth, Bond, Money Market,
Mortgage Securities, Index 500, Capital Appreciation, International Stock,
Small Company, Value Stock, Maturing Government Bond--2010, Macro-Cap Value,
Index 400 Mid-Cap, Small Company Value, Micro-Cap Value, Micro-Cap Growth, and
International Bond Portfolios of the Series Fund, the High Income and Equity-
Income Portfolios of VIP, and the Contrafund Portfolio of VIP II. The Asset
Allocation Portfolio of the Series Fund offers owners the opportunity to have
the Series Fund's investment adviser make all decisions concerning the
percentages of assets that should be invested in different types of securities
at any given time. Although the Macro-Cap Value, the Index 400 Mid-Cap, the
Small Company Value, the Micro-Cap Value, the Micro-Cap Growth, and the
International Bond Portfolios are included in this prospectus, they will not
be available until October 1, 1997.
The investment objectives and certain policies of the Portfolios of the
Series Fund are as follows:
The GROWTH PORTFOLIO seeks the long-term accumulation of capital. Current
income, while a factor in Portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The BOND PORTFOLIO seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
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securities will tend to rise and fall inversely with the rise and fall of
interest rates.
The MONEY MARKET PORTFOLIO seeks maximum current income to the extent
consistent with liquidity and the preservation of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuations in short-term interest rates.
The ASSET ALLOCATION PORTFOLIO seeks as high a level of long-term total
rate of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity
securities, bonds and money market instruments. The Asset Allocation
Portfolio involves the risks inherent in stocks and debt securities of
varying maturities and the risk that the Portfolio may invest too much or too
little of its assets in each type of security at any particular time.
The MORTGAGE SECURITIES PORTFOLIO seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily in
mortgage-related securities. Prices of mortgage-related securities will tend
to rise and fall inversely with the rise and fall of the general level of
interest rates.
The INDEX 500 PORTFOLIO seeks investment results that correspond generally
to the price and yield performance of the common stocks included in the
Standard & Poor's Corporation 500 Composite Stock Price Index (the "Index").
It is designed to provide an economical and convenient means of maintaining a
broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been included
in the Index affords no assurance against declines in the price or yield
performance of that stock.
The CAPITAL APPRECIATION PORTFOLIO seeks growth of capital. The Portfolio
will invest principally in equity securities (common stocks, securities
convertible into common stocks or rights or warrants to subscribe for or
purchase common stocks). Investments will be made based upon their potential
for capital appreciation. Therefore, current income will be incidental to the
objective of capital growth. Because of the market risks inherent in any
equity investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value.
The INTERNATIONAL STOCK PORTFOLIO seeks long-term capital growth. In
pursuit of this objective the International Stock Portfolio will follow a
policy of investing in stocks issued by companies, large and small, and debt
obligations of companies and governments outside the United States. Current
income will be incidental to the objective of capital growth. The Portfolio
is designed for persons seeking international diversification. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations, which are
in addition to the usual risks inherent in domestic investments.
The SMALL COMPANY PORTFOLIO seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy
of investing primarily in common and preferred stocks issued by small
companies, defined in terms of either market capitalization or gross
revenues. Investments in small companies usually involve greater investment
risks than fixed income securities or corporate equity securities generally.
Small companies will typically have a market capitalization of less than $1.5
billion or annual gross revenues of less than $1.5 billion.
The VALUE STOCK PORTFOLIO seeks the long-term accumulation of capital. The
production of income through the holding of dividend paying stocks will be a
secondary objective of the Portfolio. The Value Stock Portfolio will invest
primarily in equity securities of companies which, in the opinion of the
Portfolio's investment adviser, have market values which appear low relative
to their underlying value or future earnings and growth potential.
The MATURING GOVERNMENT BOND PORTFOLIOS seek to provide as high an
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investment return as is consistent with prudent investment risk for a
specified period of time ending on a specified liquidation date. In pursuit
of this objective, each of the four Maturing Government Bond Portfolios seek
to return a reasonably assured targeted dollar amount, predicable at the time
of investment, on a specific target date in the future through investment in
a Portfolio composed primarily of zero coupon securities. These are
securities that pay no cash income and are sold at a discount from their par
value at maturity. The current target dates for the maturities of these
Portfolios are 1998, 2002, 2006, and 2010, respectively. Beginning on May 1,
1997, no premium allocations or transfers may be made to the Maturing
Government Bond Portfolios with target dates of maturity of 1998, 2002, or
2006. On maturity the Portfolio will be converted to cash and reinvested at
the direction of the contractholder. In the absence of instructions,
liquidation proceeds will be allocated to the Money Market Portfolio.
The MACRO-CAP VALUE PORTFOLIO seeks to provide high total return. It
pursues this objective by investing in equity securities that the sub-adviser
believes, through the use of dividend discount models, to be undervalued
relative to their long-term earnings power, creating a diversified portfolio
of equity securities which typically will have a price/earnings ratio and a
price to book ratio that reflects a value orientation. The Portfolio seeks to
enhance its total return relative to that of the universe of large-sized U.S.
companies.
The INDEX 400 MID-CAP PORTFOLIO seeks to provide investment results
generally corresponding to the aggregate price and dividend performance of
publicly traded common stocks that comprise the Standard & Poor's 400 MidCap
Index. The Portfolio pursues its investment objective by investing primarily
in the 400 common stocks that comprise the Index, issued by medium-sized
domestic companies with market capitalizations that generally range from $200
million to $5 billion. It is designed to provide an economical and convenient
means of maintaining a diversified portfolio in this equity security area as
part of an over-all investment strategy. The inclusion of a stock in the
Index in no way implies an opinion by Standard & Poor's as to its
attractiveness as an investment, nor is it a sponsor or in any way affiliated
with the Portfolio.
The SMALL COMPANY VALUE PORTFOLIO seeks the long-term accumulation of
capital. The Portfolio will follow a policy of investing primarily in the
equity securities of small companies, defined in terms of market
capitalization and which appear to have market values which are low relative
to their underlying value or future earnings and growth potential. Dividend
income will be incidental to the investment objective for this Portfolio.
The MICRO-CAP VALUE PORTFOLIO seeks capital appreciation. The Portfolio
will pursue its objective by investing in a diversified portfolio of
securities that the adviser believes to be undervalued. It will invest
primarily in common stocks and stock equivalents of micro-cap companies, that
is, companies with a market capitalization of less than $300 million.
The MICRO-CAP GROWTH PORTFOLIO seeks long-term capital appreciation. It
pursues this objective by investing primarily in equity securities of smaller
companies which the sub-adviser believes are in an early stage or
transitional point in their development and have demonstrated or have the
potential for above average revenue growth. It will invest primarily in
common stocks and stock equivalents of micro-cap companies, that is,
companies with a market capitalization of less than $300 million.
The INTERNATIONAL BOND PORTFOLIO seeks to maximize current income
consistent with protection of principal. The Portfolio pursues its objective
by investing primarily in a managed portfolio of non-U.S. dollar debt
securities issued by foreign governments, companies and supranational
entities.
The investment objectives and certain policies of the Portfolios available
under VIP are as follows:
The VIP HIGH INCOME PORTFOLIO seeks a high level of current income by
investing primarily in high yielding, lower-quality, fixed-income securities,
while also considering growth of capital. Normally at least 65 percent of the
Portfolio's total assets will be in these securities. The Portfolio may also
invest up to 20 percent in common stocks and other equity
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securities consistent with the Portfolio's primary objective, or when
acquired as part of a unit combining fixed-income and equity securities.
The VIP EQUITY-INCOME PORTFOLIO seeks reasonable income by investing
primarily in income-producing equity securities. Normally at least 65 percent
of the Portfolio's total assets are in these securities. The remainder of the
Portfolio's assets will tend to be invested in debt obligations, many of
which are expected to be convertible into common stock. The Portfolio seeks
to achieve a yield that beats the Standard & Poor's Corporation 500 Composite
Stock Price Index (the "Index"). The adviser of the Portfolio may also
consider the potential for capital appreciation when choosing the Portfolio's
investments.
The investment objectives and certain policies of the Portfolio available
under VIP II are as follows:
The VIP II CONTRAFUND PORTFOLIO seeks capital appreciation by investing
mainly in equity securities of companies that the adviser believes to be
under-valued due to overly pessimistic appraisal by the public. In pursuit of
the Portfolio's goal the adviser looks for companies with the following
characteristics: unpopular currently, but improvement seems possible due to
developments such as a change in management, product line or balance sheet
improvements; recently popular, but temporarily out of favor companies due to
short-term or one-time factors; or companies which are undervalued compared
to other investments in the same industry. This strategy can lead to
investments in domestic or foreign companies, many of which may not be well
known.
There is no assurance that any Portfolio will meet its objectives.
Additional information
concerning the investment objectives, policies and risks of the Portfolios can
be found in the current prospectus for the MIMLIC Series Fund, Inc., which is
attached to this prospectus, and in the Prospectus for Fidelity's Variable
Insurance Products Fund and Variable Insurance Products Fund II, which is
attached to this Prospectus.
HOW CAN NET PREMIUMS BE ALLOCATED?
In the initial application for life insurance, the owner may indicate the
desired allocation of net premiums among the guaranteed account and the
available sub-accounts of the separate account. All future net premiums will
be allocated in the same proportion until the owner sends us a written request
to change the allocation. Similarly, the owner may transfer amounts from one
sub-account to another by sending us a written request or by calling us.
WHAT DEATH BENEFIT OPTIONS ARE OFFERED UNDER THE POLICY?
We offer two death benefit options under the policy. Under "Option A", a
level death benefit, the death benefit is the face amount of the policy. Under
"Option B", a variable death benefit, the death benefit is the face amount of
the policy plus the net cash value. So long as a policy remains in force and
there are no policy loans, the minimum death benefit under either option will
be at least equal to the current face amount. The death benefit proceeds will
be adjusted by the amount of any charges due or overpaid and any outstanding
policy loans and accrued policy loan interest charged determined as of the
date of death. The group sponsor will select one death benefit option of the
two we offer for all policies in a single group-sponsored program. Once
selected, a death benefit option under a policy shall remain unchanged.
There is a minimum initial face amount for the policy which is stated on the
specification pages of the policy. The owner may generally change the face
amount, but evidence of insurability of the insured may be required for
certain face amount increases.
TO WHOM DO WE PAY DEATH BENEFITS?
Death benefit proceeds are payable to the named beneficiary when the insured
under a policy dies. Benefits under the policy may be paid in a single sum or
under an elected settlement option.
DOES THE OWNER HAVE ACCESS TO THE ACCOUNT VALUES?
Yes. The net cash value, subject to the limitations in the policy, is
available to the owner during the insured's lifetime. The net cash value may
be used to provide retirement income, as collateral for a policy loan, to
7
<PAGE>
continue some amount of insurance protection without payment of premiums or to
obtain cash by surrendering the policy in full or in part.
The owner may borrow, as a policy loan, an amount up to 90 percent of the
owner's account value less any loan account value. Each alternative for
accessing the owner's account value may be subject to conditions described in
the policy or under the heading "Account Values" on page 16 of this prospectus
and certain transactions may have tax consequences, as described under the
heading "Federal Tax Status" on page 30.
WHAT CHARGES ARE ASSOCIATED WITH THE POLICY?
We assess certain charges against each premium payment and the account
values under each policy and against the asset value of the separate account.
These charges, which are largely designed to cover our expenses in providing
insurance protection and in distributing and administering the policies are
fully described under the heading "Charges" on page 22 of this prospectus and
the specific charges are shown on the specifications page of the policy. There
are also advisory fees and expenses which are assessed against the asset value
of each of the portfolios of the Funds.
PREMIUM EXPENSE CHARGES Premium expense charges vary based on the group-
sponsored insurance program under which the policy is issued. Against premiums
paid, we may deduct a percentage of premium for a SALES CHARGE, not to exceed
5 percent, and a percentage of premium for a PREMIUM TAX CHARGE, not to exceed
4 percent. We will also deduct a percentage of premium as a FEDERAL TAX CHARGE
to recover a portion of our estimated cost for the federal income tax
treatment of deferred acquisition costs. If a policy is considered an
individual policy under the Omnibus Budget Reconciliation Act, as amended,
("OBRA") the charge will not exceed 1.25 percent of premium, and if a policy
is considered to be a group policy under OBRA, the charge will not exceed .25
percent of premium. Additional information is provided under the heading
"Premium Expense Charges" on page of this prospectus.
ACCOUNT VALUE CHARGES The charges deducted as part of the MONTHLY DEDUCTION
vary based on the group-sponsored insurance
program under which the policy is issued. Each month, we may deduct from a
policy's account value the sum of the following applicable items: (1) an
administration charge; (2) a cost of insurance charge; and (3) the cost of any
additional insurance benefits provided by rider. The administration charge
will never exceed $4 per month. Additional information is provided under the
heading "Monthly Deduction" on page of this prospectus.
For policies under some group-sponsored insurance programs, a PARTIAL
SURRENDER TRANSACTION CHARGE will be assessed against the net cash value to
cover administrative processing costs. The charge will not exceed the lesser
of $25 or 2 percent of the amount withdrawn.
There is currently no TRANSFER CHARGE assessed on transfers of net cash
value between the guaranteed account and the separate account or among the
sub-accounts of the separate account. A charge, not to exceed $10 per
transfer, may be imposed in the future.
SEPARATE ACCOUNT CHARGES We assess a MORTALITY AND EXPENSE RISK CHARGE
against the separate account assets. This charge will vary based on the group-
sponsored insurance program under which the policy is issued. The annual rate
will not exceed .50 percent of the average daily assets of the separate
account. This annual rate is based on the actuarial risk associated with the
group that the cost of insurance and other charges will be insufficient to
cover the actual mortality experience and other costs in connection with the
policies. Additional information is provided under the heading "Separate
Account Charges" on page of this prospectus.
We reserve the right to deduct a charge against the separate account assets,
or make other provisions, for any additional tax liability we may incur with
respect to the separate account or the policies, to the extent that those
liabilities exceed the amounts recovered through the deduction from premiums
for state premium taxes and federal taxes. No such charge or provision is made
at the present time.
FUND CHARGES
Shares of the Funds are purchased for the separate account at their net
asset value, which reflects ADVISORY FEES AND EXPENSES
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<PAGE>
which are assessed against the net asset value of each of the Portfolios of
the Funds. Advantus Capital Management, Inc. ("Advantus Capital") acts as the
investment adviser to the Series Fund.
Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset Management
Company ("MIMLIC Management") which, prior to May 1, 1997, served as
investment adviser to the Fund. The same portfolio managers and other
personnel who previously provided investment advisory services to the Fund
through MIMLIC Management continue to provide the same services through
Advantus Capital. For more information about the Series Fund, see the
prospectus of MIMLIC Series Fund, Inc. which is attached to this prospectus.
The Fidelity VIP Funds' High Income Portfolio, Equity-Income Portfolio and
Contrafund Portfolio each has as its adviser Fidelity Management & Research
Company ("FMR"), a subsidiary of FMR Corp. For more information about the VIP
and the VIP II, see the prospectus of the Variable Insurance Products Funds
which is attached to this prospectus.
A summary of the advisory fees and portfolio expenses can be found in
Appendix III.
In addition to the investment advisory fees, other direct expenses are
charged against the assets of the Funds.
ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
We believe that the owner's policy should qualify as a life insurance
contract for federal income tax purposes. Assuming that a policy qualifies as
a life insurance contract for federal income tax purposes, the benefits under
policies described in this prospectus should receive the same tax treatment
under the Code as benefits under traditional fixed benefit life insurance
policies. Thus, death proceeds payable under variable life insurance policies
should be excludable from the beneficiary's gross income for federal income
tax purposes. The owner should not be in constructive receipt of the net cash
values of the policy until actual distribution. Additional information is
provided under the heading "Federal Tax Status" on page 30 of this prospectus.
It should be noted, however, that under recent legislation the tax treatment
described above relating to distributions is available only for policies not
described as "modified endowment contracts." Policies described as modified
endowment contracts are treated as life insurance with respect to the tax
treatment of death proceeds and the tax-free inside buildup of yearly account
value increases. However, any amounts received by the owner, such as
dividends, loans and amounts received from partial or total surrender of the
policy will be subject to the same tax treatment as amounts received under an
annuity during the accumulation period. Annuity tax treatment includes the 10
percent additional income tax imposed on the portion of any distribution that
is included in income, except where the distribution or loan is made on or
after the owner attains age 59 1/2, is attributable to the owner becoming
disabled, or is part of a series of substantially equal periodic payments for
the life of the owner or the joint lives of the owner and beneficiary.
A determination as to whether a policy is a modified endowment contract and
subject to this special tax treatment will require an examination of the
premium paid in relation to the death benefit of the policy. A policy would be
a modified endowment contract if the cumulative premiums during the first
seven contract years exceed the sum of the net level premiums which would be
paid under a seven-pay life policy. In addition, a policy which is subject to
a material change will be treated as a new policy on the date that such a
material change takes effect. A determination must be made at that time to
test whether such a policy meets the seven-pay standard by taking into account
the previously existing account value. Additional information on this subject
is provided under the heading "Federal Tax Status" on page 30 of this
prospectus.
CAN THE OWNER RETURN THE POLICY?
For a limited time after the application for the policy and its delivery,
the policy may be returned for a refund of all premium payments within the
terms of its "free look" or right of cancellation provision. See the heading
"Free Look" in this prospectus on page 21.
9
<PAGE>
CONDENSED FINANCIAL INFORMATION
The financial statements of The Minnesota Mutual Life Insurance Company and
Minnesota Mutual Variable Universal Life Account may be found in this
prospectus.
The table below gives per unit information about each sub-account for the
year ended December 31, 1996 and the period from March 8, 1995, commencement
of operations, to December 31, 1995. This information should be read in
conjunction with the financial statements and related notes of Minnesota
Mutual Variable Universal Life Account included in this prospectus.
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Growth Sub-Account:
Unit value at beginning of period ............................ $ 1.103 $1.000
Unit value at end of period .................................. $ 1.286 $1.103
Number of units outstanding at end of period ................. 10,583 5,717
Bond Sub-Account:
Unit value at beginning of period ............................ $ 1.067 $1.000
Unit value at end of period .................................. $ 1.093 $1.067
Number of units outstanding at end of period ................. 2,462 1,708
Money Market Sub-Account:
Unit value at beginning of period ............................ $ 1.027 $1.000
Unit value at end of period .................................. $ 1.072 $1.027
Number of units outstanding at end of period ................. 2,822 1,163
Asset Allocation Sub-Account:
Unit value at beginning of period ............................ $ 1.107 $1.000
Unit value at end of period .................................. $ 1.240 $1.107
Number of units outstanding at end of period ................. 5,376 2,487
Mortgage Securities Sub-Account:
Unit value at beginning of period ............................ $ 1.053 $1.000
Unit value at end of period .................................. $ 1.103 $1.053
Number of units outstanding at end of period ................. 1,353 1,116
Index 500 Sub-Account:
Unit value at beginning of period ............................ $ 1.164 $1.000
Unit value at end of period .................................. $ 1.409 $1.164
Number of units outstanding at end of period ................. 902,194 457,639
Capital Appreciation Sub-Account:
Unit value at beginning of period ............................ $ 1.127 $1.000
Unit value at end of period .................................. $ 1.319 $1.127
Number of units outstanding at end of period ................. 8,725 5,583
</TABLE>
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
International Stock Sub-Account:
Unit value at beginning of period.............................. $1.046 $1.000
Unit value at end of period ................................... $1.247 $1.046
Number of units outstanding at end of period .................. 4,601 3,688
Small Company Sub-Account:
Unit value at beginning of period.............................. $1.210 $1.000
Unit value at end of period ................................... $1.282 $1.210
Number of units outstanding at end of period .................. 41,743 34,825
Value Stock Sub-Account:
Unit value at beginning of period.............................. $1.161 $1.000
Unit value at end of period ................................... $1.513 $1.161
Number of units outstanding at end of period .................. 5,585 4,016
<CAPTION>
1996
------
<S> <C> <C>
Maturing Government Bond 1998 Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.044
Number of units outstanding at end of period................... 1,000
Maturing Government Bond 2002 Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.059
Number of units outstanding at end of period................... 1,000
Maturing Government Bond 2006 Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.079
Number of units outstanding at end of period................... 1,000
Maturing Government Bond 2010 Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.098
Number of units outstanding at end of period................... 1,000
Contrafund Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.114
Number of units outstanding at end of period................... 30,361
High Income Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.067
Number of units outstanding at end of period................... 29,956
Equity-Income Sub-Account:
Unit value at beginning of period.............................. $1.000*
Unit value at end of period.................................... $1.063
Number of units outstanding at end of period................... 30,306
</TABLE>
* The information for the sub-account is shown for the period from May 1, 1996
to December 31, 1996. May 1, 1996 was the effective date of the 1933 Act
Registration.
10
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GENERAL DESCRIPTIONS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
We are a mutual life insurance company organized in 1880 under the laws of
Minnesota. Our home office is at 400 Robert Street North, St. Paul, Minnesota
55101-2098, telephone: (612) 665-3500. We are licensed to do a life insurance
business in all states of the United States (except New York where we are an
authorized reinsurer), the District of Columbia, Canada, Puerto Rico, and Guam.
VARIABLE UNIVERSAL LIFE ACCOUNT
The separate account was established on August 8, 1994, by our Board of
Trustees in accordance with certain provisions of the Minnesota insurance law.
The separate account is registered as a "unit investment trust" with the
Securities and Exchange Commission under the Investment Company Act of 1940,
but such registration does not signify that the Securities and Exchange
Commission supervises the management, or the investment practices or policies,
of the separate account. The separate account meets the definition of a
"separate account" under the federal securities laws.
We are the legal owner of the assets in the separate account. The obligations
to policy owners and beneficiaries arising under the policies are general
corporate obligations of Minnesota Mutual and thus our general assets back the
policies. The Minnesota law under which the separate account was established
provides that the assets of the separate account shall not be chargeable with
liabilities arising out of any other business which we may conduct, but shall
be held and applied exclusively to the benefit of the holders of those variable
life insurance policies for which the separate account was established. The
investment performance of the separate account is entirely independent of both
the investment performance of our guaranteed account and of any other separate
account which we may have established or may later establish.
The separate account has twenty-three sub-accounts. Each sub-account invests
in shares of a corresponding Portfolio of the Funds. Although the Macro-Cap
Value, the Index 400 Mid-Cap, the Small Company Value, the Micro-Cap Value, the
Micro-Cap Growth, and the International Bond Portfolios are included in this
prospectus, they will not be available until October 1, 1997. Although the
Maturing Government Bond Portfolios with maturities of 1998, 2002, and 2006 are
included in this prospectus, they are not available for premium allocations or
transfers effective May 1, 1997.
MIMLIC SERIES FUND, INC.
The separate account currently invests in the MIMLIC Series Fund, Inc.,
Fidelity's Variable Insurance Products Fund, and Fidelity's Variable Insurance
Products Fund II. Currently, the Series Fund is a mutual fund of the series
type which is registered with the Securities and Exchange Commission as a
diversified, open-end management investment company. Such registration does not
signify that the Commission supervises the management, or the investment
practices or policies, of the Series Fund. Currently, the Series Fund issues
its shares, continually and without sales charge, only to us and certain of our
separate accounts, including the Variable Universal Life Account. The Series
Fund may be used in the future as the underlying investment medium for separate
accounts of the Northstar Life Insurance Company, our wholly-owned life
insurance subsidiary domiciled in the state of New York. Shares of the Series
Fund are sold and redeemed at net asset value.
The Series Fund's investment adviser is Advantus Capital Management, Inc.
("Advantus Capital"). It acts as an investment adviser to the Series Fund
pursuant to an advisory agreement. Advantus Capital is a wholly-owned
subsidiary of MIMLIC Management which, prior to May 1, 1997, served as
investment adviser to the Fund. The same portfolio managers and other personnel
who previously provided investment advisory services to the Fund through MIMLIC
Management continue to provide the same services through Advantus Capital.
While Advantus Capital acts as investment adviser for the Series Fund and its
Portfolios, Winslow Capital Management, Inc., a Minnesota corporation with
principal offices
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<PAGE>
in Minneapolis, Minnesota, has been retained under an investment sub-advisory
agreement to provide investment advice to the Capital Appreciation Portfolio.
Similarly, Templeton Investment Counsel, Inc., a Florida corporation with
principal offices in Fort Lauderdale, Florida, has been retained under an
investment sub-advisory agreement to provide investment advice to the
International Stock Portfolio. Advantus Capital has entered into a sub-
advisory agreement with J.P. Morgan Investment Management Inc. ("Morgan
Investment"), a Delaware corporation with primary offices in New York, New
York, under which Morgan Investment provides advisory services to the Macro-
Cap Value Portfolio. Advantus Capital has entered into a sub-advisory
agreement with Keystone Investment Management Company ("Keystone Management"),
a Delaware corporation with primary offices in Boston, Massachusetts, under
which Keystone provides advisory services to the Micro-Cap Value Portfolio.
Advantus Capital has entered into a sub-advisory agreement with Wall Street
Associates ("Wall Street"), a California corporation with primary offices in
La Jolla, California, under which Wall Street provides advisory services to
the Micro-Cap Growth Portfolio. Advantus Capital has entered into a sub-
advisory agreement with Julius Baer Investment Management Inc. ("Julius
Baer"), a Delaware corporation with primary offices in New York, New York,
under which Julius Baer provides advisory services to the International Bond
Portfolio.
The Series Fund currently has twenty investment Portfolios, seventeen of
which are available to policy owners for the allocation of premiums or for
transfers. A series of the Series Fund's common stock is issued for each
Portfolio. The assets of each Portfolio are separate from the others and each
has different investment objectives and policies. Therefore, each Portfolio
operates as a separate investment fund and the investment performance of one
has no affect on the investment performance of any other Portfolio.
All dividends and capital gains distributions from each Portfolio are
automatically reinvested in shares of that Portfolio at net asset value.
For more information about the Series Fund and its Portfolios, see the
"Summary" sections in this prospectus and the prospectus of the MIMLIC Series
Fund, Inc., which is attached to this prospectus.
FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS
The policy also provides for sub-accounts of the Variable Universal Life
Account which invests in shares of other registered investment companies. VIP
has two Portfolios which are available to the Variable Universal Life Account.
They are the High Income Portfolio and the Equity-Income Portfolio. VIP II has
one Portfolio which is available to the Variable Universal Life Account. It is
the Contrafund Portfolio. There is no guaranteed minimum value associated with
the separate account and its sub-accounts. Both VIP and VIP II issue their
shares, continually and without sales charge, only to us and to separate
accounts of other insurance companies, both affiliated and unaffiliated with
the investment adviser of VIP and VIP II.
The investment adviser of VIP and VIP II is Fidelity Management & Research
Company ("FMR"), 82 Devonshire Street, Boston, Massachusetts. FMR handles the
business affairs and, with the assistance of affiliates for certain
Portfolios, chooses the investments for VIP and VIP II. Fidelity Management &
Research (U.K.) Inc., in London, England, and Fidelity Management & Research
(Far East) Inc., in Tokyo, Japan, both serve as sub-advisers for the High
Income and Contrafund Portfolios. The ultimate parent company of all of these
entities is FMR Corp.
The assets of each Portfolio are separate from the others and each has
different investment objectives and policies. Therefore, each Portfolio
operates as a separate investment fund and the investment performance of one
has no affect on the investment performance of any other Portfolio. All
dividends and capital gains distributions from each Portfolio are
automatically reinvested in shares of that Portfolio at net asset value.
For more information about VIP and VIP II and the Portfolios, see the
"Summary" section in this prospectus, and the prospectus for Fidelity's
Variable Insurance Products Fund and Variable Insurance Products Fund II.
ADDITIONS, DELETIONS OR SUBSTITUTIONS
We reserve the right to add, combine or remove any sub-accounts of the
Variable Universal Life Account when permitted by law. Each additional sub-
account will
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<PAGE>
purchase shares in a new portfolio or mutual fund. New sub-accounts may be
established when, in our sole discretion, marketing, tax, investment or other
conditions warrant such action. We will use similar considerations should
there be a determination to eliminate one or more of the sub-accounts of the
separate account. Any new investment option will be made available to existing
owners on whatever basis we may determine.
We retain the right, subject to any applicable law, to make substitutions
with respect to the investments of the sub-accounts of the separate account.
If investment in a Portfolio of the Funds should no longer be possible or if
we determine it becomes inappropriate for policies of this class, we may
substitute another mutual fund or portfolio for a sub-account. Substitution
may be made with respect to existing account values and future premium
payments. A substitution may be made only with any necessary approval of the
Securities and Exchange Commission.
We reserve the right to transfer assets of the separate account as
determined by us to be associated with the policies to another separate
account. A transfer of this kind may require the approval of state regulatory
authorities and of the Securities and Exchange Commission.
We also reserve the right, when permitted by law, to restrict or eliminate
any voting right of owners or other persons who have voting rights as to the
separate account, and to combine the separate account with one or more other
separate accounts, and to de-register the separate account under the
Investment Company Act of 1940.
Shares of the Portfolios of the Series Fund are also sold to other of our
separate accounts, which are used to receive and invest premiums paid under
other variable annuity contracts and variable life policies issued by us.
Shares of VIP and VIP II are sold to other life insurance companies' separate
accounts for the purpose of funding other variable annuity and variable life
insurance contracts. It is conceivable that in the future it may be
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the Funds simultaneously.
THE GUARANTEED ACCOUNT
The owner may allocate net premiums and may transfer net cash values in the
policy, subject to policy limitations, to our guaranteed account.
Because of exemptive and exclusionary provisions, interests in Minnesota
Mutual's guaranteed account have not been registered under the Securities Act
of 1933, and the guaranteed account has not been registered as an investment
company under the Investment Company Act of 1940. Therefore, neither the
guaranteed account nor any interest therein is subject to the provisions of
these Acts, and Minnesota Mutual has been advised that the staff of the SEC
does not review disclosures relating to it. Disclosures regarding the
guaranteed 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.
This prospectus describes a Variable Universal Life Insurance Policy and is
generally intended to serve as a disclosure document only for the aspects of
the policy relating to the sub-accounts of the separate account. For more
information about the guaranteed account, please see the policy and the
summary information provided immediately below.
GENERAL DESCRIPTION Minnesota Mutual's general account consists of all assets
owned by Minnesota Mutual other than those in the separate account and any
other separate accounts which we may establish. The guaranteed account is that
portion of the general assets of Minnesota Mutual, exclusive of policy loans,
which is attributable to the policy described herein and others of its class.
The description is for accounting purposes only and does not represent a
division of the general account assets for the specific benefit of policies of
this class. Allocations to the guaranteed account become part of the general
assets of Minnesota Mutual and are used to support insurance and annuity
obligations and are subject to the claims of our creditors. Subject to
applicable law, we have sole discretion over the investment of assets of the
guaranteed account. Owners do not share in the actual investment experience of
the assets in the guaranteed account.
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<PAGE>
A portion or all the net premiums may be allocated or transferred to
accumulate at a fixed rate of interest in the guaranteed account, though we
reserve the right to restrict the allocation of premium into the guaranteed
account. If we do so, no more than 50 percent of the net premium may be
allocated to the guaranteed account. Such amounts are guaranteed by us as to
principal and a minimum rate of interest. Transfers from the guaranteed
account to the sub-accounts of the separate account may be subject to certain
limitations with respect to timing and amount. Currently, no such restrictions
are in effect.
GUARANTEED ACCOUNT VALUE Minnesota Mutual bears the full investment risk for
amounts allocated to the guaranteed account and guarantees that interest
credited to each owner's account value in the guaranteed account will not be
less than an annual rate of 4 percent without regard to the actual investment
experience of the guaranteed account. We may, at our sole discretion, credit a
higher rate of interest ("excess interest") although we are not obligated to
do so. Any interest credited on the policy's account value in the guaranteed
account in excess of the guaranteed minimum rate per year will be determined
at our sole discretion. The owner assumes the risk that interest credited may
not exceed the guaranteed minimum rate.
Even if excess interest is credited to the guaranteed account value, no
excess interest will be credited to the loan account value in the guaranteed
account. However, the loan account value will be credited interest at a rate
which is not less than 6 percent per annum.
INFORMATION ABOUT THE POLICY
APPLICATIONS AND POLICY ISSUE
We will generally issue a group contract to a group, as defined and
permitted by state law. For example, a group contract may be issued to an
employer, whose employees and/or their spouses may become insured thereunder
so long as the person is within a class of members eligible to be included in
the group contract. The class(es) of members eligible to be insured by a
policy under the group contract are set forth in that group contract's
specification pages. The group contract will be issued upon receipt of an
application for the group contract signed by a duly authorized officer of the
group wishing to enter into a group contract and the acceptance of that
application by a duly authorized officer of Minnesota Mutual at its home
office. Individuals wishing to purchase a policy insuring an eligible member
under a group-sponsored program must complete the appropriate application for
life insurance and submit it to our home office. If the policy is approved, we
will issue to the group sponsor either a certificate or an individual policy
to give to the owner. The issue of a group contract or individual policy and
their associated forms is always subject to the approval of those documents
for use by state insurance regulatory authorities.
Individuals who satisfy the eligibility requirements under a particular
group contract may be required to submit to a simplified underwriting
procedure which requires satisfactory responses to certain health questions in
the application and to provide, in some cases, medical information. Acceptance
of an application is subject to our underwriting rules, and we reserve the
right to reject an application for any reason.
A policy will not take effect until the owner signs the appropriate
application for insurance, the initial premium has been paid prior to the
insured's death, the insured is eligible, and we approve the completed
application. The date on which the last event occurs shall be the effective
date of coverage ("issue date").
POLICY PREMIUMS
A premium must be paid to put a policy in force, and may be remitted to us
by the group sponsor on behalf of the owner. The initial premium for a policy
must cover the premium expense charges and the first month's deductions. A
premium must also be paid when there is insufficient net cash value to pay the
monthly deduction necessary to keep the policy in force.
When the policy is established, the policy's specification pages may show
premium payments scheduled and the
14
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amounts of those payments. However, under the policy, the owner may elect to
omit making those premium payments. Failure to pay one or more premium
payments will not cause the policy to lapse until such time as the net cash
value is insufficient to cover the next monthly deduction. Moreover, as
mentioned above, the owner may also skip premium payments scheduled.
Therefore, unlike traditional insurance policies, a policy does not obligate
the owner to pay premiums in accordance with a rigid and inflexible premium
schedule.
Failure of a group sponsor to remit the authorized premium payments may
cause the group contract to terminate. Nonetheless, provided that there is
sufficient net cash value to prevent the certificate from lapsing, the owner's
insurance can be converted to an individual policy of life insurance in the
event of such termination. (See "Conversion Right to an Individual Policy,"
page 22.) The owner's insurance can also continue if the insured's eligibility
under the group-sponsored insurance program terminates because the insured is
no longer a part of the group or otherwise fails to satisfy the eligibility
requirements set forth in the specifications page to the group contract or
individual policy. (See "Continuation of Group Coverage," page 22.)
PREMIUM LIMITATIONS After the payment of the initial premium, premiums may be
paid at any time in any amount while the insurance is in force under the
policy. Since the policy permits flexible premium payments, it may become a
modified endowment contract (See "Federal Tax Status" on page 30). When we
receive the application, our systems will test the owner's elected premium
schedule to determine, if it is paid as scheduled and if there is no change
made to the owner's policy, whether it will result in the owner's policy being
classified as a modified endowment contract for federal income tax purposes.
Our systems will continue to test the owner's policy with each premium payment
to determine whether the policy has attained this tax status. If we determine
that the policy has attained the status of a modified endowment contract, we
will mail the owner a notice. The owner will be given a limited amount of
time, subject to the restrictions under the Code, to request that the policy
maintain the modified endowment contract status. If the owner does not request
to have this tax status maintained, the excess premium amounts paid that
caused this tax status will be returned with interest at the end of the policy
year to avoid the policy being classified as a modified endowment contract.
The owner may request an immediate refund if it is desired earlier.
ALLOCATION OF NET PREMIUMS AND ACCOUNT VALUE Net premiums, which are premiums
after the deduction of the charges assessed against premiums, are allocated to
the guaranteed account or sub-accounts of the separate account which, in turn,
invest in shares of the Funds.
The owner makes the selection of the sub-accounts and/or the guaranteed
account on the application for the policy. The owner may change the allocation
instructions for future premiums by giving us a written request. The
allocation to the guaranteed account or to any sub-account of the separate
account must be at least 10 percent of the net premium. We reserve the right
to delay the allocation of net premiums to named sub-accounts for a period of
30 days after policy issue or policy change. This right, which has not been
implemented to date, will be exercised by us only when we believe economic
conditions make such an allocation necessary to reduce market risk during the
"free look" period. If we exercise this right, net premiums will be allocated
to the Money Market Sub-Account until the end of that period.
We reserve the right to restrict the allocation of net premiums to the
guaranteed account for policies under some group-sponsored programs. For these
policies, the limit on allocation of net premiums to the Guaranteed Account
will never be lower than 20 percent. Currently, no such restriction applies.
LAPSE Unlike traditional life insurance policies, the failure to make a
premium payment following the payment of the premium which puts the policy
into force will not itself cause a policy to lapse. Lapse will occur only when
the net cash value is insufficient to cover the monthly deduction, and the
subsequent grace period expires without sufficient payment being made.
The grace period is 61 days. The grace period will start on the day we mail
the owner a notice that the policy will lapse if the premium amount specified
in the notice is not paid by the end of the grace period. We will
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<PAGE>
mail this notice on any policy's monthly anniversary when the net cash value
is insufficient to pay for the monthly deduction for the insured. The notice
will specify the amount of premium required to keep the policy in force and
the date the premium is due. If we do not receive the required amount within
the grace period, the policy will lapse and terminate. The grace period does
not apply to the first premium payment.
REINSTATEMENT A lapsed policy may be reinstated, any time within three years
from the date of lapse, provided the insured is living and subject to the
limitations described below. Reinstatement is made by payment of an amount
that, after the deduction of premium expense charges, is large enough to cover
all monthly deductions which have accrued on the policy up to the effective
date of reinstatement, plus the monthly deductions for the two months
following the effective date of reinstatement. If any policy loans and policy
loan interest charged is not repaid, this indebtedness will be reinstated
along with the insurance. No evidence of the insured's insurability will be
required during the first 31 days following lapse, but will be required from
the 32nd day to three years from the date of lapse.
The amount of account value on the date of reinstatement will be equal to
the amount of any policy loans and policy loan interest charged reinstated
increased by the net premiums paid at the time of reinstatement.
The effective date of reinstatement will be the date we approve the
application for reinstatement. There will be a full monthly deduction for the
policy month that includes that date.
DEATH BENEFIT
If the policy is in force at the time of the insured's death, upon receipt
of due proof of death, we will pay the death benefit proceeds of the policy
based on the death benefit option elected by the contractholder.
The group sponsor may choose one of two death benefit options for all
participants under the group-sponsored program. Once elected, the death
benefit option under a policy shall remain unchanged. There is a level death
benefit ("Option A") and a variable death benefit ("Option B"). The death
benefit under either option will never be less than the current face amount of
the policy as long as the policy remains in force and there are no policy
loans. The face amount elected must be at least the minimum stated on the
specification pages of the policy.
OPTION A Under Option A, the death benefit will be determined as follows:
(1) The face amount of insurance on the insured's date of death while the
policy is in force; plus
(2) the amount of the cost of insurance for the portion of the policy month
from the date of death to the end of the policy month; less
(3) any outstanding policy loans and accrued policy loan interest charged;
less
(4) any unpaid monthly deductions determined as of the date of the insured's
death.
OPTION B Under Option B, the death benefit will be determined as follows:
(1) The face amount of insurance on the insured's date of death while the
policy is in force; plus
(2) the amount of the owner's account value as of the date we receive due
proof of death satisfactory to us; plus
(3) the amount of the cost of insurance for the portion of the policy month
from the date of death to the end of the policy month; plus
(4) any monthly deductions taken under the certificate since the date of
death; less
(5) any outstanding policy loans and accrued policy loan interest charged;
less
(6) any unpaid monthly deductions determined as of the date of the insured's
death.
At issue, the group sponsor may choose between two tests that may be used to
determine if a policy qualifies as life insurance as defined by Section 7702
of the Code. Once a test is selected for a policy, it shall remain unchanged
for that policy. The two tests are the Guideline Premium Test and the Cash
Value Accumulation Test. The test selected will determine how the death
benefit is calculated in the event the account value or the premiums paid
exceed certain limits established under Section 7702.
Under either test, the death benefit at any point must be greater than the
account value times a specified percentage. Under the Guideline Premium Test
those percentages are prescribed and vary only by the age of the insured.
Under the Cash Value
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Accumulation Test, the percentages vary by the age and underwriting class of
the insured. If at any point the death benefit is not greater than the
applicable percentage, the death benefit will be increased to the amount
necessary to satisfy the test.
The prescribed percentages for the Guideline Premium Test are indicated in
the following table:
<TABLE>
<CAPTION>
APPLI- APPLI- APPLI-
CABLE CABLE CABLE
ATTAINED PERCENT- ATTAINED PERCENT- ATTAINED PERCENT-
AGE AGE AGE AGE AGE AGE
- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
40 & below 250% 54 157% 68 117%
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75-90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 0
53 164 67 118
</TABLE>
The following table contains illustrative applicable percentages under the
Cash Value Accumulation Test for an insured classified as a non-smoker:
<TABLE>
<CAPTION>
ATTAINED APPLICABLE
AGE PERCENTAGE
-------- ----------
<S> <C>
35 441%
45 316
55 231
65 175
75 140
</TABLE>
The Guideline Premium Test also limits the amount of premium that may be
paid into the policy. If premiums paid exceed the limits for the current death
benefit amount, the death benefit will be automatically increased to an amount
for which the prescribed premium limits exceed the premiums paid.
CHANGE IN FACE AMOUNT
Subject to certain limitations set forth below, an owner may increase or
decrease the face amount of a policy. A written request must be sent directly
to us for a change in the face amount. A change in the face amount will affect
the net amount at risk which affects the cost of insurance charge. (See
"Charges," page 22.) In addition, a change in the face amount of a policy may
result in a material change in the policy that may cause it to become a
modified endowment contract. More information on this subject and possible
federal income tax consequences of this result is provided under the heading
"Federal Tax Status" on page 30 of this prospectus.
INCREASES If an increase in the current face amount is applied for, we reserve
the right to require evidence of insurability from the insured. The increase
will become effective on the monthly anniversary on or following approval of
the change or on any other date mutually agreed upon between the owner and us.
Although an increase need not necessarily be accompanied by an additional
premium (unless it is required to meet the next monthly deduction), the net
cash value in effect immediately after the increase must be sufficient to
cover the next monthly deduction.
With respect to premiums allocated to an increase, the owner will have the
same "free look," conversion, and refund rights with respect to an increase as
with the initial purchase of the owner's policy. (See "Free Look," page 21.)
DECREASES Any decrease in the face amount will become effective on the monthly
anniversary on or following our receipt of the written request. However, the
amount of insurance on any insured may not be reduced to less than the minimum
face amount indicated on the specification page which is attached to the
owner's policy. Generally, this amount will be at least $10,000. If, following
a decrease in face amount, the policy would not comply with the maximum
premium limitations required by federal tax law (see "Federal Tax Status,"
page 30), the decrease may be limited or the account value may be returned to
the owner (at the owner's election), to the extent necessary to meet these
requirements.
PAYMENT OF DEATH BENEFIT PROCEEDS
The amount payable as death proceeds upon the insured's death will be the
death benefit under the option elected by the group sponsor. The death benefit
proceeds will also include any amounts payable under any riders.
If a rider permitting the accelerated payment of death benefit proceeds has
been added to the policy, the death benefit may be paid in a single lump sum
prior to the death of the insured and may be less than otherwise would be paid
upon death of the insured. (See "Additional Benefits," page 25.)
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Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death. Payment may, however, be postponed in certain circumstances.
(See "Postponement of Payments," page 26.) Under Option A death benefit,
interest will be paid on the death benefit from the date of the insured's
death until the date of payment. Under Option B death benefit, interest will
be paid on the face amount of insurance from the date of the insured's death
until the date of payment. The account value will remain as invested in the
guaranteed account and/or separate account until the date of payment;
therefore, the account value may increase or decrease in value from the date
of the insured's death to the date of the payment of death benefit proceeds.
Interest will also be paid on any charges taken under the policy since the
date of death, from the date the charge was taken until the date of payment.
Interest will be at an annual rate determined by us but never less than 4
percent per year, compounded annually, or the minimum required by state law.
Death benefit proceeds will be paid to the surviving beneficiary specified
on the application or as subsequently changed. The owner may arrange for death
benefit proceeds to be paid in a single lump sum or under one of the optional
methods of settlement described below.
When no election for an optional method of settlement is in force at the
death of the insured, the beneficiary may select one or more of the optional
methods of settlement at any time before death benefit proceeds are paid. (See
"Settlement Options," page 27.)
An election or change of method of settlement must be in writing. A change
in beneficiary revokes any previous settlement election.
ACCOUNT VALUES
The policy provides the owner certain account value benefits. Subject to
certain limitations, the owner may obtain access to the net cash value portion
of the account value of the policy. The owner may borrow against the policy's
loan value and may surrender the policy in whole or in part. The owner may
also transfer the net cash value between the guaranteed account and the sub-
accounts of the separate account or among the sub-accounts of the separate
account.
We will send the owner a report each year as of the policy anniversary
advising the owner of the policy's account values, the face amount and the
death benefit as of the date of the report. It will also summarize policy
transactions during the year, including premiums paid and their allocation,
policy charges, policy loan activity and the net cash value. It will be as of
a date within two months of its mailing. We will also, upon the owner's
request, send the owner an additional statement of past transactions at any
time for a $15 fee, which will be deducted from the portion of account value
that the owner specifies.
Also, upon request made to us at our home office, we will provide
information on the account value of a policy to the owner. Such requests may
be in writing, by telephone or by facsimile transmission, using the numbers
and procedures for providing telephone or facsimile transfer instructions.
(See "Transfers," page 20.)
DETERMINATION OF THE GUARANTEED ACCOUNT VALUE The guaranteed account value is
the sum of all net premium payments allocated to the guaranteed account. This
amount will be increased by any interest, dividends, loan repayments, policy
loan interest credits and transfers into the guaranteed account. This amount
will be reduced by any policy loans, loan interest charged, partial
surrenders, transfers into the sub-accounts of the separate account and
charges assessed against the owner's guaranteed account value. Interest is
credited on the guaranteed account value of the policy at a rate of not less
than 4 percent per year, compounded annually. We guarantee this minimum rate
for the life of the policy without regard to the actual experience of the
guaranteed account. As conditions permit, we may credit additional amounts of
interest to the guaranteed account value. The owner's guaranteed account value
is guaranteed by us. It cannot be reduced by any investment experience of the
guaranteed account.
DETERMINATION OF THE SEPARATE ACCOUNT VALUE The policy's separate account
value is determined separately. The separate account value is not guaranteed.
The determination of the separate account value
is made by multiplying the current number of sub-account units credited to a
policy by the
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<PAGE>
current sub-account unit value. A unit is a measure of a policy's interest in
a sub-account. The number of units credited with respect to each net premium
payment is determined by dividing the portion of the net premium payment
allocated to each sub-account by the then current unit value for that sub-
account. The number of units so credited is determined as of the end of the
valuation period during which we receive the owner's premium at our home
office.
Once determined, the number of units credited to the owner's policy will not
be affected by changes in the unit value. However, the number of units will be
increased by the allocation of subsequent net premiums, lump sum net premiums,
dividends and transfers to that sub-account. The number of additional units
credited is determined by dividing the net premiums, policy dividends and
transfers to that sub-account by the then current unit value for that sub-
account. The number of units of each sub-account credited to the owner's
policy will be decreased by policy charges to the sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The reduction in the number of units
credited is determined by dividing the deductions to that sub-account, policy
loans and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account by the then current unit value for that sub-
account. The number of sub-account units will decrease to zero on a policy
surrender.
UNIT VALUE The unit value of a sub-account will be determined on each
valuation date. The amount of any increase or decrease will depend on the net
investment experience of that sub-account. The value of a unit for each sub-
account was originally set at $1.00 on the first valuation date. For any
subsequent valuation date, its value is equal to its value on the preceding
valuation date multiplied by the net investment factor for that sub-account
for the valuation period ending on the subsequent valuation date.
NET INVESTMENT FACTOR The net investment factor for a valuation period is the
gross investment rate for such valuation period, less a deduction for the
mortality and expense risk charge under this policy which is assessed at the
annual rate stated on the specification pages of the policy against the
average daily net assets of each sub-account of the separate account. The
gross investment rate is equal to:
(1) the net asset value per share of a share held by the Funds in the sub-
account of the separate account determined at the end of the current
valuation period; plus
(2) the per share amount of any dividend or capital gains distribution by the
Funds if the "ex-dividend" date occurs during the current valuation
period; with the sum divided by
(3) the net asset value per share of the share of the Funds held in the sub-
account determined at the end of the preceding valuation period.
DAILY VALUES We determine the value of the units in each sub-account on each
day on which the Portfolios of the Funds are valued. The net asset value of
the Funds' shares is computed once daily, and, in the case of the Money Market
Portfolio, after the declaration of the daily dividend, as of the primary
closing time for business on the New York Stock Exchange (as of the date
hereof the primary close of trading is 3:00 p.m. Central Time, but this time
may be changed) on each day, Monday through Friday, except (i) days on which
changes in the value of a Fund's Portfolio securities will not materially
affect the current net asset value of such Fund's shares, (ii) days during
which no shares of a Fund are tendered for redemption and no order to purchase
or sell such Fund's shares is received by such Fund and (iii) customary
national business holidays on which the New York Stock Exchange is closed for
trading (as of the date hereof, New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day).
Although the account value for each policy is determinable on a daily basis,
we update our records to reflect that value on each monthly anniversary. We
also make policy value determinations as of the date of the insured's death
and on a policy adjustment, surrender, and lapse. When the policy value is
determined, we will assess and update to the date of the transaction those
charges made against the owner's account value, namely the administration
charge and the cost of insurance charge. Increases or decreases in policy
values will not be uniform for all policies but will be affected by policy
transaction activity, cost of
19
<PAGE>
insurance charges and the existence of policy loans.
To illustrate the operation of the policy under various assumptions, we have
prepared several tables, along with additional explanatory text, that may be
of assistance. For these tables, please see Appendix I, "Illustrations of
Account Values and Death Benefits," page 61 of this prospectus.
POLICY LOANS
The owner may borrow from us using only the policy as the security for the
loan. The owner may borrow up to an amount equal to (a) less (b), where (a) is
90 percent of the owner's account value and (b) is any outstanding policy
loans plus accrued policy loan interest charged. A loan taken from, or secured
by a policy, may have federal income tax consequences. (See "Federal Tax
Status," page 30.) The maximum loan amount is determined as of the date we
receive the owner's request for a loan.
Any policy loan paid to the owner in cash must be in an amount of at least
$100. We will charge interest on the loan in arrears. At the owner's request,
we will send the owner a loan request form for his or her signature. The owner
may also obtain a policy loan by calling us during our normal business hours
of 8:00 a.m. to 4:45 p.m., Central Time. Should the owner make a telephone
call to us, he or she will be asked for personal identification and policy
number. More information on the procedures to make telephone calls to us is
provided under the heading "Transfers" on page 20 of this prospectus.
When the owner takes a loan, we will reduce the net cash value by the amount
borrowed. This determination will be made as of the end of the valuation
period during which the loan request is received at our home office. Unless
the owner directs us otherwise, the policy loan will be taken from the
guaranteed account value and separate account value in the same proportion
that those values bear to each other and, as to the separate account value,
from each sub-account in the proportion that the sub-account value of each
such sub-account bears to the owner's separate account value. The number of
units to be canceled will be based upon the value of the units as of the end
of the valuation period during which we receive the owner's loan request at
our home office. The amount borrowed continues to be part of the account
value, as the amount borrowed becomes part of the loan account value where it
will accrue loan interest credits and will be held in our general account. A
policy loan has no immediate effect on the owner's account value since at the
time of the loan the account value is the sum of the guaranteed account value,
separate account value and the loan account value. When a loan is to come from
the guaranteed account value, we have the right to postpone a loan payment for
up to six months.
If a policy enters a grace period when there is an outstanding loan balance,
the owner will have to make a loan repayment to keep the policy in force. We
will give the owner notice of our intent to terminate the policy and the loan
repayment required to keep it in force. The time for repayment will be within
31 days after our mailing of the notice.
POLICY LOAN INTEREST The interest rate on a policy loan will be 8 percent per
year. Interest charged will be based on a daily rate, which if compounded for
the number of calendar days in the year will equal 8 percent annually, and
compounded for the number of days since loan interest charges were last
updated.
The outstanding loan balance will increase as the interest charged on the
policy loan accrues. The net cash value will decrease as the outstanding loan
balance increases. Interest is due at the end of the policy month. If the
owner does not pay in cash the interest accrued at the end of the policy
month, this unpaid interest will be added to the amount of the policy loan.
The new loan will be subject to the same rate of interest as the loan in
effect.
Interest is also credited to the amount of the policy loan in the loan
account value. Interest credits on a policy loan shall be at a rate which is
not less than 6 percent per year. Interest credited will be based on a daily
rate, which if compounded for the number of calendar days in the year will be
at least 6 percent annually, and compounded for the number of days since loan
interest charges were last updated.
POLICY LOAN REPAYMENTS If the owner's policy is in force, the owner's loan can
be repaid in part or in full at any time before the insured's death. The
owner's loan may also be repaid within 60 days after the date of the insured's
death, if we have not paid any of the benefits under the policy. Any loan
20
<PAGE>
repayment must be at least $100 unless the balance due is less than $100.
Loan repayments may only be allocated to the guaranteed account. The owner
may reallocate amounts in the guaranteed account among the sub-accounts of the
separate accounts, subject to the limitations in this prospectus and the
policy on such transfers. Loan repayments reduce the owner's outstanding loan
balance by the amount of the loan repayment. Loan repayments will be applied
first to interest accrued since the end of the prior policy month. Any
remaining portion of the repayment will then reduce the loan. The net cash
value will increase by the amount of the loan repayment.
A policy loan, whether or not it is repaid, will have a permanent effect on
the account value because the investment results of the sub-accounts will
apply only to the amount remaining in the sub-accounts. The effect could be
either positive or negative. If net investment results of the sub-accounts are
greater than the rate credited on the loan, the account value will not
increase as rapidly as it would have if no loan had been made. If investment
results of the sub-accounts are less than the rate credited on the loan, the
account value will be greater than if no loan had been made. For an example of
the effect of a policy loan on a policy and its death benefit, please see
Appendix II, "Policy Loan Example" on page 70 of this prospectus.
SURRENDER AND PARTIAL SURRENDER
The owner may also request a surrender or a partial surrender of the policy
at any time while the insured is living. To make a surrender, the owner sends
us a written request for its surrender. The owner is then paid the net cash
value of the policy, computed as of the end of the valuation period during
which we receive the surrender request at our home office. That payment can be
in cash or, at the option of the owner, can be applied on a settlement option.
A surrender or partial surrender may have federal income tax consequences.
(See "Federal Tax Status," page 30.)
A partial surrender of the net cash value of the policy is also permitted in
any amount equal to at least the minimum established for policies under the
group-sponsored insurance program. The minimum will never exceed $500. The
maximum partial surrender is equal to an amount that would cause the net cash
value after the partial surrender to be 10 percent of the account value
immediately prior to the partial surrender. We reserve the right to limit the
number of partial surrenders to one per policy month. A partial surrender will
cause a decrease in the face amount equal to the amount surrendered if the
policy has a level death benefit (Option A). A partial surrender has no effect
on the face amount of an Option B death benefit. However, since the account
value is reduced by the amount of the partial surrender, the death benefit is
reduced by the same amount, as the account value represents a portion of the
death benefit proceeds.
On a partial surrender, the owner may designate the sub-accounts of the
separate account from which a partial surrender is to be taken or whether it
is to be taken in whole or in part from the guaranteed account. Otherwise,
partial surrenders will be deducted from the guaranteed account value and
separate account value in the same proportion that those values bear to each
other and, as to the separate account value, from each sub-account in the
proportion that the sub-account value of each such sub-account bears to the
separate account value. We will tell the owner, on request, what amounts are
available for a partial surrender under the policy.
A transaction charge will be assessed against the net cash value in
connection with a partial surrender for policies under some group-sponsored
insurance programs. The amount of the charge will never exceed the lesser of
$25 or 2 percent of the amount withdrawn. The charge will be allocated to the
guaranteed account value and the separate account value in the same proportion
as those values bear to each other and, as to the separate account value, from
each sub-account in the same proportion that the sub-account value of each
such sub-account bears to the separate account value.
Payment of a surrender or partial surrender will be made as soon as
possible, but not later than seven days after our receipt of the owner's
written request for surrender. However, if any portion of the net cash value
to be surrendered is attributable to a premium payment made by non-guaranteed
funds such as a personal check, we will delay mailing that portion of the
surrender proceeds until we have reasonable assurance that the
21
<PAGE>
payment has cleared and that good payment has been collected. The amount the
owner receives on surrender may be more or less than the total premiums paid
under the policy.
TRANSFERS
The policy allows for transfers, a reallocation of the net cash value
between the guaranteed account and the separate account or among the available
sub-accounts of the separate account.
There are restrictions to such transfers. The amount to be transferred to or
from a sub-account or the guaranteed account must be at least $250. If the
balance is less than $250, the entire sub-account value or the guaranteed
account value must be transferred. If a transfer would reduce the sub-account
value from which the transfer is to be made to less than $250, we reserve the
right to include that remaining sub-account value in the amount transferred.
We also reserve the right to limit the number of transfers to one per policy
month.
For transfers from the sub-accounts of the separate account, we will credit
and cancel units on the basis of sub-account unit values as of the end of the
valuation period during which the owner's written or telephone request is
received at our home office. Transfers from the guaranteed account will be
dollar amounts deducted at the end of the day on which the transfer request is
received at our home office. A transfer is subject to a transaction charge.
Currently, no such charge is imposed on a transfer, but a charge, up to a
maximum of $10, may be imposed in the future.
The owner's instructions for transfer may be made in writing or the owner,
or a person authorized by the owner, may make such changes by telephone. To do
so, the owner may call us at (800) 843-8358 during our normal business hours
of 8:00 a.m. to 4:45 p.m., Central Time. Owners may also submit their requests
for transfer, surrender or other transactions to us by facsimile (FAX)
transmission. Our FAX number is (612) 665-4827.
Transfers made pursuant to a telephone call are subject to the same
conditions and procedures as would apply to written transfer requests. During
periods of marked economic or market changes, owners may experience difficulty
in implementing a telephone transfer due to a heavy volume of telephone calls.
In such a circumstance, owners should consider submitting a written transfer
request while continuing to attempt a telephone redemption. We reserve the
right to restrict the frequency of--or otherwise modify, condition, terminate
or impose charges upon--telephone transfer privileges. For more information on
telephone transfers, contact us.
We will make this telephone transfer service available to all policy owners.
We will employ reasonable procedures to satisfy ourselves that instructions
received from policy owners are genuine and, to the extent that we do not, we
may be liable for any losses due to unauthorized or fraudulent instructions.
We require policy owners to identify themselves in those telephone
conversations through policy numbers and such other information as we may deem
to be reasonable. We record telephone transfer instruction conversations and
we provide the policy owners with a written confirmation of the telephone
transfers.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited for
policies under some group-sponsored insurance programs. For these policies,
the limit on the amount to be transferred will never be lower than 20 percent
(or $250 if greater) of the guaranteed account balance. Transfers to or from
the guaranteed account may be limited to one such transfer per policy year. We
may further restrict transfers from the guaranteed account by requiring that
the request is received by us postmarked in the 30-day period before or after
the last day of the policy anniversary. Requests for such transfers which meet
these conditions would be effective after we approve them at our home office.
Currently, no such restrictions are imposed.
Although we currently intend to continue to permit transfers in the
foreseeable future, the policy provides that we may modify the transfer
privilege, by changing the minimum amount transferable, by altering the
frequency of transfers, by imposing a transfer charge, by prohibiting
transfers, or in such other manner as we may determine at our discretion.
DOLLAR COST AVERAGING
We currently offer a dollar cost averaging option enabling the owner to
preauthorize automatic monthly or quarterly transfers from the Money Market
Sub-Account to any of the other sub-accounts. The transfers will occur
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on monthly anniversaries. Dollar cost averaging is a systematic method of
investing in which securities are purchased at regular intervals in fixed
dollar amounts so that the cost of the securities is averaged over time and
possibly over various market values. Since the value of the units will vary
over time, the amounts allocated to a sub-account will result in the crediting
of a greater number of units when the unit value is low and a lesser number of
units when the unit value is high. Dollar cost averaging does not guarantee
profits, nor does it assure that a policy will not have losses.
To elect dollar cost averaging the owner must have at least $3,000 in the
Money Market Sub-Account. The automatic transfer amount from the Money Market
Sub-Account must be at least $250. The minimum amount that may be transferred
to any one of the other sub-accounts is $50. Currently, there is no charge for
this service. We reserve the right to discontinue, modify or suspend the
dollar cost averaging program at any time.
A dollar cost averaging request form is available to the owner upon request.
On the form the owner will designate the specific dollar amount to be
transferred, the sub-accounts to which the transfer is to be made, the desired
frequency of the transfer and the total number of transfers to be made. If at
any time while the dollar cost averaging option is in effect, the amount in
the Money Market Sub-Account is insufficient to cover the amount designated to
be transferred the current election in effect will terminate.
An owner may instruct us at any time to terminate the dollar cost averaging
election by a written or telephone request to our home office. The amount from
which transfers were being made will remain in the Money Market Sub-Account
unless a transfer request is made.
FREE LOOK
It is important to us that the owner is satisfied with the policy after it
is issued. If the owner is not satisfied with it, the owner may return the
policy to us within 10 days after the owner receives it. If the policy is
returned, the owner will receive within seven days of the date we receive the
notice of cancellation a full refund of the premiums paid.
A request for an increase in face amount also may be canceled. The request
for cancellation must be made within the 10 days, or that period required by
applicable state law, after the owner receives the new policy specification
pages for the increase.
Upon cancellation of an increase, the owner may request that we refund the
amount of the additional charges deducted in connection with the increase.
This will equal the amount by which the monthly deductions since the increase
went into effect exceeded the monthly deductions which would have been made
without the increase. If no request is made, we will increase the policy's
account value by the amount of these additional charges. This amount will be
allocated among the sub-accounts of the separate account and guaranteed
account in the same manner as it was deducted.
CONVERSION RIGHT TO AN INDIVIDUAL POLICY
If life insurance provided under the group contract is not continued upon
termination of the insured's eligibility under the group contract, or if the
group contract terminates or is amended so as to terminate the insurance, the
owner may convert the insurance under the group contract to an individual
policy of life insurance with us subject to the following:
(1) The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home
office within 31 days of the date the owner's insurance terminates under
the group contract.
(2) The owner may convert all or a part of the group insurance in effect on
the date that the owner's coverage terminated to any individual life
insurance policy we offer, except a policy of term insurance. We will
issue the individual policy on the policy forms we then use for the plan
of insurance the owner has requested. The premium charge for this
insurance will be based upon the insured's age as of his or her nearest
birthday.
(3) If the insured should die within 31 days of the date that the group
contract terminates, the full amount of insurance that could have been
converted under this policy will be paid.
In the case of the termination of the group contract, we may require that an
insured under a certificate issued under the group contract be so insured for
at least five years prior to the termination date in order to qualify for the
above conversion privilege.
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CONTINUATION OF GROUP COVERAGE
If the insured's eligibility under a group contract ends, the owner's
current group
coverage may continue unless the certificate is no longer in force or the
limitations below are true as of the date eligibility ends:
(1) The group contract has terminated; or
(2) The owner has less than $10 in his or her net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter all charges not to exceed the maximums. These
charges may be higher than those applicable to policies under the group
contract that have not been continued under this provision.
Termination of the group contract by the contractholder or us will not
terminate the insurance then in force under the terms of the continuation
provision. The group contract will be deemed to remain in force solely for the
purpose of continuing such insurance, but without further obligation of the
contractholder.
CHARGES
Charges will be deducted in connection with the policies to compensate us
for providing the insurance benefits set forth in the policies, administering
the policies, incurring expenses in distributing the policies and assuming
certain risks in connection with the policies. Charges will vary based on the
group-sponsored insurance program under which the policy is issued. We will
determine charges pursuant to our established actuarial procedures, and in
doing so we will not discriminate unreasonably or unfairly against any person
or class of persons. These charges for policies under a group-sponsored
insurance program are shown on the specifications page of the policy. There
are also advisory fees and expenses which are assessed against the asset value
of each of the portfolios of the Funds.
PREMIUM EXPENSE CHARGES
SALES CHARGE We may deduct a sales charge from each premium paid under the
policy. Sales charges vary based on the group-sponsored insurance program
under which the policy is issued. The charge will never exceed 5 percent of
each premium paid. The sales charge will be determined based on a variety of
factors, including enrollment procedures, the size and type of the group, the
total amount of premium payments to be received, any prior existing
relationship with the group sponsor, the level of commissions paid to agents
and brokers and their affiliated broker-dealers, and other circumstances of
which we are not presently aware. We may waive the sales charge for premiums
received as a result of Internal Revenue Code section 1035 exchanges from
another policy. In addition, we may waive the sales charge for premiums paid
by designated payors under a group-sponsored insurance program (for example,
insureds versus the group sponsor).
The amount of the sales charge in any policy year cannot be specifically
related to sales expenses for that year. To the extent that sales expenses are
not recovered from the sales charge, we will recover them from our other
assets or surplus, which may include profits from the mortality and expense
risk charge or the cost of insurance charge.
PREMIUM TAX CHARGE We will deduct a percentage of premium charge, not to
exceed 4 percent of each premium received for premium taxes. Premium tax
charges vary based on the group-sponsored insurance program under which the
policy is issued. This charge is to compensate us for our payment of premium
taxes that are imposed by various states and local jurisdictions. Currently,
the range of premium taxes imposed by the states varies from 0.75 percent to
3.5 percent. A state in which a policy is issued may impose a tax that is
higher or lower than the charge deducted under the policy. Accordingly, the
charge for the policy may be higher or lower than the premium tax actually
imposed on the policy. We may waive the premium tax charge for premiums
received as a result of Internal Revenue Code section 1035 exchanges from
another policy.
FEDERAL TAX CHARGE Due to a 1990 federal tax law change under the Omnibus
Budget Reconciliation Act of 1990 ("OBRA"), as amended, insurance companies
are generally required to capitalize and amortize certain policy acquisition
expenses rather than currently deducting such expenses. This has resulted in
an additional corporate income tax liability for insurance companies. For
policies
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deemed to be group policies for purposes of OBRA, we make a charge of up to
0.25 percent of each premium payment to compensate us for the additional
corporate taxes we pay for these policies. OBRA imposes a higher policy
acquisition expense to be capitalized on policies deemed to be individual
contracts under OBRA which results in significantly higher corporate income
tax liability for those deemed individual contracts. Thus, under policies
deemed to be individual contracts under OBRA, we make a charge of up to 1.25
percent of each premium payment. This additional charge is treated as a sales
load for purposes of determining compliance with the limitations on sales
loads imposed by the Investment Company Act of 1940 and applicable regulations
thereunder. We may waive the federal tax charge for premiums received as a
result of Internal Revenue Code section 1035 exchanges from another policy.
ACCOUNT VALUE CHARGES
MONTHLY DEDUCTION The charges deducted as part of the monthly deduction vary
based on the group-sponsored insurance program under which the policy is
issued. As of the policy date and each subsequent monthly anniversary, we will
deduct an amount from the net cash value of the owner's policy to cover
certain charges and expenses incurred in connection with the policy. The
monthly deduction will be the sum of the applicable items: (1) an
administration charge; (2) a cost of insurance charge; and (3) the cost of any
additional insurance benefits provided by rider. The monthly deduction will be
assessed against the guaranteed account value and the separate account value
in the same proportion that those values bear to each other and, as to the
separate account, from each sub-account in the proportion that the sub-account
value in such sub-account bears to the separate account value of the policy.
We may deduct an ADMINISTRATION CHARGE from the net cash value of the policy
each month. The administration charge will never exceed $4 per month. This
charge is to compensate us for expenses incurred in the administration of the
policies. These expenses include the costs of processing enrollments,
determining insurability, and establishing and maintaining policy records.
Differences in the administration charge applicable to specific group-
sponsored insurance programs will be determined based on expected differences
in the administrative costs for the policies or in the amount of revenues that
we expect to derive from the charge. Such differences may result, for example,
from the number of eligible members in the group, the type and scope of
administrative support provided by the group sponsor, the expected average
policy size, and the features to be included in policies under the group-
sponsored insurance program. This charge is not designed to produce a profit.
The monthly COST OF INSURANCE will be calculated by multiplying the
applicable cost of insurance rate based on the insured's attained age and rate
class by the net amount at risk for each policy month. The net amount at risk
for a policy month is the difference between the death benefit and the account
value. The net amount at risk may be affected by changes in the face amount of
the policy or by changes in the account value.
The cost of insurance rates are generally determined at the beginning of
each policy year, although changes may be made at other times if warranted due
to a change in the underlying characteristics of the group, changes in
benefits included in policies under the group-sponsored insurance program,
experience of the group, changes in the expense structure, or a combination of
these factors.
Cost of insurance rates for each group-sponsored insurance program are
determined based on a variety of factors related to group mortality including
gender mix, average amount of insurance, age distribution, occupations,
industry, geographic location, participation, level of medical underwriting
required, degree of stability in the charges sought by the group sponsor,
prior mortality experience of the group, number of actual or anticipated
owners electing the continuation option, and other factors which may affect
expected mortality experience. In addition, cost of insurance rates may be
intended to cover expenses to the extent they are not covered by the other
policy charges. Changes in the current cost of insurance rates may be made
based on any factor which affects the actual or expected mortality or expenses
of the group.
Any changes in the current cost of insurance rates will apply to all persons
of the
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same attained age and rate class under the group-sponsored insurance program.
We and the group sponsor will agree to the number of classes and
characteristics of each rate class. The classes may vary by tobacco users and
non-tobacco users, active and retired status, owners of coverage continued
under the continuation provision and other owners, and/or any other
nondiscriminatory classes agreed to by the group sponsor.
The current cost of insurance rates will not be greater than the guaranteed
cost of insurance rates set forth in the policy. These guaranteed rates are
125 percent of the maximum rates that could be charged based on 1980
Commissioners Standard Ordinary Mortality Tables ("1980 CSO Table"). The
guaranteed rates are higher than 100 percent of the 1980 CSO Table because we
use a simplified underwriting approach and may issue policies that do not
require medical evidence of insurability. The current cost of insurance rates
are generally lower than 100 percent of the 1980 CSO Table. (For purposes of
premiums under Section 7702 of the Internal Revenue Code of 1986, as amended,
we will use 100 percent of the 1980 CSO Table.)
PARTIAL SURRENDER TRANSACTION CHARGE For policies under some group-sponsored
insurance programs, a transaction charge will be assessed against the net cash
value for each partial surrender to cover the administrative costs incurred in
processing the partial surrender. The charge will not exceed the lesser of $25
or 2 percent of the amount withdrawn. This charge will be assessed in the same
manner as the monthly deduction. This charge is not designed to produce a
profit.
TRANSFER CHARGE There is currently no charge assessed on transfers of net
cash value between the guaranteed account and the separate account or among
the sub-accounts of the separate account. A charge, not to exceed $10 per
transfer, may be imposed in the future.
SEPARATE ACCOUNT CHARGES
We assess a mortality and expense risk charge directly against the separate
account assets. This charge will vary based on the group-sponsored insurance
program under which the policy is issued. The annual rate will not exceed .50
percent of the average daily assets of the separate account. The mortality and
expense risk charge compensates us for assuming the risk that the cost of
insurance and other charges will be insufficient to cover the actual mortality
experience and other costs in connection with the policies.
Differences in the mortality and expense risk charge rates applicable to
different group-sponsored insurance programs will be determined by us based on
differences in the levels of mortality and expense risk under those contracts.
Differences in mortality and expense risk arise principally from the fact
that: (1) the factors used to determine cost of insurance and administration
charges are more uncertain for some group-sponsored insurance programs than
for others; and (2) our ability to recover any unexpected mortality and
administration costs will also vary from group-sponsored insurance program to
group-sponsored insurance program, depending on the charges established for
policies issued under the group-sponsored insurance program, and on other
financial factors.
We reserve the right to deduct a charge against the separate account assets,
or make other provisions for, any additional tax liability we may incur with
respect to the separate account or the polices, to the extent that those
liabilities exceed the amounts recovered through the deduction from premiums
for state premium taxes and federal taxes. No such charge or provision is made
at the present time.
FUND CHARGES
Advantus Capital Management, Inc. ("Advantus Capital"), acts as the
investment adviser to the Series Fund. Advantus Capital is a wholly-owned
subsidiary of MIMLIC Management which, prior to May 1, 1997, served as
investment adviser to the Fund. The same portfolio managers and other
personnel who previously provided investment advisory services to the Fund
through MIMLIC Management continue to provide the same services through
Advantus Capital. For more information about the Series Fund, see the
prospectus of MIMLIC Series Fund, Inc. which is attached to this prospectus.
The Fidelity High Income Portfolio, Equity-Income Portfolio and Contrafund
Portfolio each has as its adviser Fidelity Management & Research Company
("FMR"), a subsidiary of FMR Corp. For more
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information about the VIP and the VIP II, see the prospectus of the Variable
Insurance Products Funds which is attached to this prospectus.
A summary of the advisory fees and portfolio expenses can be found in
Appendix III.
In addition to the investment advisory fees, other direct expenses are
charged against the assets of the Funds.
GUARANTEE OF CERTAIN CHARGES
We guarantee and will not increase the following charges for policies under
a group-sponsored insurance program: (1) the sales charge; (2) the federal tax
charge (unless there is a change in the law regarding the federal income tax
treatment of deferred acquisition cost); (3) the maximum cost of insurance
charge; (4) the maximum administration charge; (5) the maximum partial
surrender transaction charge; (6) the maximum transfer charge; and (7) the
maximum separate account charge for mortality and expense risk.
ADDITIONAL BENEFITS
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to the policy by rider. However, some group
contracts may not offer each of the additional benefits described below.
Certain riders may not be available in all states. The descriptions below are
intended to be general; the terms of the policy riders providing the
additional benefits may vary from state to state, and the policy should be
consulted. The cost of any additional insurance benefits will be deducted as
part of the monthly deduction.
ACCELERATED BENEFITS AGREEMENT All policies, where allowed by state law, will
be issued with the Accelerated Benefits Agreement. Eligibility requirements
and conditions for payment of accelerated benefits are described in the
agreement. The agreement provides for an accelerated payment of all or a
portion of the death benefit proceeds in a single sum or any other mutually
acceptable manner if the insured is terminally ill as defined in the
agreement, provided the policy has not been assigned and it does not have an
irrevocable beneficiary. All accelerated benefits will be paid to the insured
unless the insured validly assigns them otherwise. If the insured dies before
all payments have been made, we will pay the remainder to the beneficiary
under the policy in one lump sum.
The amount of accelerated benefit available will be the death benefit
multiplied by the accelerated benefit factor. The accelerated benefit factor
will be calculated using the following considerations: the insured's age,
gender, and option applied for; and certain assumptions including, but not
limited to, expected future premiums, future dividends at the scale in effect
when making the calculation, and the insured's life expectancy. We will
subtract a processing charge of up to $150 before paying the benefit. This
charge is not designed to produce a profit.
The addition of an Accelerated Benefits Agreement and/or the receipt of
amounts under such an Agreement may have tax consequences. The insured should
seek assistance from a personal tax adviser.
WAIVER AGREEMENT Provides for the waiver of the monthly deductions while the
insured is totally disabled, subject to certain limitations described in the
rider agreement. The insured must have become disabled before the age of 60.
ACCIDENTAL DEATH AND DISMEMBERMENT Provides additional insurance if the
insured dies or becomes dismembered as a result of an accidental bodily
injury, as defined in the rider. Under the terms of the rider, the additional
benefits provided in the policy will be paid upon receipt of proof by us that
the death or dismemberment resulted directly from accidental injury and
independently of all other causes. The death or dismemberment must occur
within 180 days after the date of the injury and before the insured's 70th
birthday.
CHILDREN'S RIDER Provides for term insurance on the insured's children, as
specified in the rider. To be eligible for the insurance, the child must be of
eligible age as indicated in the rider and be dependent upon the insured for
financial support. Under terms of the rider, the death benefit will be payable
to the person insured by the policy to which the rider is attached.
SPOUSE AND CHILD RIDER Provides for term insurance on the insured's spouse and
children, as specified in the rider. To be eligible for the insurance, spouse
and children must meet the eligibility requirements indicated in the rider.
Under terms of the
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rider, the death benefit will be payable to the person insured by the policy
to which the rider is attached.
POLICYHOLDER CONTRIBUTION RIDER Allows the contractholder to pay for all or a
portion of the monthly charges under the policy without affecting the account
value which may accumulate due to employee-paid net premiums. The portion of
the net premium paid by the contractholder will be allocated to the guaranteed
account. On the same day such premium is allocated, the charges the
contractholder intends to cover will be deducted from the guaranteed account
value.
GENERAL MATTERS RELATING TO THE POLICY
POSTPONEMENT OF PAYMENTS Normally, we will pay any policy proceeds within
seven days after our receipt of all the documents required for such a payment.
Other than the death proceeds, which are determined as of the date of death of
the insured, the amount of payment will be determined as of the end of the
valuation period during which a request is received at our home office.
However, we reserve the right to defer policy payments, including policy
loans, for up to six months from the date of the owner's request, if such
payments are based upon policy values which do not depend on the investment
performance of the separate account. In that case, if we postpone a payment
other than a policy loan payment for more than 31 days, we will pay the owner
interest at the greater of 4 percent per year or the minimum rate required by
state law for the period beyond that time that payment is postponed. For
payments based on policy values which do depend on the investment performance
of the separate account, we may defer payment only: (a) for any period during
which the New York Stock Exchange is closed for trading (except for normal
holiday closing); or (b) when the Securities and Exchange Commission has
determined that a state of emergency exists which may make such payment
impractical.
THE POLICY The policy, the attached application, endorsements, any application
for an increase in face amount and any application for reinstatement
constitute the entire contract between the owner and us. Apart from the rights
and benefits described in the policy and incorporated by reference into the
group contract, the owner has no rights under the group contract. All
statements made by the owner or insured in the application are considered
representations and not warranties, except in the case of fraud. Only
statements in the application and any supplemental applications can be used to
contest a claim or the validity of the policy. Any change to the policy must
be approved in writing by the President, a Vice President or Secretary of
Minnesota Mutual. No agent has the authority to alter or modify any of the
terms, conditions or agreements of the policy or to waive any of its
provisions.
CONTROL OF POLICY The insured will be considered the owner of the policy
unless another person is shown as the owner in the application. Ownership may
be changed, however, by assigning the policy as described below. The owner is
entitled to all rights provided by the policy, prior to its maturity date.
After the maturity date, the owner cannot change the payee nor the mode of
payment, unless otherwise provided in the policy. Any person whose rights of
ownership depend upon some future event will not possess any present rights of
ownership. If there is more than one owner at a given time, all must exercise
the rights of ownership. If the owner should die, and the owner is not the
insured, the owner's interest will go to his or her estate unless otherwise
provided.
BENEFICIARY The owner may name one or more beneficiaries on the application to
receive the death benefit. The owner may choose to name a beneficiary that the
owner cannot change without the beneficiary's consent. This is called an
irrevocable beneficiary. If the owner has not named an irrevocable
beneficiary, the owner has reserved the right to change the beneficiary by
filing a subsequent written request with us. In that event, we will pay the
death benefit to the beneficiary named in the most recent change of
beneficiary request as provided for in the policy.
If a beneficiary dies before the insured, that beneficiary's interest in the
policy ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no
beneficiary survives the insured we will pay the proceeds according to the
following order of priority:
(1) The insured's lawful spouse, if living; otherwise
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(2) The personal representative of the insured's estate.
CHANGE OF BENEFICIARY If the owner has reserved the right to change the
beneficiary, the owner can file a written request with us to change the
beneficiary. If the owner has named an irrevocable beneficiary, the written
consent of the irrevocable beneficiary will be required. The owner's written
request will not be effective until it is recorded in our home office records.
After it has been so recorded, it will take effect as of the date the owner
signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
SETTLEMENT OPTIONS The death benefit proceeds of a policy will be payable if
we receive due proof satisfactory to us of the insured's death while it is in
force. The proceeds will be paid from our home office and in a single sum
unless a settlement option has been selected.
We will pay interest on the face amount of single sum death proceeds from
the date of the insured's death until the date of payment at any annual rate
to be determined by us, but never less than 4 percent per year, compounded
annually, or the minimum rate required by state law. Death benefits proceeds
arising from the account value, as under Option B, will continue to reflect
the separate account experience until the time of payment of those amounts.
The proceeds of a policy may be paid in other than a single sum and the
owner may, during the lifetime of the insured, request that we pay the
proceeds under one of the policy's settlement options. We may also use any
other method of payment acceptable to both the owner and us. Unless the owner
elects otherwise, a beneficiary may select a settlement option after the
insured's death. A settlement option may be selected only if the payments are
to be made to a natural person in that person's own right.
Each settlement option is payable in fixed amounts as described below. A
person electing a settlement option will be asked to sign an agreement
covering the election which will state the terms and conditions of the
payments. The payments do not vary with the investment performance of the
separate account.
(1) INTEREST PAYMENTS This option will provide payment of interest on the
proceeds at such times and for a period that is agreeable to the person
electing the settlement option and us. Withdrawal of proceeds may be made
in amounts of at least $500. At the end of the period, any remaining
proceeds will be paid in either a single sum or under any other method we
approve.
(2) FIXED PERIOD ANNUITY This is an annuity payable in monthly installments
for a specified number of years, from one to twenty years. The amount of
guaranteed payments for each $1,000 of proceeds applied would be shown on
the settlement option agreement.
(3) LIFE ANNUITY This is an annuity payable monthly during the lifetime of the
person who is to receive the income and terminating with the last monthly
payment immediately preceding that person's death. We may require proof of
the age and gender of the annuitant. The amount of guaranteed payments for
each $1,000 of proceeds applied would be shown in the settlement option
agreement. It would be possible under this option for the annuitant to
receive only one annuity payment if he or she died prior to the due date
of the second annuity payment, two if he or she died before the due date
of the third annuity payment, etc.
(4) PAYMENTS OF A SPECIFIED AMOUNT This is an annuity payable in a specified
amount until the proceeds and interest are fully paid.
The minimum amount of interest we will pay under any settlement option is 4
percent per year, compounded annually, or the minimum rate required by state
law. Additional interest earnings, if any, on deposits under a settlement
option will be payable as determined by us.
POLICY CHANGES We reserve the right to limit the number of policy changes to
one per policy year and to restrict such changes in the first policy year. For
this purpose, changes include increases or decreases in face amount. No change
will be permitted that would result in the death benefit under a policy being
included in gross income due to not satisfying the requirements of Section
7702 of the Internal Revenue Code or any applicable successor provision.
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CONFORMITY WITH STATUTES If any provision in a policy is in conflict with the
laws of the state governing the policy, the provision will be deemed to be
amended to conform to such laws.
CLAIMS OF CREDITORS To the extent permitted by law, neither the policy nor any
payment thereunder will be subject to the claims of creditors or to any legal
process.
INCONTESTABILITY After a policy has been in force during the insured's lifetime
for two years from the policy date, we cannot contest the insurance for any
loss that is incurred more than two years after the policy date, unless the net
cash value has dropped below the amount necessary to pay the insured's cost of
insurance on the insured's life. However, if there has been an increase in the
amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable. We may elect to waive our
right to contest the insurance for any loss that is incurred within two years
after the policy issue date where the policy replaces existing coverage.
ASSIGNMENT The policy may be assigned. However, we will not be bound by any
assignment unless it is in writing and filed at our home office in St. Paul,
Minnesota, and we send the owner an acknowledged copy. We assume no
responsibility for the validity or effect of any assignment of the policy or of
any interest in it. Any claim made by an assignee will be subject to proof of
the assignee's interest and the extent of the assignment. A valid assignment
will take precedence over any claim of a beneficiary.
SUICIDE If the insured, whether sane or insane, dies by suicide, within two
years of the original policy date, our liability will be limited to an amount
equal to the premiums paid for the policy. If there has been a face amount
increase for which we required evidence of insurability, and if the insured
dies by suicide within two years from the effective date of the increase, our
liability with respect to the increase will be limited to an amount equal to
the premiums paid for that increase.
If the insured is a Missouri citizen when the policy is issued, this
provision does not apply on the issue date of the policy, or on the effective
date of any increase in face amount, unless the insured intended suicide when
the policy, or any increase in face amount, was applied for.
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two.
MISSTATEMENT OF AGE If the age of the insured has been misstated, the death
benefit and account value will be adjusted. The adjustment will be the
difference between two amounts accumulated with interest. These two amounts
are:
(1) the monthly cost of insurance charges that were paid; and
(2) the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating
guaranteed account values for that time period.
DIVIDENDS The policies are participating policies. Each year we will determine
if this class of policies and this policy will share in our divisible surplus.
We call a share of this participation a dividend. We do not anticipate that
dividends will be declared with respect to these policies.
Dividends, if received, may be added to the owner's account value or, if the
owner elects, they may be paid in cash.
A dividend applied to account value will be allocated to the guaranteed
account or to the sub-accounts of the separate account in accordance with the
owner's current instructions for the allocation of net premiums. In the absence
of instruction, dividends will be allocated to the guaranteed account value and
separate account value in the same proportion that those account values bear to
each other and, as to the account value in the separate account, to each sub-
account in the proportion that the sub-account value bears to the separate
account value.
REPORTS Each year we will send the owner a report. This report will show the
policy's status on the policy anniversary. It will include the account value,
the face amount and the death benefit as of the date of the report. It will
also show the premiums paid during the year, policy loan activity and the
policy value. The report will be sent to the owner without cost. The report
will be as of a date within two months of its mailing.
30
<PAGE>
GENERAL PROVISIONS OF THE GROUP CONTRACT
ISSUANCE The group contract will be issued upon receipt of an application for
group insurance signed by a duly authorized officer of the group sponsor and
acceptance by a duly authorized officer of Minnesota Mutual at our home office.
TERMINATION The contractholder may terminate a group contract by giving us 31
days prior written notice of the intent to terminate. In addition, we may
terminate a group contract or any of its provisions on 61 days' notice. We may
elect to limit the situations in which we may exercise our right to terminate
the group contract to situations where, in the absence of fraud or the non-
payment of premiums, during any twelve month period, the aggregate specified
face amount for all policies under the group contract or the number of policies
under a group contract decrease by certain amounts or below the minimum
permissible levels we establish for the group contract. No individual may
become insured under the group contract after the effective date of a notice of
termination. However, if the group contract terminates, policies may be allowed
to convert to individual coverage as described under the heading "Conversion
Right to an Individual Policy" on page 22.
Termination of the group contract by the contractholder or us will not
terminate the insurance then in force under the terms of the continuation
provision. The group contract will be deemed to remain in force solely for the
purpose of continuing such insurance, but without further obligation of the
contractholder.
RIGHT TO EXAMINE GROUP CONTRACT The contractholder may terminate the group
contract within 10 days, or that period required by law, after receiving it. To
cancel the group contract, the contractholder should mail or deliver the group
contract to us.
ENTIRE GROUP CONTRACT The group contract, the attached copy of the
contractholder's application and any additional agreements constitute the
entire contract between the contractholder and us. All statements made by the
contractholder, any owner or any insured will be deemed representations and not
warranties. A misstatement will not be used in any contest or to reduce claim
under the group contract, unless it is in writing. A copy of the application
containing such misstatement must have been given to the contractholder or to
the insured or to his or her beneficiary, if any.
OWNERSHIP OF GROUP CONTRACT The contractholder owns the group contract. The
group contract may be changed or amended by agreement between us and the
contractholder without the consent of, or notice to, any person claiming rights
or benefits under the group contract. However, unless the contractholder owns
all of the certificates issued under the group contract, the contractholder
does not have any ownership interest in the certificates issued under the group
contract. The rights and benefits under the certificates of the owners,
insureds and beneficiaries are as set forth in this prospectus and in the
certificates.
OTHER MATTERS
FEDERAL TAX STATUS
The discussion contained herein is general in nature and is not intended as
tax advice. Each person concerned should consult a competent tax adviser. No
attempt is made to consider any applicable state or other tax laws. In
addition, this discussion is based on our understanding of federal income tax
laws as they are currently interpreted. No representation is made regarding the
likelihood of continuation of current income tax laws or the current
interpretations of the Internal Revenue Service.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the separate account form a part of, and are taxed with, our
other business activities. Currently, no federal income tax is payable by us on
income dividends received by the separate account or on capital gains arising
from the separate account's activities. The separate account is not taxed as a
"regulated investment company" under the Code and it does not anticipate any
change in that tax status.
On the death of the insured, the death benefit provided by the policies will
be
31
<PAGE>
excludable from the gross income of the beneficiary under Section 101(a) of
the Internal Revenue Code. Under Section 7702 of the Code, life insurance
contracts such as the policies will be treated as life insurance under the
Code if certain tests are met. Guidance on how these tests are to be applied
is limited.
However, the Internal Revenue Service has issued proposed regulations that
would specify what will be considered reasonable mortality charges under
Section 7702. In light of these proposed regulations and the other available
guidance on the application of the tests under Section 7702, we generally
believe that a policy issued in respect of a standard risk should meet the
statutory definition of a life insurance contract under Section 7702. With
respect to a policy issued on a substandard basis (i.e., a premium class
involving higher than standard mortality risk), there is insufficient guidance
to determine if such a policy would satisfy the Section 7702 definition of a
life insurance contract. If it is subsequently determined that a policy does
not satisfy Section 7702, we may take whatever steps are appropriate and
necessary to attempt to cause such a policy to comply with Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the separate account to be
"adequately diversified" in order for the policy to be treated as a life
insurance contract for federal tax purposes. The separate account, through the
Funds, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Funds' assets may be
invested. Although the investment adviser of the Series Fund is an affiliate
of Minnesota Mutual, Minnesota Mutual does not have control over the Fund or
its investments. Nonetheless, Minnesota Mutual believes that each Portfolio of
the Series Fund in which the separate account owns shares will be operated in
compliance with the requirements prescribed by the Treasury.
In certain circumstances, owners of variable life policies may be considered
the owners, for federal income tax purposes, of the assets of a separate
account used to support their policies. In those circumstances, income and
gains from the separate account assets would be includable in the variable
life owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets
if the policy owner possesses incidents of ownership in those assets, such as
the ability to exercise the investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance
would be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular subaccounts without
being treated as owners of the underlying assets."
The ownership rights under the policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the owner of a policy has the choice of one or more sub-accounts in
which to allocate net purchase payments and policy values, and may be able to
transfer among sub-accounts more frequently than in such rulings. These
differences could result in a policy owner being treated as the owner of the
assets of the separate account. In addition, Minnesota Mutual 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. Minnesota Mutual
therefore reserves the right to modify the policy as necessary to attempt to
prevent a policy owner from being considered the owner of a pro rata share of
the assets of the separate account.
The following discussion assumes that the policy will qualify as a life
insurance contract for federal income tax purposes.
The owner is not currently taxed on any part of his or her interest until
the owner actually receives cash from the policy. However, taxability may also
be determined by the individual's contributions to the policy and prior policy
activity. We also believe that policy loans will be treated as indebtedness
and will not be currently taxable as income to
32
<PAGE>
the policy owner. However, a surrender or partial surrender may have tax
consequences. On surrender, an owner will generally not be taxed on values
received except to the extent that they exceed the gross premiums paid under
the policy. An exception to this general rule occurs in the case of a partial
surrender, a decrease in the face amount, or any other change that reduces
benefits under the policy in the first 15 years after the policy is issued and
that results in a cash distribution to the owner in order for the policy to
continue complying with the Section 7702 definitional limits. In that case,
such distribution may be taxed in whole or in part as ordinary income (to the
extent of any gain in the policy) under rules prescribed in Section 7702.
Premiums for additional benefits are not used in the calculation for computing
the tax on account values.
It should be noted, however, that the tax treatment described above is
available only for policies not described as a modified endowment contract. In
general, the tests to make such a determination will have an impact on
policies which have a high premium in relation to the death benefit. Thus,
under these tests, generally the cumulative premiums paid on a life insurance
policy during the first seven contract years cannot exceed the sum of the net
level premiums which would be paid under a seven-pay life policy. If the
cumulative premiums during the first seven contract years exceed the seven-pay
life premiums, the policy is a modified endowment contract.
Modified endowment contracts would still be treated as life insurance with
respect to the tax treatment of death proceeds and to the extent that the
inside build-up of account value would not be taxed on a yearly basis.
However, any amounts received by the owner, such as loans and amounts received
from partial or total surrender of the contract would be subject to the same
tax treatment as the same amounts received under an annuity (i.e., such
distributions are generally treated as taxable income to the extent that the
account value immediately before the distribution exceeds the investment in
the policy). This annuity tax treatment includes the 10 percent additional
income tax which would be imposed on the portion of any distribution that is
included in income except where the distribution or loan is made on or after
the owner attains age 59 1/2, or is attributable to the policy owner becoming
disabled, or as part of a series of substantially equal periodic payments for
the life of the policy owner or the joint lives of the policy owner and
beneficiary.
The modified endowment contract rules apply to all policies entered into on
or after June 21, 1988. It should be noted, in addition, that a policy which
is subject to a "material change" shall be treated as newly entered into on
the date on which such material change takes effect. Appropriate adjustment
shall be made in determining whether such a policy meets the seven-pay test by
taking into account the previously existing cash surrender value. While
certain adjustments described herein may result in a material change, the law
provides that any cost of living increase described in the regulations and
based upon an established broad-based index will not be treated as a material
change if any increase is funded ratably over the remaining period during
which premiums are required to be paid under the policy. To date, no
regulations under this provision have been issued.
Due to the policy's flexibility, classification of a policy as a modified
endowment contract will depend upon the circumstances of each policy.
Accordingly, a prospective policy owner should contact a competent tax adviser
before purchasing a policy to determine the circumstances under which the
policy would be a modified endowment contract. In addition, an owner should
contact a competent tax adviser before paying any lump sum premiums or making
any other change to, including an exchange of, a policy to determine whether
that premium or change would cause the policy (or the new policy in the case
of an exchange) to be treated as a modified endowment contract.
All modified endowment contracts issued by us (or an affiliated company) to
the same owner during any calendar year will be treated as one modified
endowment contract for purposes of determining the amount includable in gross
income under Section 72(e) of the Code. Additional rules may be promulgated
under this provision to prevent avoidance of its effects through serial
contracts or otherwise. For further information on current aggregation rules
under this provision, see your own tax adviser. A life insurance policy
received in exchange for a
33
<PAGE>
modified endowment contract will also be treated as a modified endowment
contract. Accordingly, an owner should consult a tax adviser before effecting
an exchange of any life insurance policy.
Generally, interest paid on any loan under a life insurance contract is not
deductible. An owner should consult a competent tax adviser before deducting
any loan interest.
The policy may be used in various arrangements, including non-qualified
deferred compensation or salary continuance plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a policy in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax adviser regarding the tax attributes of the particular
arrangement.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of policy proceeds depend upon the
circumstances of each policy owner or beneficiary. A competent tax adviser
should be consulted for further information.
It should be understood that the foregoing description of the federal income
tax consequences under the policies is not exhaustive and that special rules
are provided with respect to situations not discussed. Statutory changes in
the Internal Revenue Code, with varying effective dates, and regulations
adopted thereunder may also alter the tax consequences of specific factual
situations. Due to the complexity of the applicable laws, tax advice may be
needed by a person contemplating the purchase of a variable life insurance
policy or exercising elections under such a policy. For further information, a
qualified tax adviser should be consulted.
At the present time, we make no charge to the separate account or from
premium payments for any federal, state or local taxes (other than state
premium taxes and federal taxes under OBRA) that we incur that may be
attributable to such account or to the policies. We, however, reserve the
right in the future to make a charge for any such tax or other economic burden
resulting from the application of the tax laws that we determine to be
properly attributable to the separate account or the policies.
34
<PAGE>
TRUSTEES AND PRINCIPAL OFFICERS OF MINNESOTA MUTUAL
<TABLE>
<CAPTION>
Trustees Principal Occupation
-------- --------------------
<C> <S>
Giulio Agostini Senior Vice President, Finance and Administrative
Services, Minnesota Mining and Manufacturing
Company, Maplewood, Minnesota
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company, St.
Paul, Minnesota (Adhesive Products) since June 1995,
prior thereto for more than five years President and
Chief Executive Officer, H. B. Fuller Company
John F. Grundhofer Chairman of the Board, President and Chief Executive
Officer, First Bank System, Inc., Minneapolis,
Minnesota (Banking)
Harold V. Haverty Retired since May 1995, prior thereto, for more than
five years Chairman of the Board, President and
Chief Executive Officer, Deluxe Corporation,
Shoreview, Minnesota (Check Printing)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L. Carlson
School of Management, University of Minnesota
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Terry N. Saario, Ph.D. Formerly, to March 1996, President, Northwest Area
Foundation, St. Paul, Minnesota (Private Regional
Foundation)
Robert L. Senkler Chairman of the Board, President and Chief Executive
Officer, The Minnesota Mutual Life Insurance Company
since August 1995; prior thereto for more than five
years Vice President and Actuary, The Minnesota
Mutual Life Insurance Company
Michael E. Shannon Chairman, Chief Financial and Administrative
Officer, Ecolab Inc., St. Paul, Minnesota, since
August 1992, prior thereto President, Residential
Services Group, Ecolab Inc., St. Paul, Minnesota
from October 1990 to July 1992 (Develops and Markets
Cleaning and Sanitizing Products)
Frederick T. Weyerhaeuser Chairman, Clearwater Investment Trust, St. Paul,
Minnesota (Financial Management)
Principal Officers (other than Trustees)
Name Position
---- --------
John F. Bruder Senior Vice President
Keith M. Campbell Vice President
Paul H. Gooding Vice President and Treasurer
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Richard D. Lee Vice President
Joel W. Mahle Vice President
Dennis E. Prohofsky Senior Vice President, General Counsel and Secretary
Gregory S. Strong Vice President and Actuary
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
</TABLE>
35
<PAGE>
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Messrs. Andersen and Shannon, whose prior employment is as
indicated above. All officers of Minnesota Mutual have been employed by
Minnesota Mutual for at least five years.
VOTING RIGHTS
We will vote the shares of the Funds held in the various sub-accounts of the
Variable Universal Life Account at regular and special shareholder meetings of
the Funds in accordance with the owner's instructions. If, however, the
Investment Company Act of 1940, as amended, or any regulation thereunder
should change and we determine that it is permissible to vote the shares of
the Funds in our own right, we may elect to do so. The number of votes as to
which the owner has the right to instruct will be determined by dividing his
or her sub-account value by the net asset value per share of the corresponding
Portfolio of the Funds. Fractional shares will be counted. The number of votes
as to which the owner has the right to instruct will be determined as of the
date coincident with the date established by the Funds for determining
shareholders
eligible to vote at the meeting of the Funds. Voting instructions will be
solicited in writing prior to the meeting in accordance with procedures
established by the Funds. We will vote shares of the Funds held by the
separate account as to which no instructions are received in proportion to the
voting instructions which are received from policy owners with respect to all
policies participating in the separate account. Each owner having a voting
interest will receive proxy material, reports and other material relating to
the Funds.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that shares be voted so as to
cause a change in sub-classification or investment policies of the Funds or
approve or disapprove an investment advisory contract of the Funds. In
addition, we may disregard voting instructions in favor of changes in the
investment policies or the investment adviser of one or more of the Funds if
we reasonably disapprove of such changes. A change would be disapproved only
if the proposed change is contrary to state law or disapproved by state
regulatory authorities on a determination that the change would be detrimental
to the interests of policy owners or if we determine that the change would be
inconsistent with the investment objectives of the Funds or would result in
the purchase of securities for the Funds which vary from the general quality
and nature of investments and investment techniques utilized by other separate
accounts created by us or any of our affiliates which have similar investment
objectives. In the event that we disregard voting instructions, a summary of
that action and the reason for such action will be included in the owner's
next semi-annual report.
DISTRIBUTION OF POLICIES
The policies will be sold by state licensed life insurance producers who are
also registered representatives of MIMLIC Sales Corporation ("MIMLIC Sales")
or of other broker-dealers who have entered into selling agreements with
MIMLIC Sales. MIMLIC Sales acts as principal underwriter for the policies.
MIMLIC Sales is a wholly-owned subsidiary of MIMLIC Asset Management Company,
which in turn is a wholly-owned subsidiary of Minnesota Mutual. MIMLIC Asset
Management Company is a registered investment adviser.
MIMLIC Sales Corporation, whose address is 400 Robert Street North, St.
Paul, Minnesota 55101-2098, is a registered broker-dealer under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The policies are sold in the states where their sale is lawful.
The insurance underwriting and the determination of a proposed insured's risk
classification and whether to accept or reject an application for a policy is
done in accordance with our rules and standards.
Commissions to registered representatives on the sale of policies will be
premium-based, asset-based or a fixed amount. Commissions for policies under a
group-sponsored insurance program will not exceed the equivalent of 50 percent
of the portion of all premiums paid in the initial year to cover the cost of
insurance, 7 percent of all premiums paid in the initial year in excess of the
amount to cover the cost of insurance, and 7 percent of all premiums paid
after the initial year.
The commission schedule for a group-sponsored insurance program will be
determined based on a variety of factors, including enrollment procedures, the
size and type of the group, the total amount of
36
<PAGE>
premium payments to be received, any prior existing relationship with the
group sponsor, the sophistication of the group sponsor, and other
circumstances of which we are not presently aware.
In addition, MIMLIC Sales or Minnesota Mutual will pay, based uniformly on
the sales of the policies by registered representatives, credits which allow
registered representatives (agents) who are responsible for sales of the
policies to attend conventions and other meetings sponsored by Minnesota
Mutual or its affiliates for the purpose of promoting the sale of insurance
and/or investment products offered by Minnesota Mutual and its affiliates.
Such credits may cover the registered representatives' transportation, hotel
accommodations, meals, registration fees, etc.
LEGAL MATTERS
Legal matters in connection with federal securities laws applicable to the
issue and sale of the policies have been passed upon by Jones & Blouch L.L.P.,
1025 Thomas Jefferson Street, N.W., Suite 405 West, Washington, D.C. 20007.
All other legal matters, including the right to issue such policies under
Minnesota law and applicable regulations thereunder, have been passed upon by
Donald F. Gruber, Senior Counsel of Minnesota Mutual.
LEGAL PROCEEDINGS
As an insurance company, we are ordinarily involved in litigation. Minnesota
Mutual is of the opinion that such litigation is not material with respect to
the policies or the separate account.
EXPERTS
The separate financial statements of Minnesota Mutual Variable Universal
Life Account and Minnesota Mutual included in this prospectus have been
audited by KPMG Peat Marwick LLP, independent auditors, 4200 Norwest Center,
90 South Seventh Street, Minneapolis, Minnesota 55402, whose reports thereon
appear elsewhere herein, and have been so included in reliance upon the
authority of said firm as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Robert
M. Olafson, F.S.A., Second Vice President and Actuary of Minnesota Mutual, as
stated in his opinion filed as an exhibit to the Registration Statement.
REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933, as
amended, with the Securities and Exchange Commission with respect to the
policies offered hereby. This prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the
exhibits filed as a part thereof, to all of which reference is hereby made for
further information concerning the separate account, Minnesota Mutual, and the
policies. Statements contained in this prospectus as to the contents of
policies and other legal instruments are summaries, and reference is made to
such instruments as filed.
37
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees of The Minnesota Mutual Life Insurance Company and
Contract Owners of Minnesota Mutual Variable Universal Life Account:
We have audited the accompanying statements of assets and liabilities of the
Growth, Bond, Money Market, Asset Allocation, Mortgage Securities, Index 500,
Capital Appreciation, International Stock, Small Company, Maturing Government
Bond 1998, Maturing Government Bond 2002, Maturing Government Bond 2006,
Maturing Government Bond 2010, Value Stock, Contrafund, High Income and Equity-
Income Segregated Sub-Accounts of Minnesota Mutual Variable Universal Life
Account as of December 31, 1996 and the related statements of operations,
statements of changes in net assets for the year ended December 31, 1996 and
the period from March 8, 1995 to December 31, 1995 and financial highlights for
the periods in footnote (6). These financial statements and the financial
highlights are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investments owned at December 31, 1996 were confirmed to us by the
respective Sub-Account mutual fund group, or, for MIMLIC Series Fund, Inc.,
verified by examination of the underlying portfolios. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Growth, Bond, Money
Market, Asset Allocation, Mortgage Securities, Index 500, Capital Appreciation,
International Stock, Small Company, Maturing Government Bond 1998, Maturing
Government Bond 2002, Maturing Government Bond 2006, Maturing Government Bond
2010, Value Stock, Contrafund, High Income and Equity-Income Segregated Sub-
Accounts of Minnesota Mutual Variable Universal Life Account at December 31,
1996 and the results of their operations, changes in their net assets and the
financial highlights for the periods stated in the first paragraph above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 14, 1997
38
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------------------------------------------------------
MONEY ASSET MORTGAGE CAPITAL INTERNATIONAL SMALL
ASSETS GROWTH BOND MARKET ALLOCATION SECURITIES INDEX 500 APPRECIATION STOCK COMPANY
------ ------- ----- ------ ---------- ---------- --------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of
MIMLIC Series Fund,
Inc.:
Growth Portfolio, 5,806
shares at net asset
value of $2.343 per
share (cost $12,597) $13,605 -- -- -- -- -- -- -- --
Bond Portfolio, 2,099
shares at net asset
value of
$1.283 per share (cost
$2,629) -- 2,693 -- -- -- -- -- -- --
Money Market Portfolio,
3,026 shares at net as-
set value of $1.000 per
share (cost $3,026) -- -- 3,026 -- -- -- -- -- --
Asset Allocation Port-
folio, 3,574 shares at
net asset value of
$1.865 per share (cost
$6,312) -- -- -- 6,665 -- -- -- -- --
Mortgage Securities
Portfolio, 1,258 shares
at net asset value of
$1.187 per share (cost
$1,444) -- -- -- -- 1,493 -- -- -- --
Index 500 Portfolio,
527,753 shares at net
asset value of $2.409
per share (cost
$1,106,338) -- -- -- -- -- 1,271,205 -- -- --
Capital Appreciation
Portfolio, 4,656 shares
at net asset value of
$2.471 per share (cost
$10,417) -- -- -- -- -- -- 11,508 -- --
International Stock
Portfolio, 3,591 shares
at net asset value of
$1.597 per share (cost
$5,078) -- -- -- -- -- -- -- 5,736 --
Small Company Portfo-
lio, 34,854 shares at
net asset value of
$1.535 per share (cost
$53,707) -- -- -- -- -- -- -- -- 53,495
------- ----- ----- ----- ----- --------- ------ ----- ------
13,605 2,693 3,026 6,665 1,493 1,271,205 11,508 5,736 53,495
Receivable from Minne-
sota Mutual for policy
purchase payments -- -- 123 -- -- -- -- -- --
Receivable for invest-
ments sold 150 16 155 26 24 5,341 33 53 279
------- ----- ----- ----- ----- --------- ------ ----- ------
Total assets 13,755 2,709 3,304 6,691 1,517 1,276,546 11,541 5,789 53,774
------- ----- ----- ----- ----- --------- ------ ----- ------
<CAPTION>
LIABILITIES
-----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payable for investments
purchased -- -- 123 -- -- -- -- -- --
Payable to Minnesota Mu-
tual for policy termina-
tions and mortality and
expense charges 150 16 155 26 24 5,341 33 53 279
------- ----- ----- ----- ----- --------- ------ ----- ------
Total liabilities 150 16 278 26 24 5,341 33 53 279
------- ----- ----- ----- ----- --------- ------ ----- ------
NET ASSETS APPLICABLE TO
POLICY OWNERS $13,605 2,693 3,026 6,665 1,493 1,271,205 11,508 5,736 53,495
======= ===== ===== ===== ===== ========= ====== ===== ======
UNITS OUTSTANDING 10,583 2,462 2,822 5,376 1,353 902,194 8,725 4,601 41,743
======= ===== ===== ===== ===== ========= ====== ===== ======
NET ASSET VALUE PER UNIT $1.286 1.093 1.072 1.240 1.103 1.409 1.319 1.247 1.282
======= ===== ===== ===== ===== ========= ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------------------------------------------
MATURING MATURING MATURING MATURING
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT VALUE HIGH EQUITY-
ASSETS BOND 1998 BOND 2002 BOND 2006 BOND 2010 STOCK CONTRAFUND INCOME INCOME
------ ---------- ---------- ---------- ---------- ----- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of
MIMLIC Series Fund,
Inc.:
Maturing Government
Bond 1998 Portfolio,
967 shares at net asset
value of $1.080 per
share (cost $997)...... $1,044 -- -- -- -- -- -- --
Maturing Government
Bond 2002 Portfolio,
1,009 shares at net as-
set value of $1.049 per
share (cost $1,055).... -- 1,059 -- -- -- -- -- --
Maturing Government
Bond 2006 Portfolio,
986 shares at net asset
value of $1.094 per
share (cost $1,057).... -- -- 1,079 -- -- -- -- --
Maturing Government
Bond 2010 Portfolio,
937 shares at net asset
value of $1.172 per
share (cost $997)...... -- -- -- 1,098 -- -- -- --
Value Stock Portfolio,
5,313 shares at net as-
set value of $1.591
per share (cost $7,408) -- -- -- -- 8,451 -- -- --
Investments in shares of
Fidelity Variable Insur-
ance
Products Fund II:
Contrafund Portfolio,
2,043 shares at net as-
set value of $16.56 per
share (cost $30,303)... -- -- -- -- -- 33,831 -- --
Investments in shares of
Fidelity Variable
Insurance
Products Fund:
High Income Portfolio,
2,553 shares at net as-
set value of $12.52 per
share (cost $29,821)... -- -- -- -- -- -- 31,965 --
Equity-Income Portfo-
lio, 1,533 shares at
net asset value of
$21.03 per share (cost
$30,241)............... -- -- -- -- -- -- -- 32,229
------ ----- ----- ----- ----- ------ ------ ------
1,044 1,059 1,079 1,098 8,451 33,831 31,965 32,229
Receivable for invest-
ments sold -- -- -- -- 34 3 1 5
------ ----- ----- ----- ----- ------ ------ ------
Total assets 1,044 1,059 1,079 1,098 8,485 33,834 31,966 32,234
------ ----- ----- ----- ----- ------ ------ ------
<CAPTION>
LIABILITIES
-----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Payable to Minnesota Mu-
tual for policy termina-
tions and mortality
and expense charges -- -- -- -- 34 3 1 5
------ ----- ----- ----- ----- ------ ------ ------
NET ASSETS APPLICABLE TO
POLICY OWNERS $1,044 1,059 1,079 1,098 8,451 33,831 31,965 32,229
====== ===== ===== ===== ===== ====== ====== ======
UNITS OUTSTANDING 1,000 1,000 1,000 1,000 5,585 30,361 29,956 30,306
====== ===== ===== ===== ===== ====== ====== ======
NET ASSET VALUE PER UNIT $1.044 1.059 1.079 1.098 1.513 1.114 1.067 1.063
====== ===== ===== ===== ===== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------------------------------------------------------
MONEY ASSET MORTGAGE INDEX CAPITAL INTERNATIONAL SMALL
GROWTH BOND MARKET ALLOCATION SECURITIES 500 APPRECIATION STOCK COMPANY
------ ---- ------ ---------- ---------- -------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Investment income dis-
tributions from under-
lying mutual fund (note
4) $ 73 111 108 117 80 9,083 -- 127 113
Mortality and expense
charges (note 3) (51) (12) (11) (23) (7) (4,074) (49) (27) (245)
------ ---- ---- ---- ---- -------- ------ ------ ------
Investment income
(loss)--net 22 99 97 94 73 5,009 (49) 100 (132)
------ ---- ---- ---- ---- -------- ------ ------ ------
Realized and unrealized
gains (losses) on invest-
ments--net:
Realized gain distribu-
tions from underlying
mutual fund (note 4) 689 20 -- 214 -- 4,702 221 139 5,128
------ ---- ---- ---- ---- -------- ------ ------ ------
Realized gains on sales
of investments:
Proceeds from sales 1,863 498 859 441 241 122,254 2,445 2,242 5,459
Cost of investments
sold (1,769) (489) (859) (430) (238) (111,122) (2,219) (2,082) (5,051)
------ ---- ---- ---- ---- -------- ------ ------ ------
94 9 -- 11 3 11,132 226 160 408
------ ---- ---- ---- ---- -------- ------ ------ ------
Net realized gains on
investments 783 29 -- 225 3 15,834 447 299 5,536
------ ---- ---- ---- ---- -------- ------ ------ ------
Net change in unrealized
appreciation or
depreciation of
investments 729 (40) -- 236 (9) 137,153 1,067 553 (2,764)
------ ---- ---- ---- ---- -------- ------ ------ ------
Net gains (losses) on
investments 1,512 (11) -- 461 (6) 152,987 1,514 852 2,772
------ ---- ---- ---- ---- -------- ------ ------ ------
Net increase in net
assets resulting from
operations $1,534 88 97 555 67 157,996 1,465 952 2,640
====== ==== ==== ==== ==== ======== ====== ====== ======
</TABLE>
See accompanying notes to financial statements. [/R]
41
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996*
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------------------------------------------------------------
MATURING MATURING MATURING MATURING
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
BOND BOND BOND BOND VALUE CONTRA- HIGH EQUITY-
1998 2002 2006 2010 STOCK FUND INCOME INCOME
---------- ---------- ---------- ---------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss):
Investment income
distributions from
underlying mutual fund
(note 4) $-- 58 60 -- 67 -- -- --
Mortality and expense
charges (note 3) (3) (3) (3) (3) (35) (87) (87) (85)
---- --- --- --- ------ ----- ----- -----
Investment income
(loss)--net (3) 55 57 (3) 32 (87) (87) (85)
---- --- --- --- ------ ----- ----- -----
Realized and unrealized
gains on investments--
net:
Realized gain distri-
butions from under-
lying mutual fund
(note 4) -- -- -- -- 540 -- -- --
---- --- --- --- ------ ----- ----- -----
Realized gains on
sales of investments:
Proceeds from sales 3 3 3 3 2,286 93 87 97
Cost of investments
sold (3) (3) (3) (3) (1,970) (90) (84) (95)
---- --- --- --- ------ ----- ----- -----
-- -- -- -- 316 3 3 2
---- --- --- --- ------ ----- ----- -----
Net realized gains
on investments -- -- -- -- 856 3 3 3
---- --- --- --- ------ ----- ----- -----
Net change in
unrealized
appreciation or
depreciation of
investments 47 4 22 101 1,007 3,528 2,144 1,988
---- --- --- --- ------ ----- ----- -----
Net gains on in-
vestments 47 4 22 101 1,863 3,531 2,147 1,990
---- --- --- --- ------ ----- ----- -----
Net increase in net
assets resulting
from operations $ 44 59 79 98 1,895 3,444 2,060 1,905
==== === === === ====== ===== ===== =====
</TABLE>
* Period from May 1, 1996, commencement of operations, to December 31, 1996
for Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010, Contrafund, High Income
and Equity-Income Segregated Sub-Accounts.
See accompanying notes to financial statements.
42
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIOD FROM MARCH 8, 1995, COMMENCEMENT OF OPERATIONS, TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------------------------------------------------------------
MONEY ASSET MORTGAGE INDEX CAPITAL INTERNATIONAL SMALL VALUE
GROWTH BOND MARKET ALLOCATION SECURITIES 500 APPRECIATION STOCK COMPANY STOCK
------ ---- ------ ---------- ---------- ------- ------------ ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss):
Investment income dis-
tributions from under-
lying mutual fund
(note 4) $ -- -- 31 -- -- -- -- -- 48 32
Mortality and expense
charges (note 3) (9) (4) (3) (5) (3) (599) (10) (6) (74) (7)
----- --- --- ----- ---- ------- ------ ---- ------ ------
Investment income
(loss)--net (9) (4) 28 (5) (3) (599) (10) (6) (26) 25
----- --- --- ----- ---- ------- ------ ---- ------ ------
Realized and unrealized
gains on investments--
net:
Realized gain distri-
butions from under-
lying mutual fund
(note 4) -- -- -- -- -- -- -- -- 417 174
----- --- --- ----- ---- ------- ------ ---- ------ ------
Realized gains on
sales of investments:
Proceeds from sales 630 57 10 1,041 111 48,401 1,760 107 3,715 1,706
Cost of investments
sold (611) (55) (10) (982) (109) (47,208) (1,645) (105) (3,506) (1,568)
----- --- --- ----- ---- ------- ------ ---- ------ ------
19 2 -- 59 2 1,193 115 2 209 138
----- --- --- ----- ---- ------- ------ ---- ------ ------
Net realized gains
on investments 19 2 -- 59 2 1,193 115 2 626 312
----- --- --- ----- ---- ------- ------ ---- ------ ------
Net change in
unrealized
appreciation or
depreciation of
investments 279 104 -- 117 58 27,714 24 105 2,552 36
----- --- --- ----- ---- ------- ------ ---- ------ ------
Net gains on in-
vestments 298 106 -- 176 60 28,907 139 107 3,178 348
----- --- --- ----- ---- ------- ------ ---- ------ ------
Net increase in net
assets resulting
from operations $ 289 102 28 171 57 28,308 129 101 3,152 373
===== === === ===== ==== ======= ====== ==== ====== ======
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------------------------------------------
MONEY ASSET MORTGAGE CAPITAL INTERNATIONAL SMALL
GROWTH BOND MARKET ALLOCATION SECURITIES INDEX 500 APPRECIATION STOCK COMPANY
------- ----- ------ ---------- ---------- --------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Investment income
(loss)--net $ 22 99 97 94 73 5,009 (49) 100 (132)
Net realized gains on
investments 783 29 -- 225 3 15,834 447 299 5,536
Net change in
unrealized appreciation
or depreciation of
investments 729 (40) -- 236 (9) 137,153 1,067 553 (2,764)
------- ----- ----- ----- ----- --------- ------ ------ ------
Net increase in net as-
sets resulting from op-
erations 1,534 88 97 555 67 157,996 1,465 952 2,640
------- ----- ----- ----- ----- --------- ------ ------ ------
Policy transactions
(notes 3, 4 and 5):
Policy purchase pay-
ments 7,575 1,269 2,582 3,774 485 698,664 6,147 3,141 13,908
Policy withdrawals and
charges (1,812) (486) (848) (418) (234) (118,180) (2,396) (2,215) (5,214)
------- ----- ----- ----- ----- --------- ------ ------ ------
Increase in net assets
from policy transactions 5,763 783 1,734 3,356 251 580,484 3,751 926 8,694
------- ----- ----- ----- ----- --------- ------ ------ ------
Increase in net assets 7,297 871 1,831 3,911 318 738,480 5,216 1,878 11,334
Net assets at the begin-
ning of year 6,308 1,822 1,195 2,754 1,175 532,725 6,292 3,858 42,161
------- ----- ----- ----- ----- --------- ------ ------ ------
Net assets at the end of
year $13,605 2,693 3,026 6,665 1,493 1,271,205 11,508 5,736 53,495
======= ===== ===== ===== ===== ========= ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996*
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------------------------------------------
MATURING MATURING MATURING MATURING
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
BOND BOND BOND BOND VALUE CONTRA- HIGH EQUITY-
1998 2002 2006 2010 STOCK FUND INCOME INCOME
---------- ---------- ---------- ---------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Investment income
(loss)--net $ (3) 55 57 (3) 32 (87) (87) (85)
Net realized gains on
investments -- -- -- -- 856 3 3 2
Net change in
unrealized appreciation
or depreciation of in-
vestments 47 4 22 101 1,007 3,528 2,144 1,988
------ ----- ----- ----- ------ ------ ------ ------
Net increase in net as-
sets resulting from op-
erations 44 59 79 98 1,895 3,444 2,060 1,905
------ ----- ----- ----- ------ ------ ------ ------
Policy transactions
(notes 3, 4 and 5):
Policy purchase pay-
ments 1,000 1,000 1,000 1,000 4,143 30,393 29,905 30,336
Policy withdrawals and
charges -- -- -- -- (2,251) (6) -- (12)
------ ----- ----- ----- ------ ------ ------ ------
Increase in net assets
from policy transactions 1,000 1,000 1,000 1,000 1,892 30,387 29,905 30,324
------ ----- ----- ----- ------ ------ ------ ------
Increase in net assets 1,044 1,059 1,079 1,098 3,787 33,831 31,965 32,229
Net assets at the begin-
ning of period -- -- -- -- 4,664 -- -- --
------ ----- ----- ----- ------ ------ ------ ------
Net assets at the end of
period $1,044 1,059 1,079 1,098 8,451 33,831 31,965 32,229
====== ===== ===== ===== ====== ====== ====== ======
</TABLE>
* Period from May 1, 1996, commencement of operations, to December 31, 1996
for Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010, Contrafund, High Income
and Equity-Income Segregated Sub-Accounts.
See accompanying notes to financial statements.
45
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIOD FROM MARCH 8, 1995, COMMENCEMENT OF OPERATIONS, TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
------------------------------------------------------------------------------------------------
MONEY ASSET MORTGAGE INDEX CAPITAL INTERNATIONAL SMALL VALUE
GROWTH BOND MARKET ALLOCATION SECURITIES 500 APPRECIATION STOCK COMPANY STOCK
------ ----- ------ ---------- ---------- ------- ------------ ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Investment income
(loss)--net $ (9) (4) 28 (5) (3) (599) (10) (6) (26) 25
Net realized gains on
investments 19 2 -- 59 2 1,193 115 2 626 312
Net change in
unrealized apprecia-
tion or depreciation
of investments 279 104 -- 117 58 27,714 24 105 2,552 36
------ ----- ----- ------ ----- ------- ------ ----- ------ ------
Net increase in net as-
sets resulting from op-
erations 289 102 28 171 57 28,308 129 101 3,152 373
------ ----- ----- ------ ----- ------- ------ ----- ------ ------
Policy transactions
(notes 3, 4 and 5):
Policy purchase pay-
ments 6,640 1,773 1,174 3,619 1,226 552,219 7,913 3,858 42,650 5,990
Policy withdrawals and
charges (621) (53) (7) (1,036) (108) (47,802) (1,750) (101) (3,641) (1,699)
------ ----- ----- ------ ----- ------- ------ ----- ------ ------
Increase in net assets
from policy transac-
tions 6,019 1,720 1,167 2,583 1,118 504,417 6,163 3,757 39,009 4,291
------ ----- ----- ------ ----- ------- ------ ----- ------ ------
Increase in net assets 6,308 1,822 1,195 2,754 1,175 532,725 6,292 3,858 42,161 4,664
Net assets at the be-
ginning of period -- -- -- -- -- -- -- -- -- --
------ ----- ----- ------ ----- ------- ------ ----- ------ ------
Net assets at the end
of period $6,308 1,822 1,195 2,754 1,175 532,725 6,292 3,858 42,161 4,664
====== ===== ===== ====== ===== ======= ====== ===== ====== ======
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
The Minnesota Mutual Variable Universal Life Account (the Account) was
established on August 8, 1994 as a segregated asset account of The Minnesota
Mutual Life Insurance Company (Minnesota Mutual) under Minnesota law and is
registered as a unit investment trust under the Investment Company Act of 1940
(as amended). The Account commenced operations on March 8, 1995. The Account
currently has seventeen segregated sub-accounts to which policy owners may
allocate their purchase payments. On May 1, 1996, seven additional segregated
sub-accounts, Maturing Government Bond 1998, Maturing Government Bond 2002,
Maturing Government Bond 2006, Maturing Government Bond 2010, Contrafund, High
Income and Equity-Income, were added to the Account.
The assets of each segregated sub-account are held for the exclusive benefit
of the group-sponsored variable universal life insurance policy owners and are
not chargeable with liabilities arising out of the business conducted by any
other account or by Minnesota Mutual. Variable universal life policy owners
allocate their purchase payments to one or more of the seventeen segregated
sub-accounts. Such payments are then invested in shares of MIMLIC Series Fund,
Inc., Fidelity Variable Insurance Products Fund II or Fidelity Variable
Insurance Products Fund (the Underlying Funds). Each of the Underlying Funds is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Payments allocated to the
Growth, Bond, Money Market, Asset Allocation, Mortgage Securities, Index 500,
Capital Appreciation, International Stock, Small Company, Maturing Government
Bond 1998, Maturing Government Bond 2002, Maturing Government Bond 2006,
Maturing Government Bond 2010, Value Stock, Contrafund, High Income and Equity
Income segregated sub-accounts are invested in shares of the Growth, Bond,
Money Market, Asset Allocation, Mortgage Securities, Index 500, Capital
Appreciation, International Stock, Small Company, Maturing Government Bond
1998, Maturing Government Bond 2002, Maturing Government Bond 2006, Maturing
Government Bond 2010 and Value Stock Portfolios of the MIMLIC Series Fund,
Inc., Contrafund Portfolio of the Fidelity Variable Insurance Products Fund II
and High Income and Equity Income Portfolios of the Fidelity Variable Insurance
Products Fund, respectively.
MIMLIC Sales Corporation acts as the underwriter for the Account. MIMLIC
Asset Management Company acts as the investment adviser for the Fund. MIMLIC
Sales Corporation is a wholly-owned subsidiary of MIMLIC Asset Management
Company. MIMLIC Asset Management Company is a wholly-owned subsidiary of
Minnesota Mutual.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets resulting from
operations during the period. Actual results could differ from those estimates.
Investments in Underlying Funds
Investments in shares of the Underlying Funds are stated at market value which
is the net asset value per share as determined daily by each of the Underlying
Funds. Investment transactions are accounted for on the date the shares are
purchased or sold. The cost of investments sold is determined on the average
cost method. All dividend distributions received from the Underlying Funds are
reinvested in additional shares of the Underlying Funds and are recorded by the
sub-accounts on the ex-dividend data.
Federal Income Taxes
The Account is treated as part of Minnesota Mutual for federal income tax
purposes. Under current interpretations of existing federal income tax law, no
income taxes are payable on investment income or capital gain distributions
received by the Account from the Underlying Funds.
47
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) MORTALITY AND EXPENSE AND OTHER POLICY CHARGES
The mortality and expense charge paid to Minnesota Mutual is computed daily and
is equal, on an annual basis, to .50 percent of the average daily net assets of
the Account. This charge is an expense of the Account
and is deducted daily from net assets of the Account.
Policy purchase payments are reflected net of the following charges paid to
Minnesota Mutual:
A sales load of up to 5 percent is deducted from each premium payment.
Total sales charges deducted from premium payments for the year ended
December 31, 1996 and the period from March 8, 1995 to December 31, 1995
amounted to $27,054 and $311, respectively.
A premium tax charge in the amount of 2 percent is deducted from each
premium payment. Premium taxes are paid to state and local governments.
Total premium tax charges deducted from premium payments for the year ended
December 31, 1996 and the period from March 8, 1995 to December 31, 1995
amounted to $18,636 and $827, respectively.
A federal tax charge of .25 percent for group-sponsored policies and 1.25
percent for an individual policy is deducted from each premium payment. The
federal tax charge is paid to offset additional corporate federal income
taxes incurred by Minnesota Mutual under the Omnibus Budget Reconciliation
Act of 1990. Total federal tax charges for the year ended December 31, 1996
and the period from March 8, 1995 to December 31, 1995 amounted to $2,330
and $103, respectively.
In addition to deductions from premium payments, an administration charge, a
partial surrender charge, a cost of insurance charge and a charge for
additional benefits provided by rider, if any, are assessed from the actual
cash value of each policy. These charges are paid by redeeming units of the
Account held by the policy owner. The administration charge varies based upon
the number of eligible members in a group -sponsored program and ranges from $1
to $4 per month. The partial surrender charge is to cover administrative costs
incurred by Minnesota Mutual. The amount of the partial surrender charge is the
lesser of $25 or 2 percent of the amount withdrawn.
The cost of insurance charge varies with the amount of insurance, the
insured's age, rate class of the insured and gender mix of the group-sponsored
contract.
The total of cash value charges for the year ended December 31, 1996 and the
period from March 8, 1995 to December 31, 1995 for each segregated sub-account
are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Growth $ 1,811 $ 516
Bond 145 53
Money Market 847 7
Asset Allocation 418 151
Mortgage Securities 235 108
Index 500 105,767 47,802
Capital Appreciation 866 253
International Stock 375 68
Small Company 4,492 2,093
Maturing Government Bond 1998 -- --
Maturing Government Bond 2002 -- --
Maturing Government Bond 2006 -- --
Maturing Government Bond 2010 -- --
Value Stock 584 157
Contrafund 14 --
High Income 1 --
Equity-Income 18 --
</TABLE>
48
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) INVESTMENT TRANSACTIONS
The Account's purchases of Underlying Fund shares, including reinvestment of
dividend distributions, were as follows during the year ended December 31, 1996
and period from March 8, 1995 to December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Growth Portfolio $ 8,337 $ 6,640
Bond Portfolio 1,400 1,773
Money Market Portfolio 2,691 1,204
Asset Allocation Portfolio 4,105 3,619
Mortgage Securities Portfolio 565 1,226
Index 500 Portfolio 712,449 552,219
Capital Appreciation Portfolio 6,368 7,913
International Stock Portfolio 3,407 3,858
Small Company Portfolio 19,149 43,115
Maturing Government Bond 1998 Portfolio 1,000 --
Maturing Government Bond 2002 Portfolio 1,058 --
Maturing Government Bond 2006 Portfolio 1,060 --
Maturing Government Bond 2010 Portfolio 1,000 --
Value Stock Portfolio 4,750 6,196
Contrafund Portfolio 30,393 --
High Income Portfolio 29,905 --
Equity-Income Portfolio 30,336 --
</TABLE>
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS
Transactions in units for each segregated sub-account for the year ended
December 31, 1996 and period from March 8, 1995 to December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------------------
MONEY ASSET MORTGAGE INDEX
GROWTH BOND MARKET ALLOCATION SECURITIES 500
------ ----- ------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1994 -- -- -- -- -- --
Policy purchase pay-
ments 6,300 1,759 1,170 3,444 1,222 500,879
Deductions for policy
withdrawals and
charges (583) (51) (7) (957) (106) (43,240)
------ ----- ----- ----- ----- -------
Units outstanding at
December 31, 1995 5,717 1,708 1,163 2,487 1,116 457,639
Policy purchase pay-
ments 6,491 1,528 2,587 3,275 474 544,469
Deductions for policy
withdrawals and
charges (1,625) (774) (928) (386) (237) (99,914)
------ ----- ----- ----- ----- -------
Units outstanding at
December 31, 1996 10,583 2,462 2,822 5,376 1,353 902,194
====== ===== ===== ===== ===== =======
</TABLE>
49
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTION (CONTINUED)
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
--------------------------------------------------------------------
MATURING MATURING MATURING
CAPITAL INTERNATIONAL SMALL GOVERNMENT GOVERNMENT GOVERNMENT
APPRECIATION STOCK COMPANY BOND 1998 BOND 2002 BOND 2006
------------ ------------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1994 -- -- -- -- -- --
Policy purchase pay-
ments 7,072 3,786 37,910 -- -- --
Deduction for policy
withdrawals and
charges (1,489) (98) (3,085) -- -- --
------ ------ ------ ----- ----- -----
Units outstanding at
December 31, 1995 5,583 3,688 34,825 -- -- --
Policy purchase pay-
ments 5,652 3,760 11,903 1,000 1,000 1,000
Deductions for policy
withdrawals and
charges (2,510) (2,847) (4,985) -- -- --
------ ------ ------ ----- ----- -----
Units outstanding at
December 31, 1996 8,725 4,601 41,743 1,000 1,000 1,000
====== ====== ====== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
SEGREGATED SUB--ACCOUNTS
-------------------------------------------
MATURING
GOVERNMENT VALUE CONTRA- HIGH EQUITY-
BOND 2010 STOCK FUND INCOME INCOME
---------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31,
1994 -- -- -- -- --
Policy purchase payments -- 5,499 -- -- --
Deduction for policy withdrawals
and charges -- (1,483) -- -- --
----- ------ ------ ------ ------
Units outstanding at December 31,
1995 -- 4,016 -- -- --
Policy purchase payments 1,000 3,817 30,375 29,956 30,325
Deductions for policy withdrawals
and charges -- (2,248) (14) (1) (19)
----- ------ ------ ------ ------
Units outstanding at December 31,
1996 1,000 5,585 30,361 29,955 30,306
===== ====== ====== ====== ======
</TABLE>
50
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS
The following table for each segregated sub-account show certain data for an
accumulation unit outstanding during the year ended December 31, 1996 and the
period from March 8, 1995, commencement of operations, to December 31, 1995
(period from May 1, 1996, commencement of operations, to December 31, 1996 for
Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010, Contrafund, High Income
and Equity-Income segregated sub-accounts):
<TABLE>
<CAPTION>
GROWTH BOND MONEY MARKET
------------- --------------- --------------
1996 1995 1996 1995 1996 1995
------ ----- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
period $1.103 1.000 1.067 1.000 1.027 1.000
------ ----- ------- ------ ------ ------
Income from investment
operations:
Net investment income (loss) .003 (.003) .045 (.003) .045 .027
Net gains or losses on
securities
(both realized and
unrealized) .180 .106 (.019) .070 -- --
------ ----- ------- ------ ------ ------
Total from investment
operations .183 .103 .026 .067 .045 .027
------ ----- ------- ------ ------ ------
Unit value, end of period $1.286 1.103 1.093 1.067 1.072 1.027
====== ===== ======= ====== ====== ======
<CAPTION>
ASSET MORTGAGE
ALLOCATION SECURITIES INDEX 500
------------- --------------- --------------
1996 1995 1996 1995 1996 1995
------ ----- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
period $1.107 1.000 1.053 1.000 1.164 1.000
------ ----- ------- ------ ------ ------
Income from investment
operations:
Net investment income (loss) .023 (.003) .059 (.003) .008 (.003)
Net gains or losses on
securities
(both realized and
unrealized) .110 .110 (.009) .056 .237 .167
------ ----- ------- ------ ------ ------
Total from investment
operations .133 .107 .050 .053 .245 .164
------ ----- ------- ------ ------ ------
Unit value, end of period $1.240 1.107 1.103 1.053 1.409 1.164
====== ===== ======= ====== ====== ======
<CAPTION>
CAPITAL INTERNATIONAL SMALL
APPRECIATION STOCK COMPANY
------------- --------------- --------------
1996 1995 1996 1995 1996 1995
------ ----- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
period $1.127 1.000 1.046 1.000 1.210 1.000
------ ----- ------- ------ ------ ------
Income from investment
operations:
Net investment income (loss) (.006) (.003) .021 (.003) (.003) (.001)
Net gains or losses on
securities
(both realized and
unrealized) .198 .130 .180 .049 .075 .211
------ ----- ------- ------ ------ ------
Total from investment
operations .192 .127 .201 .046 .072 .210
------ ----- ------- ------ ------ ------
Unit value, end of period $1.319 1.127 1.247 1.046 1.282 1.210
====== ===== ======= ====== ====== ======
</TABLE>
51
<PAGE>
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MATURING MATURING MATURING MATURING
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
BOND 1998 BOND 2002 BOND 2006 BOND 2010
---------- ---------- ---------- ----------
1996 1996 1996 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Unit value, beginning of
period $1.000 1.000 1.000 1.000
------ ----- ----- -----
Income from investment
operations:
Net investment income
(loss) (.003) .055 .057 (.003)
Net gains or losses on
securities
(both realized and
unrealized) .047 .004 .022 .101
------ ----- ----- -----
Total from investment
operations .044 .059 .079 .098
------ ----- ----- -----
Unit value, end of period $1.044 1.059 1.079 1.098
====== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
HIGH EQUITY-
VALUE STOCK CONTRAFUND INCOME INCOME
------------ ---------- ------ -------
1996 1995 1996 1996 1996
------ ----- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period $1.161 1.000 1.000 1.000 1.000
------ ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .006 .012 (.003) (.003) (.003)
Net gains or losses on securities
(both realized and unrealized) .346 .149 .117 .070 .066
------ ----- ----- ----- -----
Total from investment operations .352 .161 .114 .067 .063
------ ----- ----- ----- -----
Unit value, end of period $1.513 1.161 1.114 1.067 1.063
====== ===== ===== ===== =====
</TABLE>
52
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company
We have audited the accompanying consolidated balance sheets of The Minnesota
Mutual Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations and policyowners'
surplus and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Minnesota Mutual Life Insurance Company and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1996 in
conformity with generally accepted accounting principles. As discussed in Note
2 to the consolidated financial statements, the Company adopted Statement of
Financial Accounting Standards No. 120, "Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain Long-
Duration Participating Contracts," in 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in the accompanying schedules is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
Minneapolis, Minnesota [/R]
February 10, 1997
53
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Fixed maturity securities:
Available-for-sale, at fair value (amortized cost
$4,558,975 and $4,525,352) $ 4,674,082 $ 4,761,561
Held-to-maturity, at amortized cost (fair value
$1,179,112 and $1,281,523) 1,125,638 1,180,654
Equity securities, at fair value (cost $429,509 and
$277,554) 549,797 384,882
Mortgage loans, net 608,808 608,537
Real estate, net 43,082 47,256
Policy loans 204,178 198,716
Short-term investments 122,772 72,841
Other invested assets 98,247 91,530
----------- -----------
Total investments 7,426,604 7,345,977
Cash 57,140 48,358
Finance receivables, net 259,192 226,720
Deferred policy acquisition costs 589,517 539,732
Accrued investment income 90,996 98,373
Premiums receivable 77,140 85,247
Property and equipment, net 55,050 50,809
Reinsurance recoverables 126,629 102,198
Other assets 54,798 46,530
Separate account assets 3,706,256 2,609,460
----------- -----------
Total assets $12,443,322 $11,153,404
=========== ===========
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy and contract account balances $ 4,310,015 $ 4,287,083
Future policy and contract benefits 1,638,720 1,554,898
Pending policy and contract claims 70,577 55,812
Other policyowner funds 396,848 371,537
Policyowner dividends payable 49,899 50,450
Unearned premiums and fees 207,111 210,494
Federal income tax liability:
Current 25,643 39,516
Deferred 149,665 173,905
Other liabilities 286,042 320,607
Notes payable 319,000 279,967
Separate account liabilities 3,691,374 2,596,285
----------- -----------
Total liabilities 11,144,894 9,940,554
Policyowners' surplus:
Unassigned surplus 1,190,116 1,059,598
Net unrealized investment gains 108,312 153,252
----------- -----------
Total policyowners' surplus 1,298,428 1,212,850
----------- -----------
Total liabilities and policyowners' surplus $12,443,322 $11,153,404
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
54
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Premiums $ 612,359 $ 603,770 $ 562,018
Policy and contract fees 245,966 214,203 188,115
Net investment income 530,987 515,047 486,101
Net realized investment gains 59,546 66,643 25,769
Finance charge income 46,932 39,937 34,258
Other income 51,630 40,250 30,106
---------- ---------- ---------
Total revenues 1,547,420 1,479,850 1,326,367
---------- ---------- ---------
Benefits and expenses:
Policyowner benefits 541,520 517,771 498,424
Interest credited to policies and con-
tracts 288,967 297,145 283,626
General operating expenses 302,618 273,425 253,317
Commissions 103,370 93,465 87,631
Administrative and sponsorship fees 79,360 76,223 71,143
Dividends to policyowners 24,804 27,282 26,672
Interest on notes payable 22,798 11,128 7,295
Increase in deferred policy acquisition
costs (15,312) (29,822) (43,974)
---------- ---------- ---------
Total benefits and expenses 1,348,125 1,266,617 1,184,134
---------- ---------- ---------
Income from operations before taxes 199,295 213,233 142,233
Federal income tax expense:
Current 68,033 71,379 63,641
Deferred 744 11,995 (1,511)
---------- ---------- ---------
Total federal income tax expense 68,777 83,374 62,130
Net income $ 130,518 $ 129,859 $ 80,103
========== ========== =========
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $1,212,850 $ 874,577 $ 892,510
Net income 130,518 129,859 80,103
Change in net unrealized investment
gains and losses (44,940) 208,414 (98,036)
---------- ---------- ---------
Policyowners' surplus, end of year $1,298,428 $1,212,850 $ 874,577
========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
55
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 130,518 $ 129,859 $ 80,103
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest credited to annuity and insur-
ance contracts 275,968 288,218 277,863
Fees deducted from policy and contract
balances (206,780) (201,575) (188,226)
Change in future policy benefits 84,389 100,025 63,328
Change in other policyowner liabilities 16,099 (4,762) (16,794)
Change in deferred policy acquisition
costs (15,312) (29,822) (43,974)
Change in premiums due and other receiv-
ables (26,142) (18,039) 38,166
Change in federal income tax liabilities (12,055) 18,376 17,854
Net realized investment gains (59,546) (66,643) (25,769)
Other, net 29,987 36,561 28,958
---------- ---------- ----------
Net cash provided by operating activi-
ties 217,126 252,198 231,509
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of:
Fixed maturity securities, available-
for-sale 877,682 1,349,348 653,498
Equity securities 352,901 203,493 88,645
Mortgage loans 15,567 4,315 20,912
Real estate 11,678 15,948 17,571
Other invested assets 12,280 10,775 28,305
Proceeds from maturities and repayments
of:
Fixed maturity securities, available-
for-sale 329,550 253,576 327,337
Fixed maturity securities, held-to-matu-
rity 114,222 127,617 75,648
Mortgage loans 94,703 104,730 126,134
Cost of purchases of:
Fixed maturity securities, available-
for-sale (1,228,048) (1,975,130) (1,123,125)
Fixed maturity securities, held-to-matu-
rity (60,612) (140,763) (131,820)
Equity securities (446,599) (212,142) (131,483)
Mortgage loans (108,691) (209,399) (145,964)
Real estate (3,786) (16,554) (10,985)
Other invested assets (29,271) (20,517) (12,732)
Finance receivable originations or pur-
chases (175,876) (167,298) (134,867)
Finance receivable principal payments 142,723 123,515 104,539
Other, net (43,662) (19,292) 15,309
---------- ---------- ----------
Net cash used for investing activities (145,239) (567,778) (233,078)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits credited to annuity and insurance
contracts 657,405 710,525 647,237
Withdrawals from annuity and insurance
contracts (702,681) (563,569) (645,969)
Proceeds from issuance of surplus notes -- 124,967 --
Proceeds from issuance of debt by subsidi-
ary 60,000 50,000 30,000
Payments on debt by subsidiary (21,000) (10,000) (9,100)
Other, net (6,898) (3,801) (5,940)
---------- ---------- ----------
Net cash provided by (used for) fi-
nancing activities (13,174) 308,122 16,228
---------- ---------- ----------
Net increase (decrease) in cash and short-
term investments 58,713 (7,458) 14,659
Cash and short-term investments, beginning
of year 121,199 128,657 113,998
---------- ---------- ----------
Cash and short-term investments, end of
year $ 179,912 $ 121,199 $ 128,657
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
56
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS
The Minnesota Mutual Life Insurance Company (the Company), both directly and
through its subsidiaries, provides a diversified array of insurance and
financial products and services designed principally to protect and enhance the
long-term financial well-being of individuals and families.
The Company's strategy is to be successful in carefully selected niche
markets, primarily in the United States, while focusing on the retention of
existing business and the maintenance of profitability. To achieve this
objective, the Company has divided its businesses into four strategic business
units which focus on various markets: Individual, Financial Services, Group,
and Pension. Revenues reported in 1996 by these business units were
$780,250,000, $279,554,000, $213,461,000 and $104,059,000, respectively.
Additional revenues of $170,096,000 were reported by the Company's
subsidiaries.
At December 31, 1996, the Company was one of the 11 largest mutual life
insurance company groups in the United States, as measured by total assets. The
Company serves nearly seven million people through more than 4,000 associates
located at its St. Paul headquarters and in 81 general agencies and 43 regional
offices throughout the United States.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP), which vary in
certain respects from accounting practices prescribed or permitted by state
insurance regulatory authorities. The consolidated financial statements include
the accounts of The Minnesota Mutual Life Insurance Company and its
subsidiaries (collectively, "the Company"). All material intercompany
transactions and balances have been eliminated.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported
assets and liabilities, including reporting or disclosure of contingent assets
and liabilities as of the balance sheet date and the reported amounts of
revenues and expenses during the reporting period. Actual results could vary
from management's estimates.
New Accounting Principles
In 1995 and prior years, the Company prepared its financial statements
according to statutory accounting practices prescribed or permitted by the
Commerce Department of the State of Minnesota (Department of Commerce), and
these accounting practices were considered GAAP for mutual life insurance
companies.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40 (the Interpretation), "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises."
The Interpretation was supposed to become effective for fiscal years beginning
after December 15, 1994 and stated that financial statements prepared in
accordance with statutory accounting practices would no longer be considered to
be in conformity with GAAP. The Interpretation requires all mutual life
insurance companies that report their financial statements in conformity with
GAAP to apply all applicable authoritative GAAP pronouncements, with the
exception of Statements of Financial Accounting Standards (SFAS) No. 60,
"Accounting and Reporting by Insurance Enterprises," No. 97, "Accounting and
Reporting by Insurance Enterprises for Certain Long Duration Contracts and
Realized Gains and Losses from the Sale of Investments," and No. 113,
"Accounting for Reinsurance of Short-Duration and Long-Duration Contracts."
In January 1995, the FASB issued SFAS 120, "Accounting and Reporting by
Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long
Duration Participating Contracts." This statement deferred the implementation
of the Interpretation to fiscal years beginning after December 15, 1995 and
extended the requirements of SFAS Nos. 60, 97 and 113 to mutual life insurance
enterprises.
SFAS No. 120 also requires mutual life insurance enterprises to adopt
Statement of Position 95-1, "Accounting for Certain Insurance Activities of
Mutual Life Insurance Enterprises," which was issued by the American Institute
of Certified Public Accountants.
57
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company adopted SFAS No. 120 on January 1, 1996, and the accompanying
1994 and 1995 financial statements and related notes have been restated to
conform with the presentation of the 1996 GAAP financial statements.
The Company will continue to prepare financial statements according to
statutory accounting practices prescribed or permitted by the Department of
Commerce for purposes of filing with the Department of Commerce, the National
Association of Insurance Commissioners and states in which the Company is
licensed to do business. The significant differences between statutory and GAAP
financial results are presented in Note 12.
Insurance Revenues and Expenses
Premiums on traditional life products, which include individual whole life and
term insurance and immediate annuities, are credited to revenue when due. For
accident and health and group life products, premiums are credited to revenue
over the contract period as earned. Benefits and expenses are recognized in
relation to premiums over the contract period via a provision for future policy
benefits and the amortization of deferred policy acquisition costs.
Nontraditional life products include individual adjustable and variable life
insurance and group universal and variable life insurance. Revenue from
nontraditional life products and deferred annuities is comprised of policy and
contract fees charged for the cost of insurance, policy administration and
surrenders. Expenses include the portion of claims not covered by and interest
credited to the related policy and contract account balances. Policy
acquisition costs are amortized relative to gross margins.
Deferred Policy Acquisition Costs
The costs of acquiring new and renewal business, which vary with and are
primarily related to the production of new and renewal business, are generally
deferred to the extent recoverable from future premiums or expected gross
profits. Deferrable costs include commissions, underwriting expenses and
certain other selling and issue costs.
For traditional life, accident and health and group life products, deferred
acquisition costs are amortized over the premium paying period in proportion to
the ratio of annual premium revenues to ultimate anticipated premium revenues.
The ultimate premium revenues are estimated based upon the same assumptions
used to calculate the future policy benefits.
For nontraditional life products and deferred annuities, deferred acquisition
costs are amortized over the estimated lives of the contracts in relation to
the present value of estimated gross profits from surrender charges and
investment, mortality and expense margins.
Deferred acquisition costs amortized were $125,978,000, $104,940,000 and
$86,477,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Finance Charge Income and Receivables
Finance charge income represents fees and interest charged on consumer loans.
The Company uses the interest (actuarial) method of accounting for finance
charges and interest on finance receivables. Accrual of finance charges and
interest is suspended when a loan is contractually delinquent for more than 60
days and is subsequently recognized when received. Accrual is resumed when the
loan is contractually less than 60 days past due. An allowance for
uncollectible amounts is maintained by direct charges to operations at an
amount which management believes, based upon historical losses and economic
conditions, is adequate to absorb probable losses on existing receivables that
may become uncollectible. The reported receivables are net of this allowance.
Valuation of Investments
Fixed maturity securities (bonds) which the Company has the positive intent and
ability to hold to maturity are classified as held-to-maturity and are carried
at amortized cost, net of write-downs for other than temporary declines in
value. Premiums and discounts are amortized or accreted over the estimated
lives of the securities based on the interest yield method. Fixed maturity
securities which may be sold prior to maturity are classified as available-for-
sale and carried at fair value.
58
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equity securities (common stocks and preferred stocks) are carried at fair
value. Equity securities also include initial contributions to affiliated
registered investment funds that are managed by a subsidiary of the Company.
These contributions are carried at the market value of the underlying net
assets of the funds.
Mortgage loans are carried at amortized cost less an allowance for
uncollectible amounts. Premiums and discounts are amortized or accreted over
the terms of the mortgage loans based on the interest yield method. A mortgage
loan is considered impaired if it is probable that contractual amounts due will
not be collected. Impaired mortgage loans are valued at the fair value of the
underlying collateral. Interest income on impaired mortgage loans is recorded
on an accrual basis. However, when the likelihood of collection is doubtful,
interest income is recognized when received.
Fair values of fixed maturity securities and equity securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are estimated using values obtained from independent
pricing services which specialize in matrix pricing and modeling techniques for
estimating fair values. Fair values of mortgage loans are based upon discounted
cash flows, quoted market prices and matrix pricing.
Real estate is carried at cost less accumulated depreciation and an allowance
for estimated losses. Accumulated depreciation on real estate at December 31,
1996 and 1995, was $5,968,000 and $8,342,000, respectively.
Policy loans are carried at the unpaid principal balance.
Derivative Financial Instruments
The Company entered into equity swaps in 1996 as part of an overall risk
management strategy. The swaps are used to hedge exposure to market risk on
$400,000,000 of the Company's common stock portfolio. The swaps are based upon
certain stock indices, and settlement with the counterparties will take place
in January 1998. If, at the time of settlement for a particular swap, the
designated stock index has fallen below a specified level, the counterparty
will pay the Company an amount based upon the decline in the index and the
stock portfolio value protected by the swap. If, at the time of settlement, the
designated stock index has risen, the Company will pay the counterparty an
amount based upon the increase in the index and 25% of the stock portfolio
value protected by the swap.
The basic types of risks associated with derivatives are market risk (that
the value of the derivative will be adversely affected by changes in the
market) and credit risk (that the counterparty will not perform according to
the contract terms). To reduce credit risk, the swap contracts require that the
counterparties maintain sufficient credit ratings and provide collateral under
certain circumstances.
The swaps are carried at fair value, which is based upon dealer quotes.
Changes in fair value are recorded directly in policyowners' surplus. Upon
settlement of the swaps, gains or losses are recognized in income.
Capital Gains and Losses
Realized and unrealized capital gains and losses are determined on the specific
identification method. Write-downs of held-to-maturity securities and the
provision for credit losses on mortgage loans and real estate are recorded as
realized losses.
Changes in the fair value of fixed maturity securities available-for-sale and
equity securities are recorded as a separate component of policyowners'
surplus, net of taxes and related adjustments to deferred policy acquisition
costs and unearned policy and contract fees.
Property and Equipment
Property and equipment are carried at cost, net of accumulated depreciation of
$81,962,000 and $75,507,000 at December 31, 1996 and 1995, respectively.
Buildings are depreciated over 40 years and equipment is generally depreciated
over 5 to 10 years. Depreciation expense for the years ended December 31, 1996,
1995 and 1994, was $6,454,000, $5,941,000 and $8,136,000, respectively.
59
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the exclusive benefit of certain policyowners
and contractholders. The Company receives administrative and investment
advisory fees for services rendered on behalf of these funds. Separate account
assets and liabilities are carried at fair value, based upon the market value
of the investments held in the segregated funds.
The Company periodically invests money in its separate accounts. The market
value of such investments is included with separate account assets and amounted
to $14,882,000 and $13,175,000 as of December 31, 1996 and 1995, respectively.
Policyowner Liabilities
Policy and contract account balances represent the net accumulation of funds
associated with nontraditional life products and deferred annuities. Additions
to the account balances include premiums, deposits and interest credited by the
Company. Decreases in the account balances include surrenders, withdrawals,
benefit payments, and charges assessed for the cost of insurance, policy
administration and surrenders.
Future policy and contract benefits are comprised of reserves for traditional
life, group life, and accident and health products. The reserves were
calculated using the net level premium method based upon assumptions regarding
investment yield, mortality, morbidity, and withdrawal rates determined at the
date of issue, commensurate with the Company's experience. Provision has been
made in certain cases for adverse deviations from these assumptions.
Other policyowner funds are comprised of dividend accumulations, premium
deposit funds and supplementary contracts without life contingencies.
Participating Business
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are declared
by the Board of Trustees based upon actuarial determinations which take into
consideration current mortality, interest earnings, expense factors and federal
income taxes. Dividends are recognized as expenses consistent with the
recognition of premiums.
Income Taxes
Current income taxes are charged to operations based upon amounts estimated to
be payable as a result of taxable operations for the current year. Deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between financial statement
carrying amounts and income tax bases of assets and liabilities.
Reinsurance Recoverables
Insurance liabilities are reported before the effects of ceded reinsurance.
Reinsurance recoverables represent amounts due from reinsurers for paid and
unpaid benefits, expense reimbursements, prepaid premiums and future policy
benefits.
60
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS
Net investment income for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $433,985 $426,114 $417,698
Equity securities 14,275 8,883 4,485
Mortgage loans 63,865 58,943 49,676
Real estate (475) 497 648
Policy loans 13,828 12,821 11,800
Short-term investments 6,535 6,716 4,262
Other invested assets 4,901 5,168 3,212
-------- -------- --------
Gross investment income 536,914 519,142 491,781
Investment expenses (5,927) (4,095) (5,680)
-------- -------- --------
Total $530,987 $515,047 $486,101
======== ======== ========
</TABLE>
Net realized capital gains (losses) for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $(6,536) $24,025 $(2,528)
Equity securities 57,770 36,374 11,268
Mortgage loans (721) (207) (82)
Real estate 7,088 2,436 3,915
Other invested assets 1,945 4,015 13,196
------- ------- -------
Total $59,546 $66,643 $25,769
======= ======= =======
</TABLE>
Gross realized gains (losses) on the sales of fixed maturity securities and
equity securities for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities, available-for-sale:
Gross realized gains $ 19,750 $ 34,898 $ 13,375
Gross realized losses (26,286) (10,873) (15,903)
Equity securities:
Gross realized gains 79,982 52,670 21,538
Gross realized losses (22,212) (16,296) (10,270)
</TABLE>
Net unrealized gains (losses) included in policyowners' surplus at December
31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Gross unrealized gains $314,576 $358,877
Gross unrealized losses (77,337) (13,713)
Adjustment to deferred policy acquisition costs (65,260) (99,732)
Adjustment to unearned policy and contract fees (8,192) (11,665)
Deferred federal income taxes (55,475) (80,515)
-------- --------
Net unrealized gains $108,312 $153,252
======== ========
</TABLE>
61
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and fair value of investments in marketable securities by
type of investment were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------- FAIR
COST GAINS LOSSES VALUE
---------- -------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 302,820 $ 2,397 $ 6,756 $ 298,461
States, municipalities, and polit-
ical subdivisions 11,296 759 -- 12,055
Foreign governments 1,926 -- 54 1,872
Corporate securities 2,450,126 115,846 19,554 2,546,418
Mortgage-backed securities 1,792,807 64,834 42,365 1,815,276
---------- -------- ------- ----------
Total fixed maturities 4,558,975 183,836 68,729 4,674,082
Equity securities--unaffiliated 353,983 107,172 5,168 455,987
Equity securities--affiliated 75,526 18,284 -- 93,810
---------- -------- ------- ----------
Total equity securities 429,509 125,456 5,168 549,797
---------- -------- ------- ----------
Total available-for-sale 4,988,484 309,292 73,897 5,223,879
Held-to-maturity:
Corporate securities 904,994 50,187 3,130 952,051
Mortgage-backed securities 220,644 7,833 1,416 227,061
---------- -------- ------- ----------
Total held-to-maturity 1,125,638 58,020 4,546 1,179,112
---------- -------- ------- ----------
Total $6,114,122 $367,312 $78,443 $6,402,991
========== ======== ======= ==========
DECEMBER 31, 1995
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 261,669 $ 10,911 $ 440 $ 272,140
States, municipalities, and polit-
ical subdivisions 26,317 3,262 -- 29,579
Foreign governments 1,704 223 -- 1,927
Corporate securities 2,523,889 169,329 6,098 2,687,120
Mortgage-backed securities 1,711,773 62,510 3,488 1,770,795
---------- -------- ------- ----------
Total fixed maturities 4,525,352 246,235 10,026 4,761,561
Equity securities--unaffiliated 196,355 91,269 1,590 286,034
Equity securities--affiliated 81,199 17,649 -- 98,848
---------- -------- ------- ----------
Total equity securities 277,554 108,918 1,590 384,882
---------- -------- ------- ----------
Total available-for-sale 4,802,906 355,153 11,616 5,146,443
Held-to-maturity:
United States government and gov-
ernment agencies and authorities 250 3 -- 253
States, municipalities, and polit-
ical subdivisions 525 6 -- 531
Corporate securities 953,511 89,962 525 1,042,948
Mortgage-backed securities 226,368 11,540 117 237,791
---------- -------- ------- ----------
Total held-to-maturity 1,180,654 101,511 642 1,281,523
---------- -------- ------- ----------
Total $5,983,560 $456,664 $12,258 $6,427,966
========== ======== ======= ==========
</TABLE>
62
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 1996, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
--------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 33,390 $ 33,429 $ 4,889 $ 4,948
Due after one year through five
years 435,040 459,870 163,206 168,527
Due after five years through ten
years 1,383,954 1,429,460 223,848 235,754
Due after ten years 913,784 936,047 513,051 542,822
---------- ---------- ---------- ----------
2,766,168 2,858,806 904,994 952,051
Mortgage-backed securities 1,792,807 1,815,276 220,644 227,061
---------- ---------- ---------- ----------
Total $4,558,975 $4,674,082 $1,125,638 $1,179,112
========== ========== ========== ==========
</TABLE>
At December 31, 1996 and 1995, bonds and certificates of deposit with a
carrying value of $12,934,000 and $15,296,000, respectively, were on deposit
with various regulatory authorities as required by law.
Allowances for credit losses on investments are reflected on the consolidated
balance sheets as a reduction of the related assets and were as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans $ 1,895 $ 1,711
Foreclosed real estate 535 400
Investment real estate 2,529 2,565
------- -------
Total $ 4,959 $ 4,676
======= =======
</TABLE>
At December 31, 1996, the recorded investment in mortgage loans that were
considered to be impaired was $6,518,000 before allowance for credit losses.
Included in this amount is $2,225,000 of impaired loans, for which the related
allowance for credit losses is $395,000, and $4,293,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
At December 31, 1995, the recorded investment in mortgage loans that were
considered to be impaired was $12,232,000 before allowance for credit losses.
Included in this amount is $3,256,000 of impaired loans, for which the related
allowance for credit losses is $211,000, and $8,976,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
In addition to the allowance for credit losses on impaired mortgage loans, a
general allowance for credit losses was established for potential impairments
in the remainder of the mortgage loan portfolio. The general allowance was
$1,500,000 at December 31, 1996, 1995 and 1994.
Changes in the allowance for credit losses on mortgage loans were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $1,711 $2,449 $2,412
Provision for credit losses 381 127 622
Charge-offs (197) (865) (585)
------ ------ ------
Balance at end of year $1,895 $1,711 $2,449
====== ====== ======
</TABLE>
63
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
Below is a summary of interest income on impaired mortgage loans.
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Average impaired mortgage loans $9,375 $15,845 $20,236
Interest income on impaired mortgage loans--contractual 1,796 1,590 2,103
Interest income on impaired mortgage loans--collected 1,742 1,515 1,963
</TABLE>
(4) NET FINANCE RECEIVABLES
Finance receivables as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Direct installment loans $204,038 $178,262
Retail installment notes 30,843 32,345
Retail revolving credit 24,863 14,864
Credit card receivables 3,541 4,479
Accrued interest 3,404 3,147
-------- --------
Gross receivables 266,689 233,097
Allowance for uncollectible amounts (7,497) (6,377)
-------- --------
Finance receivables, net $259,192 $226,720
======== ========
</TABLE>
Direct installment loans at December 31, 1996 consisted of $93,127,000 of
discount basis loans (net of unearned finance charges) and $110,911,000 of
interest-bearing loans. As of December 31, 1995, discount basis loans amounted
to $92,351,000 and interest-bearing loans amounted to $85,911,000. Direct
installment loans generally have a maximum term of 84 months. Retail
installment notes are principally discount basis, arise from the sale of
household appliances, furniture, and sundry services, and generally have a
maximum term of 48 months. Experience has shown that a substantial portion of
finance receivables will be renewed, converted or paid in full prior to
maturity.
Principal cash collections of direct installment loans amounted to
$92,438,000, $75,865,000 and $70,941,000, and the percentage of these cash
collections to average net balances was 48%, 47% and 55% for the years ended
December 31, 1996, 1995 and 1994, respectively.
Changes in the allowance for uncollectible amounts for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $ 6,377 $5,360 $4,801
Provision for credit losses 10,086 6,140 4,652
Charge-offs (11,036) (6,585) (5,305)
Recoveries 2,070 1,462 1,212
------- ------ ------
Balance at end of year $ 7,497 $6,377 $5,360
======= ====== ======
</TABLE>
64
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES
Income tax expense varies from the amount computed by applying the federal
income tax rate of 35% to income from operations before taxes. The significant
components of this difference were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax expense $69,753 $74,631 $49,781
Differences between
computed and actual tax
expense:
Dividends received
deduction (2,534) (1,710) (1,293)
Special tax on mutual
life insurance
companies 2,760 10,134 9,880
Tax credits (3,475) (1,840) (1,150)
Expense adjustments and
other 2,273 2,159 4,912
------- ------- -------
Total tax expense $68,777 $83,374 $62,130
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to the Company's net
deferred federal tax liability were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Policyowner liabilities $ 15,854 $ 22,151
Unearned fee income 43,232 43,576
Pension and post-retirement benefits 21,815 20,187
Tax deferred policy acquisition costs 58,732 47,228
Net realized capital losses 8,275 7,881
Other 19,229 17,997
-------- --------
Gross deferred tax assets 167,137 159,020
Deferred tax liabilities:
Deferred policy acquisition costs 206,331 188,906
Real estate and property and equipment depreciation 10,089 9,049
Basis difference on investments 8,605 7,402
Net unrealized capital gains 81,339 119,604
Other 10,438 7,964
-------- --------
Gross deferred tax liabilities 316,802 332,925
-------- --------
Net deferred tax liability $149,665 $173,905
======== ========
</TABLE>
A valuation allowance for deferred tax assets was not considered necessary as
of December 31, 1996 and 1995, because the Company believes that it is more
likely than not that the deferred tax assets will be realized through future
reversals of existing taxable temporary differences and future taxable income.
Income taxes paid for the years ended December 31, 1996, 1995 and 1994, were
$79,026,000, $64,390,000 and $45,268,000, respectively.
65
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) LIABILITY FOR UNPAID ACCIDENT AND HEALTH CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Activity in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1 $377,302 $349,311 $323,304
Less: reinsurance recoverable 80,333 61,624 51,549
-------- -------- --------
Net balance at January 1 296,969 287,687 271,755
-------- -------- --------
Incurred related to:
Current year 134,727 129,896 129,028
Prior years 4,821 (4,014) 860
-------- -------- --------
Total incurred 139,548 125,882 129,888
-------- -------- --------
Paid related to:
Current year 51,695 47,620 46,270
Prior years 70,073 68,980 67,686
-------- -------- --------
Total paid 121,768 116,600 113,956
-------- -------- --------
Net balance at December 31 314,749 296,969 287,687
Plus: reinsurance recoverable 102,161 80,333 61,624
-------- -------- --------
Balance at December 31 $416,910 $377,302 $349,311
======== ======== ========
</TABLE>
The liability for unpaid accident and health claims and claim adjustment
expenses is included in future policy and contract benefits and pending policy
and contract claims on the consolidated balance sheets.
Incurred claims related to prior years are due to the differences between
actual and estimated claims incurred as of the end of the prior year and
interest credited to future policy and contract benefits.
(7) EMPLOYEE BENEFIT PLANS
Pension Plans
The Company has noncontributory defined benefit retirement plans covering
substantially all employees and certain agents. Benefits are based upon years
of participation and the employee's average monthly compensation or the agent's
adjusted annual compensation. Plan assets are comprised of mostly stocks and
bonds which are held in the general and separate accounts of the Company and
administered under group annuity contracts issued by the Company. The Company's
funding policy is to contribute annually the minimum amount required by
applicable regulations. The Company also has an unfunded noncontributory
defined benefit retirement plan which provides certain employees with benefits
in excess of limits for qualified retirement plans.
Net periodic pension cost for the years ended December 31 included the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 6,019 $ 5,294 $ 4,880
Interest accrued on projected benefit obligation 8,541 7,935 7,382
Actual return on plan assets (12,619) (18,061) (1,331)
Net amortization and deferral 4,698 11,811 (5,094)
-------- -------- -------
Net periodic pension cost $ 6,639 $ 6,979 $ 5,837
======== ======== =======
</TABLE>
66
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status for the Company's plans as of December 31 was calculated as
follows:
<TABLE>
<CAPTION>
FUNDED PLANS UNFUNDED PLAN
------------------ ----------------
1996 1995 1996 1995
-------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit ob-
ligations:
Vested benefit obligation $ 61,328 $ 56,428 $ -- $ --
Non-vested benefit obligation 19,119 16,599 5,912 4,539
-------- -------- ------- -------
Accumulated benefit obligation $ 80,447 $ 73,027 $ 5,912 $ 4,539
======== ======== ======= =======
Pension liability included in other li-
abilities:
Projected benefit obligation $117,836 $105,180 $12,576 $10,430
Plan assets at fair value 115,107 102,594 -- --
-------- -------- ------- -------
Plan assets less than projected bene-
fit obligation 2,729 2,586 12,576 10,430
Unrecognized net gain (loss) 3,633 2,095 (2,332) (1,187)
Unrecognized prior service cost (364) (213) -- --
Unamortized transition asset (obliga-
tion) 2,422 2,643 (8,451) (9,219)
Additional minimum liability -- -- 4,119 4,515
-------- -------- ------- -------
Net pension liability $ 8,420 $ 7,111 $ 5,912 $ 4,539
======== ======== ======= =======
</TABLE>
A weighted average discount rate of 7.5% and a weighted average rate of
increase in future compensation levels of 5.8% were used in determining the
actuarial present value of the projected benefit obligation at December 31,
1996 and 1995. The assumed long-term rate of return on plan assets was either
7.5% or 8.5%, depending on the plan.
Profit Sharing Plans
The Company also has profit sharing plans covering substantially all employees
and agents. The Company's contribution rate to the employee plan is determined
annually by the trustees of the Company and is applied to each participant's
prior year earnings. The Company's contribution to the agent plan is made as a
certain percentage, based upon years of service, applied to each agent's total
annual compensation. The Company recognized contributions to the plans during
1996, 1995 and 1994 of $6,092,000, $6,595,000 and $6,866,000, respectively.
Participants may elect to receive a portion of their contributions in cash.
Postretirement Benefits Other than Pensions
The Company also has unfunded postretirement plans that provide certain health
care and life insurance benefits to substantially all retired employees and
agents. Eligibility is determined by age at retirement and years of service
after age 30. Health care premiums are shared with retirees, and other cost-
sharing features include deductibles and co-payments.
Components of net periodic postretirement benefit cost for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $1,011 $1,276 $1,760
Interest accrued on projected benefit obligation 2,041 2,452 2,298
Amortization of prior service cost (513) (513) (223)
Amortization of net gain (177) -- --
------ ------ ------
Net periodic postretirement benefit cost $2,362 $3,215 $3,835
====== ====== ======
</TABLE>
67
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The accumulated postretirement benefit obligation and the accrued
postretirement benefit liability for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $10,238 $11,875
Other fully eligible plan participants 4,594 5,535
Other active plan participants 9,514 9,809
------- -------
Total accumulated postretirement benefit obligation 24,346 27,219
Unrecognized prior service cost 4,107 4,620
Unrecognized net gain 9,880 4,743
------- -------
Accrued postretirement benefit liability $38,333 $36,582
======= =======
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation for 1996 and 1995 was 7.5%. The 1996 net health care cost trend rate
was 9.0%, graded to 5.5% over 7 years, and the 1995 rate was 11.0%, graded to
5.5% over 11 years.
The assumptions presented herein are based on pertinent information available
to management as of December 31, 1996 and 1995. Actual results could differ
from those estimates and assumptions. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1996 by
$4,262,000 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit costs for 1996 by $583,000.
(8) REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance companies. To the extent that a reinsurer is
unable to meet its obligations under the reinsurance agreement, the Company
remains liable. The Company evaluates the financial condition of its reinsurers
and monitors concentrations of credit risk to minimize its exposure to
significant losses from reinsurer insolvencies.
Reinsurance is accounted for over the life of the underlying reinsured
policies using assumptions consistent with those used to account for the
underlying policies.
The effect of reinsurance on premiums for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $615,098 $600,841 $558,066
Reinsurance assumed 64,489 64,792 60,939
Reinsurance ceded (67,228) (61,863) (56,987)
-------- -------- --------
Net premiums $612,359 $603,770 $562,018
======== ======== ========
</TABLE>
Reinsurance recoveries on ceded reinsurance contracts were $72,330,000,
$58,338,000 and $60,970,000 during 1996, 1995 and 1994, respectively.
68
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1996 and 1995.
Although management is not aware of any factors that would significantly affect
the estimated fair values, such amounts have not been comprehensively revalued
since those dates. Therefore, estimates of fair value subsequent to the
valuation dates may differ significantly from the amounts presented herein.
Considerable judgment is required to interpret market data to develop the
estimates of fair value. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Please refer to Note 2 for additional fair value disclosures concerning fixed
maturity securities, equity securities, mortgages and derivatives. The carrying
amounts for policy loans, cash, short term investments and finance receivables
approximate the assets' fair values.
The interest rates on the finance receivables outstanding as of December 31,
1996 and 1995, are consistent with the rates at which loans would currently be
made to borrowers of similar credit quality and for the same maturity; as such,
the carrying value of the finance receivables outstanding as of December 31,
1996 and 1995, approximate the fair value for those respective dates.
The fair values of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges, are
estimated to be the amount payable on demand as of December 31, 1996 and 1995.
The amount payable on demand equates to the account balance less applicable
surrender charges. Contracts without guaranteed interest rates and surrender
charges have fair values equal to their accumulation values plus applicable
market value adjustments. The fair values of guaranteed investment contracts
and supplementary contracts without life contingencies are calculated using
discounted cash flows, based on interest rates currently offered for similar
products with maturities consistent with those remaining for the contracts
being valued.
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the fair value of notes payable.
The carrying amounts and fair values of the Company's financial instruments
which were classified as assets as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturity securities:
Available-for-sale $4,674,082 $4,674,082 $4,761,561 $4,761,561
Held-to-maturity 1,125,638 1,179,112 1,180,654 1,281,523
Equity securities 549,797 549,797 384,882 384,882
Mortgage loans:
Commercial 432,198 445,976 373,897 391,089
Residential 176,610 180,736 234,640 239,723
Policy loans 204,178 204,178 198,716 198,716
Short-term investments 122,772 122,772 72,841 72,841
Cash 57,140 57,140 48,358 48,358
Finance receivables, net 259,192 259,192 226,720 226,720
Derivatives 1,197 1,197 -- --
---------- ---------- ---------- ----------
Total financial assets $7,602,804 $7,674,182 $7,482,269 $7,605,413
========== ========== ========== ==========
</TABLE>
69
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and fair values of the Company's financial instruments
which were classified as liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred annuities $2,178,355 $2,152,636 $2,178,223 $2,156,886
Annuity certain contracts 52,636 53,962 48,492 50,732
Other fund deposits 808,592 805,709 856,535 847,975
Guaranteed investment contracts 18,770 18,866 47,426 47,987
Supplementary contracts without
life contingencies 47,966 47,536 41,431 39,962
Notes payable 319,000 325,974 279,967 294,103
---------- ---------- ---------- ----------
Total financial liabilities $3,425,319 $3,404,683 $3,452,074 $3,437,645
========== ========== ========== ==========
</TABLE>
(10) NOTES PAYABLE
In September 1995, the Company issued surplus notes with a face value of
$125,000,000, at 8.25%, due in 2025. The surplus notes are subordinate to all
current and future policyowners' interests, including claims, and indebtedness
of the Company. All payments of interest and principal on the notes are subject
to the approval of the Department of Commerce. The approved accrued interest
was $3,008,000 as of December 31, 1996 and 1995. The issuance costs of
$1,403,000 are deferred and amortized over 30 years on a straight-line basis.
Notes payable as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Corporate--surplus notes, 8.25%, 2025 $125,000 $124,967
Consumer finance subsidiary--senior, 6.53%--8.77%, through
2003 194,000 155,000
-------- --------
Total notes payable $319,000 $279,967
======== ========
</TABLE>
At December 31, 1996, the aggregate minimum annual notes payable maturities
for the next five years were as follows: 1997, $21,000,000; 1998, $31,000,000;
1999, $49,000,000; 2000, $33,000,000; 2001, $26,000,000.
Long-term borrowing agreements involving the consumer finance subsidiary
include provisions with respect to borrowing limitations, payment of cash
dividends on or purchases of common stock, and maintenance of liquid net worth.
As of December 31, 1996, the consumer finance subsidiary was required to have a
minimum liquid net worth of $41,354,000. Liquid net worth at that date was
$51,803,000.
Interest paid on debt for the years ended December 31, 1996, 1995 and 1994,
was $21,849,000, $6,504,000 and $5,378,000, respectively.
(11) COMMITMENTS AND CONTINGENCIES
The Company is involved in various pending or threatened legal proceedings
arising out of the normal course of business. In the opinion of management, the
ultimate resolution of such litigation will not have a material adverse effect
on operations or the financial position of the Company.
The Company has issued certain participating group annuity and life insurance
contracts jointly with another life insurance company. The joint contract
issuer has liabilities related to these contracts of
70
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) COMMITMENTS AND CONTINGENCIES (CONTINUED)
$328,346,000 as of December 31, 1996. To the extent the joint contract issuer
is unable to meet its obligation under the agreement, the Company remains
liable.
The Company has long-term commitments to fund venture capital and real estate
investments totaling $142,469,000 as of December 31, 1996. The Company
estimates that $35,000,000 of these commitments will be invested in 1997, with
the remaining $107,469,000 invested over the next four years.
As of December 31, 1996, the Company had committed to purchase bonds and
mortgage loans totaling $74,123,000 but had not completed the purchase
transactions.
At December 31, 1996, the Company had guaranteed the payment of $68,700,000
in policyowner dividends and discretionary amounts payable in 1997. The Company
has pledged bonds, valued at $70,336,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessments pertaining to future insolvencies and impairments of
unaffiliated insurance companies. The Company records a liability for future
guaranty fund assessments based upon known insolvencies, according to data
received from the National Organization of Life and Health Insurance Guaranty
Associations. An asset is held for the amount of guaranty fund assessments paid
which can be recovered through future premium tax credits.
(12) STATUTORY FINANCIAL DATA
Statutory accounting is primarily focused on solvency and surplus adequacy.
Therefore, fundamental differences exist between statutory and GAAP accounting,
and their effects on income and policyowners' surplus are illustrated below:
<TABLE>
<CAPTION>
POLICYOWNERS' SURPLUS NET INCOME
---------------------- ----------------------------
1996 1995 1996 1995 1994
---------- ---------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statutory basis $ 682,886 $ 601,565 $115,797 $ 88,706 $ 65,123
Adjustments:
Deferred policy acquisi-
tion costs 589,517 539,732 15,312 29,822 43,974
Net unrealized invest-
ment gains 111,575 235,143 -- -- --
Statutory asset valua-
tion reserve 240,474 201,721 -- -- --
Statutory interest main-
tenance reserve 24,707 32,899 (8,192) 12,976 (4,426)
Premiums and fees de-
ferred or receivable (75,716) (77,444) 1,587 497 (2,310)
Change in reserve basis 98,406 77,464 20,114 12,382 (1,444)
Separate accounts (40,755) (36,010) (6,304) (854) (5,837)
Unearned policy and con-
tract fees (121,843) (122,786) (2,530) (4,410) (10,406)
Surplus notes (125,000) (124,967) -- -- --
Net deferred taxes (149,665) (173,905) 744 (11,995) 1,511
Nonadmitted assets 31,531 28,211 -- -- --
Policyowner dividends 57,765 57,263 502 4,660 2,446
Other (25,454) (26,036) (6,512) (1,925) (8,528)
---------- ---------- -------- -------- --------
As reported in the
accompanying
consolidated
financial statements $1,298,428 $1,212,850 $130,518 $129,859 $ 80,103
========== ========== ======== ======== ========
</TABLE>
71
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AS SHOWN
MARKET ON THE BALANCE
TYPE OF INVESTMENT COST(3) VALUE SHEET(1)
- ------------------ ---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds:
United States government and government
agencies and authorities $ 302,820 $ 298,461 $ 298,461
States, municipalities and political
subdivisions 11,296 12,055 12,055
Foreign governments 1,926 1,872 1,872
Public utilities 547,228 590,445 573,030
Mortgage-backed securities 2,013,451 2,042,337 2,035,920
All other corporate bonds 2,807,892 2,908,024 2,878,382
---------- ---------- ----------
Total bonds 5,684,613 5,853,194 5,799,720
---------- ---------- ----------
Equity securities:
Common stocks:
Public utilities 510 611 611
Banks, trusts and insurance companies 12,824 21,484 21,484
Industrial, miscellaneous and all
other 329,792 422,401 422,401
Nonredeemable preferred stocks 10,857 11,491 11,491
---------- ---------- ----------
Total equity securities 353,983 455,987 455,987
---------- ---------- ----------
Mortgage loans on real estate 608,808 xxxxxx 608,808
Real estate (2) 43,082 xxxxxx 43,082
Policy loans 204,178 xxxxxx 204,178
Other long-term investments 98,247 xxxxxx 98,247
Short-term investments 122,772 xxxxxx 122,772
---------- ----------
Total $1,077,087 xxxxxx $1,077,087
---------- ----------
Total investments $7,115,683 xxxxxx $7,332,794
========== ==========
</TABLE>
- -------
(1) Amortized cost for bonds classified as held-to-maturity and fair value for
common stocks and bonds classified as available-for-sale.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $1,810,000.
(3) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for bonds
and other investments.
72
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------- ------------------------------------------------------------
FUTURE POLICY AMORTIZATION
DEFERRED BENEFITS OTHER POLICY BENEFITS, OF DEFERRED
POLICY LOSSES, CLAIMS CLAIMS AND NET CLAIMS, LOSSES POLICY OTHER
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS PREMIUM INVESTMENT AND SETTLEMENT ACQUISITION OPERATING
SEGMENT COSTS EXPENSES(1) PREMIUMS(2) PAYABLE REVENUE(3) INCOME EXPENSES COSTS EXPENSES
- ------- ----------- -------------- ----------- ------------ ---------- ---------- -------------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
Life insurance $456,461 $2,123,148 $149,152 $51,772 $568,874 $223,762 $478,228 $ 97,386 $290,525
Accident and
health insurance 62,407 437,118 33,770 18,774 160,097 34,202 96,743 14,017 87,222
Annuity 70,649 3,360,614 -- 31 79,245 267,473 243,387 14,575 111,366
Property and
liability
insurance -- 27,855 24,189 -- 50,109 5,550 36,933 -- 19,033
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$589,517 $5,948,735 $207,111 $70,577 $858,325 $530,987 $855,291 $125,978 $508,146
======== ========== ======== ======= ======== ======== ======== ======== ========
1995:
Life insurance $430,829 $2,009,154 $151,864 $41,212 $540,353 $203,487 $454,299 $ 80,896 $266,090
Accident and
health insurance 55,888 400,950 34,847 14,567 153,505 33,358 93,482 11,448 83,345
Annuity 53,015 3,401,760 -- 33 74,899 272,499 260,854 12,596 86,716
Property and
liability
insurance -- 30,117 23,783 -- 49,216 5,703 33,563 -- 18,090
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$539,732 $5,841,981 $210,494 $55,812 $817,973 $515,047 $842,198 $104,940 $454,241
======== ========== ======== ======= ======== ======== ======== ======== ========
1994:
Life insurance $510,117 $1,867,170 $133,221 $47,099 $505,300 $192,141 $443,233 $ 59,351 $245,791
Accident and
health insurance 46,506 352,955 36,529 17,142 136,619 30,119 93,359 12,401 75,380
Annuity 92,664 3,263,042 -- 12 60,479 258,196 238,301 14,725 79,498
Property and
liability
insurance -- 32,807 21,865 -- 47,735 5,645 33,829 -- 18,717
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$649,287 $5,515,974 $191,615 $64,253 $750,133 $486,101 $808,722 $ 86,477 $419,386
======== ========== ======== ======= ======== ======== ======== ======== ========
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
PREMIUMS
SEGMENT WRITTEN(4)
- ------- ----------
(IN THOUSANDS)
<S> <C>
1996:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 50,515
-------
$50,515
=======
1995:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 51,133
-------
$51,133
=======
1994:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 47,073
-------
$47,073
=======
</TABLE>
- -----
(1) Includes policy and contract account balances
(2) Includes unearned policy and contract fees
(3) Includes policy and contract fees
(4) Applies only to property and liability insurance
73
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
OTHER FROM OTHER NET ASSUMED TO
GROSS AMOUNT COMPANIES COMPANIES AMOUNT NET
------------ ----------- ----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996:
Life insurance in force $116,445,975 $15,164,764 $22,957,287 $124,238,498 18.5%
============ =========== =========== ============
Premiums:
Life insurance $ 347,056 $ 45,988 $ 63,044 $ 364,112 17.3%
Accident and health
insurance 174,219 15,511 1,389 160,097 0.9%
Annuity 38,041 -- -- 38,041 --
Property and liability
insurance 55,782 5,729 56 50,109 0.1%
------------ ----------- ----------- ------------
Total premiums $ 615,098 $ 67,228 $ 64,489 $ 612,359 10.5%
============ =========== =========== ============
1995:
Life insurance in force $106,228,277 $15,620,303 $24,289,241 $114,897,215 21.1%
============ =========== =========== ============
Premiums:
Life insurance $ 342,433 $ 44,778 $ 62,169 $ 359,824 17.3%
Accident and health
insurance 163,412 12,296 2,389 153,505 1.6%
Annuity 41,225 -- -- 41,225 --
Property and liability
insurance 53,771 4,789 234 49,216 0.5%
------------ ----------- ----------- ------------
Total premiums $ 600,841 $ 61,863 $ 64,792 $ 603,770 10.7%
============ =========== =========== ============
1994:
Life insurance in force $ 99,220,067 $13,570,369 $23,520,616 $109,170,314 21.5%
============ =========== =========== ============
Premiums:
Life insurance $ 322,799 $ 38,088 $ 59,064 $ 343,775 17.2%
Accident and health
insurance 145,333 10,007 1,293 136,619 0.9%
Annuity 33,889 -- -- 33,889 --
Property and liability
insurance 56,045 8,892 582 47,735 1.2%
------------ ----------- ----------- ------------
Total premiums $ 558,066 $ 56,987 $ 60,939 $ 562,018 10.8%
============ =========== =========== ============
</TABLE>
74
<PAGE>
APPENDIX I
ILLUSTRATIONS OF ACCOUNT VALUES AND DEATH BENEFITS
The following tables illustrate how the account value and death benefit of a
policy change with the investment experience of the sub-accounts of the
separate account. The tables show how the account values and death benefit of a
policy issued to an insured of a given age and at a given premium would vary
over time if the investment return on the assets held in each sub-account of
the separate account were a uniform, gross, after-tax rate of 0 percent, 6
percent or 12 percent. In addition, the account values and death benefits would
be different from those shown if the gross annual investment rates of return
averaged 0 percent, 6 percent and 12 percent over a period of years, but
fluctuated above and below those averages for individual policy years.
The tables illustrate both a policy issued to an insured, age 45, and to an
insured, age 55, in a small group-sponsored program issued a group contract.
This assumes a $4.00 monthly administration charge and a 3 percent sales load
charge. If a particular policy has different sales or administration charges or
if a particular group is larger or smaller or has a different gender mix, the
account values and death benefits would vary from those shown in the tables.
The account value column in the tables with the heading "Using Maximum
Mortality Charges" shows the accumulated value of the premiums paid reflecting
deduction of the charges described above and monthly charges for the cost of
insurance based on the guaranteed maximum rate when there has been simplified
underwriting, which is 125 percent of the maximum allowed under the 1980
Commissioners Standard Ordinary ("CSO") Mortality Table. The account value
column in the table with the heading "Using Current Mortality Charges" shows
the accumulated value of premiums paid reflecting deduction of the charges
described above and the monthly charges for the cost of insurance at the
current level which is substantially less than the guaranteed rate. The
illustrations of the death benefits also vary between tables depending upon
whether the level or variable type death benefits are illustrated.
The amounts shown for the hypothetical account value and death benefit as of
each policy year reflect the fact that the net investment return on the assets
held in the sub-accounts is lower than the gross, after-tax return. This is
because expenses of the Fund and a daily mortality and expense risk charge
assessed against the net assets of the Variable Universal Life Account are
deducted from the gross return. The mortality and expense risk charge reflected
in the illustrations is at an annual rate of .50 percent. The investment
expenses illustrated represent an average of the investment advisory fee
charged for all twenty-three Portfolios of the Funds. The investment advisory
fee for each Portfolio for the last fiscal year is shown in Appendix III. In
addition to the deduction for the investment advisory fee, the illustrations
also reflect a deduction for Portfolio costs and expenses for the last fiscal
year, as illustrated in Appendix III. Therefore, gross annual rates of return
of 0 percent, 6 percent and 12 percent correspond to approximate net annual
rates of return of -1.23 percent, 4.77 percent and 10.77 percent.
The tables reflect the fact that no charges for federal, state or local
income taxes are currently made against the Variable Universal Life Account. If
such a charge is made in the future, it will take a higher gross rate of return
to produce after-tax returns of 0 percent, 6 percent and 12 percent than it
does now which produce the account values and death benefits illustrated.
Additionally, the hypothetical values shown in the tables assume that the
policy for which values are illustrated is not deemed an individual policy
under OBRA, and therefore the values do not reflect the additional 1 percent of
premium expense charge to cover Minnesota Mutual's increased federal tax
expense in that situation.
The tables illustrate the policy values that would result based upon the
investment rates of return if the premiums are paid on a monthly basis, and if
no policy loans have been made. The tables are also based on the assumptions
that no partial surrenders have been made, that no transfer charges were
incurred and that no optional riders have been requested. The policy values in
the tables also may reflect an increase in the face amount of insurance to the
minimum amount necessary to maintain the policy's qualification as life
insurance under Section 7702 of the Code. Further, the tables may show a
decrease in the face amount to a level that the account value immediately prior
to the decrease plus the additional illustrated premiums with interest can
provide.
Upon request, we will provide a comparable illustration based on the proposed
insured's age, the face amount of insurance, premium amount and frequency of
payment, the group size and gender mix among other characteristics of the group
and the insurance program.
75
<PAGE>
VARIABLE UNIVERSAL LIFE
DEATH BENEFIT OPTION A
ISSUE AGE 45
FACE AMOUNT OF INSURANCE--$100,000
ANNUAL PREMIUM--$1,800
(MONTHLY PREMIUM--$150)(1)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $1,800 $ 1,398 $100,000 $ 1,443 $100,000 $ 1,488 $100,000
2 47 1,800 2,759 100,000 2,936 100,000 3,116 100,000
3 48 1,800 4,084 100,000 4,479 100,000 4,900 100,000
4 49 1,800 5,373 100,000 6,078 100,000 6,858 100,000
5 50 1,800 6,618 100,000 7,725 100,000 8,998 100,000
6 51 1,800 7,829 100,000 9,433 100,000 11,355 100,000
7 52 1,800 8,986 100,000 11,186 100,000 13,931 100,000
8 53 1,800 10,102 100,000 12,997 100,000 16,765 100,000
9 54 1,800 11,166 100,000 14,862 100,000 19,877 100,000
10 55 1,800 12,170 100,000 16,773 100,000 23,292 100,000
15 60 1,800 16,285 100,000 27,174 100,000 46,431 100,000
20 65 1,800 18,348 100,000 39,000 100,000 85,404 103,169
25 70 1,800 16,633 100,000 52,023 100,000 150,474 173,046
30 75 1,800 7,221 100,000 66,230 100,000 256,613 272,172
</TABLE>
(1)A premium payment of $150 is assumed to be paid monthly at the beginning of
each policy month.
(2)Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
76
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION A
ISSUE AGE 45
FACE AMOUNT OF INSURANCE--$100,000
ANNUAL PREMIUM--$1,800
(MONTHLY PREMIUM--$150)(1)
USING MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $1,800 $1,060 $100,000 $ 1,094 $100,000 $ 1,128 $100,000
2 47 1,800 2,068 100,000 2,202 100,000 2,338 100,000
3 48 1,800 3,025 100,000 3,323 100,000 3,639 100,000
4 49 1,800 3,928 100,000 4,455 100,000 5,037 100,000
5 50 1,800 4,774 100,000 5,595 100,000 6,542 100,000
6 51 1,800 5,556 100,000 6,739 100,000 8,161 100,000
7 52 1,800 6,270 100,000 7,880 100,000 9,901 100,000
8 53 1,800 6,908 100,000 9,012 100,000 11,770 100,000
9 54 1,800 7,461 100,000 10,127 100,000 13,779 100,000
10 55 1,800 7,924 100,000 11,217 100,000 15,940 100,000
15 60 1,800 8,703 100,000 16,129 100,000 29,743 100,000
20 65 1,800 5,840 100,000 19,074 100,000 51,376 100,000
25 70 1,800 0 0 16,942 100,000 88,852 102,180
30 75 1,800 0 0 2,331 100,000 154,267 163,585
</TABLE>
(1) A premium payment of $150 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
77
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION B
ISSUE AGE 45
FACE AMOUNT OF INSURANCE--$50,000
ANNUAL PREMIUM--$1,800
(MONTHLY PREMIUM--$150)(1)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $1,800 $ 1,521 $51,521 $ 1,571 $ 51,571 $ 1,619 $ 51,619
2 47 1,800 3,012 53,012 3,204 53,204 3,401 53,401
3 48 1,800 4,472 54,472 4,903 54,903 5,361 55,361
4 49 1,800 5,903 55,903 6,671 56,671 7,519 57,519
5 50 1,800 7,298 57,298 8,504 58,504 9,892 59,892
6 51 1,800 8,663 58,663 10,413 60,413 12,506 62,506
7 52 1,800 9,989 59,989 12,388 62,388 15,378 65,378
8 53 1,800 11,280 61,280 14,439 64,439 18,539 68,539
9 54 1,800 12,531 62,531 16,563 66,563 22,015 72,015
10 55 1,800 13,737 63,737 18,758 68,758 25,835 75,835
15 60 1,800 19,080 69,080 30,881 80,881 51,478 101,478
20 65 1,800 22,935 72,935 44,848 94,848 92,712 142,712
25 70 1,800 24,330 74,330 59,925 109,925 158,550 208,550
30 75 1,800 21,532 71,532 74,227 124,227 262,908 312,908
</TABLE>
(1) A premium payment of $150 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
78
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION B
ISSUE AGE 45
FACE AMOUNT OF INSURANCE--$50,000
ANNUAL PREMIUM--$1,800
(MONTHLY PREMIUM--$150)(1)
USING MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 $1,800 $ 1,333 $51,333 $ 1,377 $51,377 $ 1,420 $ 51,420
2 47 1,800 2,629 52,629 2,797 52,797 2,968 52,968
3 48 1,800 3,884 53,884 4,260 54,260 4,659 54,659
4 49 1,800 5,100 55,100 5,768 55,768 6,506 56,506
5 50 1,800 6,273 56,273 7,319 57,319 8,522 58,522
6 51 1,800 7,400 57,400 8,912 58,912 10,722 60,722
7 52 1,800 8,479 58,479 10,545 60,545 13,123 63,123
8 53 1,800 9,506 59,506 12,216 62,216 15,740 65,740
9 54 1,800 10,476 60,476 13,921 63,921 18,592 68,592
10 55 1,800 11,385 61,385 15,657 65,657 21,700 71,700
15 60 1,800 14,949 64,949 24,748 74,748 42,022 92,022
20 65 1,800 16,395 66,395 34,037 84,037 73,403 123,403
25 70 1,800 14,603 64,603 42,129 92,129 121,549 171,549
30 75 1,800 7,843 57,843 46,520 96,520 195,165 245,165
</TABLE>
(1) A premium payment of $150 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
79
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION A
ISSUE AGE 55
FACE AMOUNT OF INSURANCE--$100,000
ANNUAL PREMIUM--$3,000
(MONTHLY PREMIUM--$250)(1)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 56 $3,000 $ 2,151 $100,000 $2,221 $100,000 $ 2,290 $100,000
2 57 3,000 4,232 100,000 4,504 100,000 4,782 100,000
3 58 3,000 6,245 100,000 6,854 100,000 7,502 100,000
4 59 3,000 8,170 100,000 9,256 100,000 10,456 100,000
5 60 3,000 10,023 100,000 11,726 100,000 13,689 100,000
6 61 3,000 11,795 100,000 14,263 100,000 17,228 100,000
7 62 3,000 13,468 100,000 16,854 100,000 21,093 100,000
8 63 3,000 15,027 100,000 19,487 100,000 25,315 100,000
9 64 3,000 16,474 100,000 22,172 100,000 29,948 100,000
10 65 3,000 17,784 100,000 24,891 100,000 35,029 100,000
15 70 3,000 21,893 100,000 39,003 100,000 69,936 100,000
20 75 3,000 19,351 100,000 53,465 100,000 131,511 139,310
25 80 3,000 5,965 100,000 70,039 100,000 234,218 245,929
30 85 3,000 0 0 95,374 100,143 400,431 420,453
</TABLE>
(1) A premium payment of $250 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
80
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION A
ISSUE AGE 55
FACE AMOUNT OF INSURANCE--$100,000
ANNUAL PREMIUM--$3,000
(MONTHLY PREMIUM--$250)(1)
USING MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 56 $3,000 $1,478 $100,000 $ 1,526 $100,000 $ 1,574 $100,000
2 57 3,000 2,850 100,000 3,036 100,000 3,226 100,000
3 58 3,000 4,112 100,000 4,524 100,000 4,963 100,000
4 59 3,000 5,263 100,000 5,990 100,000 6,795 100,000
5 60 3,000 6,294 100,000 7,422 100,000 8,728 100,000
6 61 3,000 7,190 100,000 8,808 100,000 10,763 100,000
7 62 3,000 8,936 100,000 10,128 100,000 12,901 100,000
8 63 3,000 8,508 100,000 11,361 100,000 15,139 100,000
9 64 3,000 8,884 100,000 12,479 100,000 17,476 100,000
10 65 3,000 9,040 100,000 13,459 100,000 19,916 100,000
15 70 3,000 5,780 100,000 15,418 100,000 34,244 100,000
20 75 3,000 0 0 7,175 100,000 54,468 100,000
25 80 3,000 0 0 0 0 90,908 100,000
30 85 3,000 0 0 0 0 163,762 171,950
</TABLE>
(1) A premium payment of $250 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
81
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION B
ISSUE AGE 55
FACE AMOUNT OF INSURANCE--$50,000
ANNUAL PREMIUM--$3,000
(MONTHLY PREMIUM--$250)(1)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 56 $3,000 $ 2,460 $52,460 $ 2,540 $ 52,540 $ 2,619 $ 52,619
2 57 3,000 4,860 54,860 5,170 55,170 5,488 55,488
3 58 3,000 7,200 57,200 7,895 57,895 8,634 58,634
4 59 3,000 9,470 59,470 10,707 60,707 12,075 62,075
5 60 3,000 11,677 61,677 13,617 63,617 15,848 65,848
6 61 3,000 13,814 63,814 16,621 66,621 19,983 69,983
7 62 3,000 15,872 65,872 19,714 69,714 24,506 74,506
8 63 3,000 17,838 67,838 22,887 72,887 29,447 79,447
9 64 3,000 19,715 69,715 26,143 76,143 34,850 84,850
10 65 3,000 21,486 71,486 29,469 79,469 40,746 90,746
15 70 3,000 28,478 78,478 46,924 96,924 79,341 129,341
20 75 3,000 30,941 80,941 64,230 114,230 138,267 188,267
25 80 3,000 27,795 77,795 79,724 129,724 229,166 279,166
30 85 3,000 18,734 68,734 92,261 142,261 372,682 422,682
</TABLE>
(1) A premium payment of $250 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
82
<PAGE>
VARIABLE UNIVERSAL LIFE (CONTINUED)
DEATH BENEFIT OPTION B
ISSUE AGE 55
FACE AMOUNT OF INSURANCE--$50,000
ANNUAL PREMIUM--$3,000
(MONTHLY PREMIUM--$250)(1)
USING MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(2) 6% GROSS(2) 12% GROSS(2)
(-1.23% NET) (4.77% NET) (10.77% NET)
END OF
POL ATT ANNUAL ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ --- ------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 56 $3,000 $ 2,092 $52,092 $ 2,160 $52,160 $ 2,227 $ 52,227
2 57 3,000 4,104 54,104 4,368 54,368 4,637 54,637
3 58 3,000 6,035 56,035 6,621 56,621 7,244 57,244
4 59 3,000 7,882 57,882 8,921 58,921 10,070 60,070
5 60 3,000 9,640 59,640 11,262 61,262 13,130 63,130
6 61 3,000 11,303 61,303 13,639 63,639 16,440 66,440
7 62 3,000 12,862 62,862 16,042 66,042 20,018 70,018
8 63 3,000 14,305 64,305 18,461 68,461 23,878 73,878
9 64 3,000 15,620 65,620 20,881 70,881 28,038 78,038
10 65 3,000 16,798 66,798 23,292 73,292 32,516 82,516
15 70 3,000 20,376 70,376 34,844 84,844 60,659 110,659
20 75 3,000 18,663 68,663 43,602 93,602 100,916 150,916
25 80 3,000 8,548 58,548 44,840 94,840 156,736 206,736
30 85 3,000 0 0 31,928 81,928 233,188 283,188
</TABLE>
(1) A premium payment of $250 is assumed to be paid monthly at the beginning of
each policy month.
(2) Assumes no policy loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND ACCOUNT VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
83
<PAGE>
APPENDIX II
POLICY LOAN EXAMPLE
As an example of the effect of a policy loan upon the policy account value and
the death benefit, assume a policy of an insured age 45 with the following
characteristics: The Variable Universal Life Policy has an Option B death
benefit with a level face amount of $50,000. Further, assume that 100 percent
of net premiums are invested in the sub-accounts of the Variable Universal Life
Account, that the gross investment rate in the Variable Universal Life Account
was 12 percent each year and that Minnesota Mutual deducted current mortality
charges. This situation is shown in Appendix I, "Illustrations of Account
Values and Death Benefits" on page 61 of this prospectus.
Now assume that the insured, who is also the owner of the policy, takes a
policy loan in the amount of $5,000 at the end of the fourth policy year.
When a policy loan is taken, the net cash value is reduced by the amount
borrowed and any accrued interest subsequently charged. The amount borrowed
continues to be a part of the account value, as the amount borrowed becomes
part of the loan account value where it will accrue loan interest credits and
will be held in our general account. Interest is charged on the policy loan at
a policy loan interest rate of 8 percent per year. Interest is also credited to
a policy when there is a policy loan. Interest credits on the policy loan are
at a rate which is not less than the policy loan interest rate less 2 percent
per year. Assume the interest credits in this example will be at 6 percent per
year.
The following table shows the effect on the end of fifth year account value
and death benefit, if a policy loan of $5,000 is made at the end of the fourth
year.
<TABLE>
<CAPTION>
End of Year End of Year
Account Value Death Benefit
With Loan Without Loan With Loan Without Loan
--------- ------------ --------- ------------
<S> <C> <C> <C>
$9,437 $9,673 $59,437 $59,673
</TABLE>
Note that the difference in the account values here represents the difference
between the actual policy performance in the sub-accounts of the Variable
Universal Life Account and the interest credited on the principal amount of the
policy loan. If interest credited on a policy loan exceeds the policy
performance, then a policy with a loan will have a greater value than a policy
with no loan activity. Where policy performance exceeds the interest credited
on a policy loan, the resulting policy value will be lower than it would have
been if the loan were not made.
Now consider an identical situation to that above except that the death
benefit is under Option A with a face amount of insurance of $100,000. This
situation is also shown in Appendix I, "Illustrations of Account Values and
Death Benefits" on page 61 of this prospectus. The following table shows the
effect on the same fifth year values if a policy loan of $5,000 is made at the
end of the fourth year.
<TABLE>
<CAPTION>
End of Year End of Year
Account Value Death Benefit
With Loan Without Loan With Loan Without Loan
--------- ------------ --------- ------------
<S> <C> <C> <C>
$8,569 $8,806 $100,000 $100,000
</TABLE>
The account values above under the "With Loan" headings include the loan
account value, that is, the amount of the loan plus accrued interest
subsequently charged. If the insured were to surrender the policy at the end of
the fifth year, he or she would receive only the net cash value in the sub-
accounts of the Variable Universal Life Account. The net cash value equals the
account value less the loan account value since there are no charges due.
Similarly, if the insured were to die at the end of the fifth year we would
pay out the death benefit listed under the "With Loan" heading less the loan
account value.
84
<PAGE>
APPENDIX III
ADVISORY FEES AND PORTFOLIO EXPENSES
The chart below shows the advisory fees and portfolio expense fees for the
Funds as of December 31, 1996.
The advisory fees for the Series Fund are a contractual agreement between the
Series Fund and Advantus Capital Management, Inc. The advisory fees for VIP and
VIP II are a contractual agreement between VIP and VIP II and Fidelity
Management & Research Company ("FMR").
The Series Fund portfolio expense fees reflect the actual expenses incurred
by each portfolio unless the actual expenses exceed the cap. The portfolio
expense fee is capped at 0.15 percent for all Series Fund portfolios except the
International Stock and International Bond Portfolios, which is capped at 1.00
percent. Any Series Fund portfolio expenses incurred in excess of the cap are
voluntarily absorbed by Minnesota Mutual. For a description of the arrangement
whereby Minnesota Mutual voluntarily absorbs certain expenses of the Series
Fund, see "Investment Adviser" in the attached prospectus for MIMLIC Series
Fund, Inc. The portfolio expense fees shown are not expected to increase but
rather decrease as the amount of assets in the portfolios increases.
The portfolio expense fees for the VIP Equity Income Portfolio and the VIP II
Contrafund Portfolio reflect reductions based on arrangements FMR or the funds
have entered into with third parties who either paid or reduced a portion of
the portfolio expenses.
<TABLE>
<CAPTION>
Investment Portfolio Expense
Fund / Portfolio Name Advisory Fee Actual or Cap Total
- --------------------- ------------ ----------------- -----
<S> <C> <C> <C>
SERIES FUND
Growth 0.50% 0.09% 0.59%
Bond 0.50% 0.06% 0.56%
Money Market 0.50% 0.10% 0.60%
Asset Allocation 0.50% 0.04% 0.54%
Mortgage Securities 0.50% 0.08% 0.58%
Index 500 0.40% 0.05% 0.45%
Capital Appreciation 0.75% 0.10% 0.85%
International Stock 0.74%* 0.32% 1.06%
Small Company 0.75% 0.06% 0.81%
Value Stock 0.75% 0.08% 0.83%
Maturing Government Bond 1998 0.05% 0.15% 0.20%
Maturing Government Bond 2002 0.05% 0.15% 0.20%
Maturing Government Bond 2006 0.25% 0.15% 0.40%
Maturing Government Bond 2010 0.25% 0.15% 0.40%
Macro-Cap Value 0.70% 0.15% 0.85%
Index 400 Mid-Cap 0.40% 0.15% 0.55%
Small Company Value 0.75% 0.15% 0.90%
Micro-Cap Value 1.25% 0.15% 1.40%
Micro-Cap Growth 1.10% 0.15% 1.25%
International Bond 0.60% 1.00% 1.60%
VIP
Equity-Income 0.51%** 0.05% 0.56%
High Income 0.59%** 0.12% 0.71%
VIP II
Contrafund 0.61%** 0.10% 0.71%
AVERAGE 0.57% 0.16% 0.72%
</TABLE>
* The advisory fee for this portfolio is a variable fee based upon a decreasing
fee with increased asset size. This figure represents the actual 1996 average.
** The advisory fee for each of these portfolios is calculated by adding a
group fee to an individual fund fee rate and multiplying the result by each
fund's or portfolio's average net assets. These figures represent the actual
1996 averages.
85
<PAGE>
APPENDIX III (CONTINUED)
Although the Macro-Cap Value, the Index 400 Mid-Cap, the Small Company Value,
the Micro-Cap Value, the Micro-Cap Growth, and the International Bond
Portfolios are included in this prospectus, they will not be available until
October 1, 1997. Although the Maturing Government Bond Portfolios with
maturities of 1998, 2002, and 2006 are included in this prospectus, they are
not available for premium allocations or transfers effective May 1, 1997.
86
<PAGE>
Form of Supplement. Information in brackets will vary based upon the group-
sponsored insurance program under which the policy is issued.
SUPPLEMENT DATED [JUNE 1, 1997]
TO
PROSPECTUS DATED MAY 1, 1997
FOR
VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
The prospectus describes the provisions of the policies that generally are
applicable to all purchasers. Certain provisions, however, may vary depending
upon the group in connection with which the policies are issued. Accordingly,
this supplement provides owners with additional, specific information about the
policies issued to owners in the [ABC Group]. Words and terms used in this
supplement have the same meanings given to them in the prospectus, unless the
context indicates otherwise.
THE INFORMATION SET FORTH BELOW MERELY SUPPLEMENTS THE INFORMATION INCLUDED
IN THE PROSPECTUS. IT IS NOT A SUMMARY OF THE PROSPECTUS AND IS NOT NECESSARILY
MORE IMPORTANT THAN THE INFORMATION THAT IS INCLUDED IN THE PROSPECTUS.
MATURITY DATE: The maturity date is the [95th] birthday of the insured.
ALLOCATION OF NET PREMIUMS: [The limit on allocation of net premiums to the
guaranteed account is [50 percent].] [There is no limit on allocation of net
premiums to the guaranteed account.]
PARTIAL SURRENDER: A partial surrender of the net cash value of the policy
is permitted in any amount equal to at least [$200]. [A transaction charge will
be assessed against the net cash value in connection with a partial surrender.
The amount of the charge is the lesser of $25 or 2 percent of the amount
withdrawn]. (See "Surrender and Partial Surrender" in the prospectus.)
TRANSFERS: [The limit on the amount of net cash value to be transferred out
of the guaranteed account is [50 percent (or $250 if greater)] of the guaranteed
account balance.] [There is no limit on the amount of net cash value to be
transferred out of the guaranteed account.]
PREMIUM EXPENSE CHARGES: Against premiums paid, we will deduct [a
percentage of premium charge equal to [3 percent] for a sales load and] a
percentage of premium charge equal to [2 percent] for premium taxes. We will
also deduct a percentage of premium charge equal to [.25 percent] to recover a
portion of our estimated cost for the federal income tax treatment of deferred
acquisition costs. (See "Charges--Premium Expense Charges" in the prospectus.)
ADMINISTRATION CHARGE: [We will deduct an administration charge equal to
[$2.00] from the net cash value of the policy each month. (See "Charges--Monthly
Deduction" in the prospectus.)] [There is no monthly administration charge for
the policy.]
SEPARATE ACCOUNT CHARGES: We will assess a mortality and expense risk
charge directly against the separate account assets. The charge is equal to an
annual rate of [.50 percent] of
<PAGE>
the average daily assets of the separate account. (See "Charges--Separate
Account Charges in the prospectus.)
TERMINATION OF GROUP CONTRACT: [We may terminate the group contract or any
of its provisions on 61 days' written notice.] [We may terminate the group
contract or any of its provisions in situations where, in the absence of fraud,
during any twelve month period, the aggregate specified face amount for all
policies under the group contract decreases by [15 percent] or the number of
policies decreases by [15 percent]]. (See "General Provisions of the Group
Contract--Termination" in the prospectus.)
This supplement should be read in conjunction with the accompanying
prospectus for the policies.
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
INDEMNIFICATION UNDERTAKING
The State of Minnesota has an indemnification statute, found at Minnesota
Statutes 300.083, as amended, effective January 1, 1984, which required
indemnification of individuals only under the circumstances described by the
statute. Expenses incurred in the defense of any action, including attorneys'
fees, may be advanced to the individual, after a written request, by the Board
of Directors. The Board of Directors must receive an undertaking from the
individual to repay any amount advanced unless it is ultimately determined that
he or she is entitled to be indemnified by the corporation as authorized by the
statute and after a determination that the facts then known to those making the
determination would not preclude indemnification.
Indemnification is required for persons made a part to a proceeding by reason of
their official capacity so long as they acted in good faith, received no
improper personal benefit and have not been indemnified by another organization.
In the case of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other acts arising out
of official capacity: (1) where the person is acting directly for the
corporation there must be a reasonable belief by the person that his or her
conduct was in the best interests of the corporation or; (2) where the person is
serving another organization or plan at the request of the corporation, the
person must have reasonably believed that his or her conduct was not opposed to
the best interests of the corporation. In the case of persons not directors,
officers or policy-making employees, determination of eligibility for
indemnification may be made by a board-appointed committee of which a director
is a member. For other employees, directors and officers, the determination of
eligibility is made by the Board or a committee of the Board, special legal
counsel, the shareholders of the corporation or pursuant to a judicial
proceeding.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Universal
Life Account pursuant to the foregoing provisions, or otherwise, The Minnesota
Mutual Life Insurance Company and Minnesota Mutual Variable Universal Life
Account have 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 Minnesota Mutual Life
Insurance Company and Minnesota Mutual Variable Universal Life Account of
expenses incurred or paid by a director, officer or controlling person of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Universal
Life Account 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 Minnesota Mutual Life Insurance Company and
Minnesota Mutual Variable Universal Life Account 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.
RULE 26(E) REPRESENTATION
The Minnesota Mutual Life Insurance Company hereby represents that, as to the
variable life insurance policies which are the subject of this Registration
Statement, File No. 33-85496, the fees and charges deducted under the contract,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred and the risks assumed by The Minnesota Mutual
Life Insurance Company.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The Facing Sheet.
Cross Reference Sheet.
Part I
The prospectus consisting of 86 pages.
Part II
Undertakings and Representations
The Signatures.
Written consents of the following persons:
Donald F. Gruber, Esq.
KPMG Peat Marwick LLP
Robert M. Olafson, F.S.A.
Jones & Blouch L.L.P.
The following Exhibits:
A. Exhibits described in Item IX(A) of Form N-8B-2.
(1) The indenture or agreement under the terms of which the trust was
organized or issued securities.
Resolution of the Board of Trustees of The Minnesota Mutual Life
Insurance Company dated August 8, 1994.
(2) The indenture or agreement pursuant to which the proceeds of payments
of securities are held by the custodian or trustee, if such indenture
or agreement is not the same as the indenture or agreement referred to
immediately above.
None.
(3) Distributing Policies:
(a) Agreements between the trust and principal underwriter or between
the depositor and principal underwriter.
Distribution Agreement.
(b) Specimen of typical agreements between principal underwriter and
dealers, managers, sales supervisors and salesmen.
Agent Sales Agreement.
(c) Schedules of sales commissions referred to in Item 38(c).
Sales Commission Schedule.
(4) Any agreement between the depositor, principal underwriter and the
custodian or trustee other than indentures or agreements set forth
<PAGE>
above as paragraphs (1), (2) and (3) with respect to the trust or its
securities.
None.
(5) The form of each type of security.
(a) Group Variable Universal Life Policy, form 94-18660 Rev. 1-95.
(b) Group Variable Universal Life Policy Certificate, Level Death
Benefit, form 94-18661 Rev. 1-95.
(c) Group Variable Universal Life Policy Certificate, Variable Death
Benefit, form 94-18662 Rev. 1-95.
(d) Special Rider for use with Group Policy, form 94-18672 Rev. 1-95.
(e) Spouse Coverage for use with Group Policy Certificate, Level
Death Benefit, form 94-18670 Rev. 1-95.
(f) Spouse Coverage for use with Group Policy Certificate, Variable
Death Benefit, form 94-18671 Rev. 1-95.
(g) Waiver Agreement, Certificate Supplement, for use with Group
Policy, form 94-18676.
(h) Children's Rider, Certificate Supplement, for use with Group
Policy, form 94-18679.
(i) Accidental Death and Dismemberment Rider, Certificate Supplement,
for use with Group Policy, form 94-18680.
(j) Accelerated Benefits Agreement, for use with Group Policy, form
94-18677.
(k) Accelerated Benefits, Certificate Supplement, for use with Group
Policy, form 94-18678.
(l) Policy Rider - Children's Benefit, for use with Group Policy,
form 94-18681.
<PAGE>
(m) Policy Rider - Accidental Death and Dismemberment, for use with
Group Policy, form 94-18682.
(n) Policy Rider - Waiver of Premium, for use with Group Policy, form
94-18683.
(o) Individual Variable Universal Life Policy, Level Death Benefit,
form 94-18665 Rev. 1-95.
(p) Individual Variable Universal Life Policy, Variable Death
Benefit, form 94-18673 Rev. 1-95.
(q) Individual Policy Rider - Accelerated Benefits Agreement, for use
with the Individual Policy, form 94-18686.
(r) Individual Policy Rider - Accidental Death and Dismemberment
Benefit, for use with the Individual Policy, form 94-18687.
(s) Individual Policy Rider - Waiver Agreement, for use with the
Individual Policy, form 94-18688.
(t) Individual Policy Rider - Children's Benefit, for use with the
Individual Policy, form 94-18689.
(u) Policyholder Contribution Rider, for use with the Group Policy,
form 96-18701 filed as this Exhibit to Registrant's Form S-6,
File Number 33-85496, Post-Effective Amendment Number 1, is
hereby incorporated by reference.
(v) Policyholder Contribution Certificate Supplement, for use with
the Group Policy, form 96-18702 filed as this Exhibit to
Registrant's Form S-6, File Number 33-85496, Post-Effective
Amendment Number 1, is hereby incorporated by reference.
(w) Spouse and Child Term Life Insurance Policy Rider, for use with
the Group Policy, form 96-18793 filed as this Exhibit to
Registrant's Form S-6, File Number 33-85496, Post-Effective
Amendment Number 1, is hereby incorporated by reference.
(x) Spouse and Child Term Life Insurance Certificate Supplement, for
use with the Group Policy, form 96-18704 filed as this Exhibit to
Registrant's Form S-6, File Number 33-85496, Post-Effective
Amendment Number 1, is hereby incorporated by reference.
(6) The certificate of incorporation or other instrument of organization
and bylaws of the depositor.
(a) Charter of the Depositor.
(b) Bylaws of the Depositor.
(7) Any insurance policy under a contract between the trust and the
insurance company or between the depositor and the insurance company,
together with the table of insurance premiums.
None.
<PAGE>
(8) Any agreement between the trust or the depositor concerning the trust
with the issuer, depositor, principal underwriter or investment
adviser of any underlying investment company or any affiliated person
of such persons.
None.
(9) All other material not entered into in the ordinary course of business
of the trust or of the depositor concerning the trust.
None.
(10) Form of application for a periodic payment plan certificate.
(a) Group Variable Universal Life Policy.
(i) Group Variable Universal Life Policy Application, form 94-
18663 Rev. 2-96 filed as this Exhibit to Registrant's Form
S-6, File Number 33-85496, Post-Effective Amendment Number
1, is hereby incorporated by reference.
(ii) Group Variable Universal Life Policy, Individual
enrollment, form 94-18664 Rev. 2-96, employer/employee paid
filed as this Exhibit to Registrant's Form S-6, File Number
33-85496, Post-Effective Amendment Number 1, is hereby
incorporated by reference.
(iii) Group Variable Universal Life Policy, Individual
enrollment, form 94-18684 Rev. 2-96, employee paid filed as
this Exhibit to Registrant's Form S-6, File Number 33-
85496, Post-Effective Amendment Number 1, is hereby
incorporated by reference.
(iv) Group Variable Universal Life Policy, Individual
enrollment, form 94-18685 Rev. 2-96, employer paid filed as
this Exhibit to Registrant's Form S-6, File Number 33-
85496, Post-Effective Amendment Number 1, is hereby
incorporated by reference.
(v) Group Variable Universal Life Policy, Evidence of
Insurability form, form 94-18669.
(vi) Group Variable Universal Life Policy, Spouse Enrollment,
form 94-18667 Rev. 2-96 filed as this Exhibit to
Registrant's Form S-6, File Number 33-85496, Post-Effective
Amendment Number 1, is hereby incorporated by reference.
B. A specimen copy of each security being registered.
See Exhibits listed under A.(5) above.
C. An opinion of counsel as to the legality of the securities being
registered.
Opinion and Consent of Donald F. Gruber, Esq.
D. Consent of KPMG Peat Marwick LLP.
E. Opinion and Consent of Mr. Robert M. Olafson, F.S.A.
F. Consent of Jones & Blouch L.L.P.
G. Financial Data Schedule
(1) Growth Portfolio
(2) Bond Portfolio
(3) Money Market Portfolio
(4) Asset Allocation Portfolio
(5) Mortgage Securities Portfolio
(6) Index 500 Portfolio
<PAGE>
(7) Capital Appreciation Portfolio
(8) International Stock Portfolio
(9) Small Company Portfolio
(10) Value Stock Portfolio
(11) Maturing Government Bond Portfolio 1998
(12) Maturing Government Bond Portfolio 2002
(13) Maturing Government Bond Portfolio 2006
(14) Maturing Government Bond Portfolio 2010
(15) VIP High Income Portfolio
(16) VIP Equity-Income Portfolio
(17) VIP II ContraFund Portfolio
H. The Minnesota Mutual Life Insurance Company - Power of Attorney to Sign
Registration Statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Minnesota Mutual Variable Universal Life Account, has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the Undersigned,
thereunto duly authorized, in the City of Saint Paul, and State of Minnesota, on
the 28th day of February, 1997.
MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
-----------------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor, The
Minnesota Mutual Life Insurance Company, has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the Undersigned, thereunto
duly authorized, in the City of Saint Paul, and State of Minnesota, on the 28th
day of February, 1997.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By /s/ Robert L. Senkler
-----------------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
Robert L. Senkler* Chairman of the )
- -------------------------- Board, President )
Robert L. Senkler and Chief )
Executive Officer)
)
Giulio Agostini* Trustee )
- -------------------------- )
Giulio Agostini )
)
Anthony L. Andersen* Trustee )
- -------------------------- )
Anthony L. Andersen )
)
John F. Grundhofer* Trustee )
- -------------------------- )
John F. Grundhofer )
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Harold V. Haverty* Trustee )
- -------------------------- )
Harold V. Haverty )
)
Trustee ) By /s/ Dennis E. Prohofsky
- -------------------------- ) --------------------------
Lloyd P. Johnson ) Dennis E. Prohofsky
) Attorney-in-Fact
David S. Kidwell, Ph.D.* Trustee )
- -------------------------- ) Dated: February 28, 1997
David S. Kidwell, Ph.D. )
)
Reatha C. King, Ph.D.* Trustee )
- -------------------------- )
Reatha C. King, Ph.D. )
)
Thomas E. Rohricht* Trustee )
- -------------------------- )
Thomas E. Rohricht )
)
Terry N. Saario, Ph.D.* Trustee )
- -------------------------- )
Terry N. Saario, Ph.D. )
)
Michael E. Shannon* Trustee )
- -------------------------- )
Michael E. Shannon )
)
Frederick T. Weyerhaeuser* Trustee )
- -------------------------- )
Frederick T. Weyerhaeuser )
</TABLE>
- --------------
*Registrant's Officer and Trustee executing power of attorney dated February 12,
1996, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
A.(1) Resolution of the Board of Trustees of The Minnesota Mutual
Life Insurance Company dated August 8, 1994
A.(3)(a) Distribution Agreement
A.(3)(b) Agent Sales Agreement
A.(3)(c) Sales Commission Schedule
A.(5)(a) Group Variable Universal Life Policy, form 94-18660 Rev.
1-95
A.(5)(b) Group Variable Universal Life Policy Certificate, Level
Death Benefit, form 94-18661 Rev. 1-95
A.(5)(c) Group Variable Universal Life Policy Certificate, Variable
Death Benefit, form 94-18662 Rev. 1-95
A.(5)(d) Special Rider for use with Group Policy, form 94-18672 Rev.
1-95
A.(5)(e) Spouse Coverage for use with Group Policy Certificate, Level
Death Benefit, form 94-18670 Rev. 1-95
A.(5)(f) Spouse Coverage for use with Group Policy Certificate,
Variable Death Benefit, form 94-18671 Rev. 1-95
A.(5)(g) Waiver Agreement, Certificate Supplement, for use with Group
Policy, form 94-18676
A.(5)(h) Children's Rider, Certificate Supplement, for use with Group
Policy, form 94-18679
A.(5)(i) Accidental Death and Dismemberment Rider, Certificate
Supplement, for use with Group Policy, form 94-18680
A.(5)(j) Accelerated Benefits Agreement, for use with Group Policy,
form 94-18677
A.(5)(k) Accelerated Benefits, Certificate Supplement, for use with
Group Policy, form 94-18678
A.(5)(l) Policy Rider - Children's Benefit, for use with Group
Policy, form 94-18681
A.(5)(m) Policy Rider - Accidental Death and Dismemberment, for use
with Group Policy, form 94-18682
A.(5)(n) Policy Rider - Waiver of Premium, for use with Group Policy,
form 94-18683
A.(5)(o) Individual Variable Universal Life Policy, Level Death
Benefit, form 94-18665 Rev. 1-95
A.(5)(p) Individual Variable Universal Life Policy, Variable Death
Benefit, form 94-18673 Rev. 1-95
A.(5)(q) Individual Policy Rider - Accelerated Benefits Agreement,
for use with the Individual Policy, form 94-18686
A.(5)(r) Individual Policy Rider - Accidental Death and Dismemberment
Benefit, for use with the Individual Policy, form 94-18687
A.(5)(s) Individual Policy Rider - Waiver Agreement, for use with the
Individual Policy, form 94-18688
A.(5)(t) Individual Policy Rider - Children's Benefit, for use with
the Individual Policy, form 94-18689
A.(6)(a) Charter of the Depositor
A.(6)(b) Bylaws of the Depositor
A.(10)(a)(v) Group Variable Universal Life Policy, Evidence of
Insurability form, form 94-18669
C. Opinion and Consent of Donald F. Gruber, Esq.
D. Consent of KPMG Peat Marwick LLP
E. Opinion and Consent of Robert M. Olafson, F.S.A.
F. Consent of Jones & Blouch L.L.P.
G.(1) Financial Data Schedule - Growth Portfolio
G.(2) Financial Data Schedule - Bond Portfolio
G.(3) Financial Data Schedule - Money Market Portfolio
G.(4) Financial Data Schedule - Asset Allocation Portfolio
G.(5) Financial Data Schedule - Mortgage Securities Portfolio
G.(6) Financial Data Schedule - Index 500 Portfolio
G.(7) Financial Data Schedule - Capital Appreciation Portfolio
G.(8) Financial Data Schedule - International Stock Portfolio
G.(9) Financial Data Schedule - Small Company Portfolio
G.(10) Financial Data Schedule - Value Stock Portfolio
G.(11) Financial Data Schedule - Maturing Government Bond
Portfolio 1998
G.(12) Financial Data Schedule - Maturing Government Bond
Portfolio 2002
G.(13) Financial Data Schedule - Maturing Government Bond
Portfolio 2006
G.(14) Financial Data Schedule - Maturing Government Bond
Portfolio 2010
G.(15) Financial Data Schedule - VIP High Income Portfolio
G.(16) Financial Data Schedule - VIP Equity-Income Portfolio
G.(17) Financial Data Schedule - VIP II Contrafund Portfolio
H. The Minnesota Mutual Life Insurance Company - Power of
Attorney to Sign Registration Statements
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<NET-CHANGE-IN-ASSETS> 871
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<PER-SHARE-NAV-BEGIN> 1.067
<PER-SHARE-NII> .045
<PER-SHARE-GAIN-APPREC> (.019)
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<ACCUMULATED-NII-CURRENT> 0
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<ACCUM-APPREC-OR-DEPREC> 0
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<DIVIDEND-INCOME> 108
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 11
<NET-INVESTMENT-INCOME> 97
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 97
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,587
<NUMBER-OF-SHARES-REDEEMED> 928
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,831
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 11
<AVERAGE-NET-ASSETS> 2,251
<PER-SHARE-NAV-BEGIN> 1.027
<PER-SHARE-NII> .045
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<ACCUM-APPREC-OR-DEPREC> 0
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<DIVIDEND-INCOME> 117
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23
<NET-INVESTMENT-INCOME> 94
<REALIZED-GAINS-CURRENT> 225
<APPREC-INCREASE-CURRENT> 236
<NET-CHANGE-FROM-OPS> 555
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<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NUMBER> 5
<NAME> MIMLIC MORTGAGE SECURITIES SUB-ACCOUNT
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<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NUMBER> 6
<NAME> MIMLIC INDEX 500 SUB-ACCOUNT
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NUMBER> 7
<NAME> MIMLIC CAPITAL APPRECIATION SUB-ACCOUNT
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<PAGE>
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
<SERIES>
<NUMBER> 8
<NAME> MIMLIC INTERNATIONAL STOCK SUB-ACCOUNT
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NUMBER> 9
<NAME> MIMLIC SMALL COMPANY SUB-ACCOUNT
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NAME> MIMLIC VALUE STOCK SUB-ACCOUNT
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<NUMBER> 11
<NAME> MIMLIC MGB 1998 SUB-ACCOUNT
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<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
<SERIES>
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<NAME> MIMLIC MGB 2002 SUB-ACCOUNT
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<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
<SERIES>
<NUMBER> 13
<NAME> MIMLIC MGB 2006 SUB-ACCOUNT
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000931923
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<SERIES>
<NUMBER> 14
<NAME> MIMLIC MGB 2010 SUB-ACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
<SERIES>
<NUMBER> 21
<NAME> FIDELITY HIGH INCOME SUB-ACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000931923
<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
<SERIES>
<NUMBER> 22
<NAME> FIDELITY EQUITY INCOME SUB-ACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
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<NAME> MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
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<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
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</TABLE>
<PAGE>
EX99.A1
CERTIFICATE OF SECRETARY
I, Robert J. Hasling, hereby certify that I am the Secretary of the
Minnesota Mutual Life Insurance Company, Saint Paul, Minnesota; that I have
charge, custody and control of the record books and corporate seal of said
Company; and that the attached is a true and correct copy of a resolution
adopted by The Board of Trustees of said Company at a meeting held August 8,
1994, at which meeting a quorum was present and acting throughout.
RESOLUTION ADOPTED BY THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY BOARD OF TRUSTEES AT ITS MEETING OF AUGUST 8, 1994
RESOLUTION - SEPARATE ACCOUNT
"RESOLVED, that The Minnesota Mutual Life Insurance Company hereby
establishes a separate account which shall be known as "Minnesota Mutual
Variable Universal Life Account" (hereinafter "Variable Universal Life
Account"), or such other name as the Chief Executive Officer of the Company
shall designate, in accordance with subdivision 1 of section 61A.14 of Minnesota
Statutes, as amended, for the purpose of issuing group and individual life
insurance policies on a variable basis;
FURTHER RESOLVED, that MIMLIC Sales Corporation will be the principal
underwriter of the variable life insurance policies funded through the Variable
Universal Life Account, and the variable life insurance contracts will be sold
by licensed life insurance agents who are registered representatives of The
Minnesota Mutual Life Insurance Company and MIMLIC Sales or other broker-dealers
who have entered into selling agreements with MIMLIC Sales;
FURTHER RESOLVED, that such separate account is to be registered as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940, as amended, and that application be made for such exemptions from that Act
as may be necessary or desirable;
FURTHER RESOLVED, that there be prepared and filed with the Securities and
Exchange Commission in accordance with the provisions of the Securities Act of
1933, as amended, such registration statements and any amendments thereto,
relating to such policies on a variable basis as may be offered to the public;
FURTHER RESOLVED, that the Chief Executive Officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized to
seek such exemptive or other relief as may be necessary or appropriate in
connection with the Variable Universal Life Account or the offered policies; and
FURTHER RESOLVED, that the Chief Executive Officer of the Company or such
officer or officers as he may designate be, and they hereby are authorized and
directed to take such further action as may in their judgment be necessary or
desirable to implement the foregoing resolutions."
<PAGE>
I hereby certify that the attached resolution has not be modified, amended
or rescinded, and continues in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of The Minnesota Mutual Life Insurance Company this 7th day of September
1994.
/s/ Robert J. Hasling
----------------------------
Robert J. Hasling
(Seal) Vice President, General Counsel and
Secretary
<PAGE>
EX99.A3A
DISTRIBUTION AGREEMENT
AGREEMENT made this 10th day of May, 1995, between and among The Minnesota
Mutual Life Insurance Company, a Minnesota corporation ("Minnesota Mutual"), and
MIMLIC Sales Corporation, a Minnesota corporation ("Distributor").
WITNESSETH:
WHEREAS, Minnesota Mutual is the depositor of Minnesota Mutual Variable
Universal Life Account (the "Account"); and
WHEREAS, Minnesota Mutual proposes to offer for sale certain variable life
insurance contracts (the "contracts") which may be deemed to be securities under
the Securities Act of 1933 ("1933 Act") and the laws of some states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of MIMLIC Corporation,
which is in turn a wholly-owned subsidiary of Minnesota Mutual, is registered as
a broker-dealer with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the parties desire to have the Distributor act as principal
underwriter of the contracts and assume full responsibility for the securities
activities of each "person associated" (as that term is defined in Section
3(a)(18) of the 1934 Act) with the Distributor and engaged directly or
indirectly in the sale of the contracts (the "associated persons"); and
WHEREAS, the parties desire to have Minnesota Mutual perform certain
services in connection with the sale of the contracts;
NOW, THEREFORE, in consideration of the convenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. The Distributor will act as the exclusive principal underwriter of the
contracts and as such will assume full responsibility for the securities
activities of all the associated persons. The Distributor will train the
associated persons, use its best efforts to prepare them to complete
satisfactorily the applicable NASD and state examinations so that they may be
qualified, register the associated persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. Unless otherwise permitted by applicable
state law, all persons engaged in the sale of the contracts must also be agents
of Minnesota Mutual.
2. The Distributor will assume full responsibility for the continued
compliance by itself and the associated persons with the NASD Rules of Fair
Practice and Federal and state
<PAGE>
laws, to the extent applicable, in connection with the sale of the contracts.
The Distributor will make timely filings with the SEC, NASD, and any other
regulatory authorities of all reports and any sales literature relating to the
contracts required by law to be filed by the Distributor. Minnesota Mutual will
make available to the Distributor copies of any agreements or plans intended for
use in connection with the sale of contracts in sufficient number and in
adequate time for clearance by the appropriate regulatory authorities before
they are used, and it is agreed that the parties will use their best efforts to
obtain such clearance as expeditiously as is reasonably possible.
3. With the consent of Minnesota Mutual, Distributor may enter into
agreements with other broker-dealers duly licensed under applicable Federal and
state laws for the sale and distribution of the contracts and may perform such
duties as may be provided for in such agreements.
4. Minnesota Mutual, with respect to the contracts, will prepare and file
all registration statements and prospectuses (including amendments) and all
reports required by law to be filed with Federal and state regulatory
authorities. Minnesota Mutual will bear the cost of printing and mailing all
notices, proxies, proxy statements, and periodic reports that are to be
transmitted to persons having voting rights under the contracts. Minnesota
Mutual will make prompt and reasonable efforts to effect and keep in effect, at
its expense, the registration or qualification of its contracts in such
jurisdictions as may be required by federal and state regulatory authorities.
5. Minnesota Mutual will (a) maintain and preserve in accordance with
Rules 17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained by it in connection with the offer and sale of the contracts, which
books and records shall be and remain the property of the Distributor and shall
at all times be subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act and by all other regulatory bodies having jurisdiction,
and (b) upon or prior to completion of each "transaction" as that term is used
in Rule 10b-10 of the 1934 Act, send a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by Minnesota Mutual acting in the capacity of agent for the Distributor.
6. All purchase payments and any other monies payable upon the sale,
distribution, renewal or other transaction involving the contracts shall be paid
or remitted directly to, and all checks shall be drawn to the order of,
Minnesota Mutual, and the Distributor shall not have or be deemed to have any
interest in such payments or monies. All such payments and monies received by
the Distributor shall be remitted daily by the Distributor to Minnesota Mutual
for allocation to the Account in accordance with the contracts and any
prospectus with respect to the contracts.
7. Minnesota Mutual will, in connection with the sale of the contracts,
pay on behalf of the Distributor all amounts (including sales commissions) due
to the sales representatives of the Distributor or to broker-dealers who have
entered into sales agreements with the Distributor. The records in respect of
such payments shall be properly reflected on the books and records maintained by
the Minnesota Mutual.
2
<PAGE>
8. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from Minnesota Mutual the following
amounts:
(a) Upon receipt of proper evidence of expenditures, an amount sufficient
to reimburse the Distributor for its expenses incurred in carrying out
the terms of this Agreement, and
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual.
9. As compensation for its services performed and expenses incurred under
this Agreement, Minnesota Mutual will receive all amounts deducted as
administrative, sales, mortality and expense risk charges under the contracts,
as specified in the contracts and in the prospectus or prospectuses forming a
part of any registration statement with respect to the contracts filed with the
SEC under the 1933 Act. It is understood that Minnesota Mutual assumes the risk
that the above compensation for its services under the contracts may not prove
sufficient to cover its actual expenses in connection therewith and that its
compensation for assuming such risk shall be included in and limited to the
foregoing charges described in said prospectus(es).
10. Minnesota Mutual will, except as otherwise provided in this Agreement,
bear the cost of all services and expenses, including legal services and
expenses and registration, filing and other fees, in connection with (a)
registering and qualifying the contracts and (to the extent requested by the
Distributor) the associated persons with Federal and state regulatory
authorities and the NASD and (b) printing and distributing all contracts and all
registration statements and prospectuses (including amendments), notices,
periodic reports, sales literature and advertising prepared, filed or
distributed with respect to the contracts.
11. Each party hereto shall advise the others promptly of (a) any action of
the SEC or any authorities of any state or territory, of which it has knowledge,
affecting registration or qualification of the contracts, or the right to offer
the contracts for sale, and (b) the happening of any event which makes untrue
any statement, or which requires the making of any change, in the registration
statement or prospectus in order to make the statements therein not misleading.
12. The services of the Distributor and Minnesota Mutual under this
Agreement are not deemed to be exclusive and the Distributor and Minnesota
Mutual shall be free to render similar services to others, including, without
implied limitation, such other separate accounts as are now or hereafter
established by Minnesota Mutual, so long as the services of the Distributor and
Minnesota Mutual hereunder are not impaired or interfered with thereby.
13. This Agreement shall upon execution become effective as of the date
first above written, and shall continue in effect indefinitely unless terminated
by either party on 60 days' written notice to the other.
14. This Agreement may be amended at any time by mutual consent of the
parties.
3
<PAGE>
15. This Agreement shall be governed by and construed in accordance with
the laws of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
Witness: By:
----------------------- ---------------------------------------
Secretary President and Chief Executive Officer
MIMLIC SALES CORPORATION
Witness: By:
----------------------- ---------------------------------------
Vice President President
4
<PAGE>
EX99.A3B
VARIABLE CONTRACT SUPPLEMENT - AGENT
(a) GENERAL. This supplement is a part of your Agent's Contract and is subject
to all its terms, definition and conditions. This supplement describes
both the compensation we will provide on your variable contract business
and your responsibilities with respect to the solicitation, sale or
distribution of these contracts for us.
(b) DEFINITIONS. Whenever we use the following words this is what we mean.
VARIABLE GROUP UNIVERSAL LIFE BUSINESS. The Variable Group Universal Life
insurance policies which we may issue on applications you obtain.
VARIABLE CONTRACTS. Variable Group universal life business.
COST OF INSURANCE (COI). The portion of Earned Premium used to cover the cost
of providing insurance coverage only. The portion of the premium allocated to
pay the COI does not build cash value.
EARNED PREMIUM. Money which we have received in our home office and applied to
pay the premiums due on variable contract business.
FIRST-YEAR PREMIUM. Premiums due on a policy in the first year.
FIRST-YEAR COMMISSIONS. Commissions on earned first-year premiums.
RENEWAL PREMIUMS. Premiums due on a policy after the first policy year.
RENEWAL COMMISSIONS. Commissions on earned renewal premiums during the second
through the tenth policy year.
SIDE FUND CONTRIBUTIONS. That portion of earned premium which is credited to
the cash value of a policy owner. Side fund contributions do not include loan
repayments or interest which accrues on side fund contributions.
(c) LICENSES. You will do all things necessary to get, and to keep in good
standing, all licenses which you will need to solicit and sell variable
contracts as a life insurance salesman for us in the jurisdictions in which
you do business.
(d) BROKER-DEALER. You will do all things necessary to get, and to keep in
good standing, all licenses which you will need to solicit and sell
variable contracts for us and which are required because of your status as
a registered representative of the broker-dealer authorized to distribute
the variable contracts as our agent. You will also contract with the
broker-dealer, such contract to govern your conduct and undertakings with
respect to the sale of our variable contracts.
<PAGE>
(e) THIS AGREEMENT. For all purposes under this supplement, we will consider
the variable contracts to be our products.
(f) COMMISSIONS ON VARIABLE CONTRACTS. You will receive commissions on the
Variable Group Universal Life Business that you sell which may be premium-
based, asset-based or a fixed amount. The amount of the commissions will be
based on a variety of factors, including enrollment procedures, the size
and type of group, the total amount of premium payments to be received, any
prior existing relationship with the group sponsor, the sophistication of
the group sponsor and other circumstances of which we are not presently
aware. The commissions paid to you will not exceed the equivalent of the
following schedule:
"Cost of Insurance" Commission Side Fund Contribution
(COI) Commission
- --------------------------------------------------------------------------------
FIRST YEAR:
50% of the COI component of PLUS 7% of side fund
the First-Year Premium contributions
SECOND AND SUBSEQUENT YEARS:
7% of the COI component of PLUS 7% of side fund
Renewal Premiums contributions
However, there will be a reduction in the amount of commissions paid for some
group contracts and group situations. A reduction in the commissions will be
determined by us be weighing the following elements:
(1) The size and type of group to which the sale of the Variable Group
Universal Life Policy is made. Generally, commissions for a larger
group of Insureds will be lower than for a smaller group.
(2) The total amount of premium payments to be received will be considered
as affecting per dollar sales expenses. Per dollar sales expenses are
likely to be less than larger premium amounts received on small
premium amounts.
(3) Any prior existing relationship with us may affect commissions.
Generally, sales expenses are likely to be less where a relationship
currently exists.
(4) Any reduction in commissions are made by agreement between you and us.
(5) Other circumstances, of which we are not presently aware.
(g) COMMISSION ADJUSTMENT. We reserve the right to refund any purchase
payments credited to our General Account under a variable contract. If we do
make such a refund, we will charge you with the amount of any commission
previously paid on the refunded payment. All charges thus made will be a debt
which you owe us and will become a first lien against any and all amounts due
you; we may offset this debt against any amount which we would otherwise credit
to you under the Agent's contract.
<PAGE>
(h) All provisions of Sections 6-10 of the Agent's contract will apply where
applicable to any compensation payable under this supplement.
(i) TERMINATION OF THIS SUPPLEMENT. We reserve the right to modify or
terminate this supplement at any time; however, any such modification or
termination will be made uniformly among all of our agencies of the same
class or as required by law or other competent authority.
(j) EFFECTIVE DATE. This supplement shall become effective as of the date
shown below.
Executed this _______ day of _______, 19____.
_______________________________________
Agent's Signature
_______________________________________
General Agent's Signature
The Minnesota Mutual Life Insurance Company
By_____________________________________
Authorized Officer
<PAGE>
EX99.A3C
COMMISSIONS ON VARIABLE CONTRACTS. In general, you will receive the following
commissions on the Variable Group Universal Life Business that you sell:
"Cost of Insurance" Commission Side Fund Contribution
(COI) Commission
- --------------------------------------------------------------------------------
FIRST YEAR:
40% of the COI component of PLUS 4% of side fund
the First-Year Premium contributions
SECOND AND
SUBSEQUENT YEARS:
4% of the COI component of PLUS 4% of side fund
Renewal Premiums contributions
However, there will be a reduction in the amount of commissions paid for some
group contracts and group situations. A reduction in the commissions will be
determined by us by weighing the following elements:
(1) The size and type of group to which the sale of the Variable Group
Universal Life Policy is made. Generally, commissions for a larger
group of Insureds will be lower than for a smaller group.
(2) The total amount of premium payments to be received will be considered
as affecting per dollar sales expenses. Per dollar sales expenses are
likely to be less than larger premium amounts received on small
premium amounts.
(3) Any prior existing relationship with us may affect commissions.
Generally, sales expenses are likely to be less where a relationship
currently exists.
(4) Any reduction in commissions are made by agreement between you and us.
(5) Other circumstances, of which we are not presently aware.
<PAGE>
================================================================================
MINNESOTA MUTUAL GROUP INSURANCE POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance . 400 Robert Street North . St. Paul,
Minnesota 55101-2098
- --------------------------------------------------------------------------------
READ YOUR POLICY CAREFULLY
- ---------------------------
This policy was issued to the policyholder on the issue date shown on the
specifications page attached to this policy. We promise to pay the benefits
provided by this policy, subject to the conditions, limitations and exceptions
of this policy. We make this promise and issue this policy in consideration of
the application for this policy and the payment of the premiums. The
policyholder is a member of The Minnesota Mutual Life Insurance Company. Our
annual meetings are held at our home office on the first Tuesday in March of
each year at three o'clock in the afternoon.
RIGHT TO CANCEL
- ----------------
It is important to us that the policyholder is satisfied with this policy after
it is issued. If the policyholder is not satisfied with it, the policyholder
may return the policy to us or our agent within 10 days after the policyholder
receives it. The policyholder may also cancel this policy by delivering or
mailing a written notice or sending a telegram to The Minnesota Mutual Life
Insurance Company (Minnesota Mutual), 400 Robert Street North, St. Paul,
Minnesota 55101-2098 and returning the policy before midnight of the 10th day
after the policyholder received the policy. Notice given by mail and return of
the policy by mail are effective on being postmarked, properly addressed and
postage prepaid. If the policyholder returns the policy, the policyholder will
receive, within 7 days of the date we receive a notice of cancellation, a full
refund of any premiums the policyholder has paid.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota on
the issue date.
Secretary President
FOR OPTION A, THE INITIAL DEATH BENEFIT FOR PERSONS INSURED UNDER THIS POLICY
WILL EQUAL THE FACE AMOUNT SHOWN ON EACH CERTIFICATE. FOR OPTION B THE INITIAL
DEATH BENEFIT FOR PERSONS INSURED UNDER THIS POLICY WILL EQUAL THE FACE AMOUNT
SHOWN ON EACH CERTIFICATE PLUS THE INITIAL ACCOUNT VALUE, IF ANY. FOR OPTION B,
THEREAFTER, THE DEATH BENEFIT MAY INCREASE OR DECREASE DEPENDING UPON SEPARATE
ACCOUNT INVESTMENT EXPERIENCE.
THE ACCOUNT VALUES OF THE CERTIFICATES ISSUED UNDER THIS POLICY WILL VARY FROM
DAY TO DAY. IT MAY INCREASE OR DECREASE DEPENDING
UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE. THERE IS NO GUARANTEED MINIMUM
ACCOUNT VALUE.
TABLE OF CONTENTS
Definitions.................. 2 Separate Account............. 6
General Information.......... 3 Account Values............... 8
Death Benefit................ 3 Surrenders and Withdrawals... 8
Payment of Proceeds.......... 4 Policy Loans................. 9
Premiums..................... 5 Termination.................. 10
Policy Charges............... 5 Conversion Privilege......... 10
Additional Information....... 10
VARIABLE GROUP UNIVERSAL LIFE INSURANCE
94-18660 Rev. 1-95 Minnesota Mutual 1
<PAGE>
SPECIFICATIONS PAGE
GROUP POLICY
================================================================================
GENERAL INFORMATION
- -------------------
POLICYHOLDER: Name POLICY NUMBER:
Address
ELIGIBLE GROUP MEMBER
- ---------------------
An eligible group member is a person that is actively at work at the employer's
normal place of business at least 20 hours per week for each of the 4 weeks
immediately prior to the date that the person's application for coverage is
applied for.
INSURANCE INFORMATION
- ---------------------
Issue Date:
First Policy Anniversary:
Minimum Face Amount: $ Minimum Planned Premium: $
Maximum Face Amount: $
Maximum Guaranteed Issue: $
*See details in this policy's application for qualifications.
Death Benefit Option: You have chosen the death benefit option B for all
certificates issued under this policy. Option B is the variable death benefit
option plan.
OTHER BENEFITS AVAILABLE
- ------------------------
Child Term Rider
Amounts available for this rider are: $ with a monthly cost of $
$ with a monthly cost of $
$ with a monthly cost of $
Waiver Agreement - See details within the policy supplement for qualifications
CHARGES
- -------
Sales Load % Administration Fee: $
Federal Tax % Partial Surrender Fee: $ or % of amount
State Tax % withdrawn, whichever is less.
SEPARATE ACCOUNT
- ----------------
The Minnesota Mutual Variable Universal Life Account
ACCOUNT OPTIONS
- ---------------
Guaranteed Account
Sub-Account Options:
Growth Bond
Money Market Asset Allocation
Index 500 Capital Appreciation
Small Company Value Stock
Mortgage Securities International Stock
F.47708
<PAGE>
DEFINITIONS
- ------------
When we use the following words, this is what we mean:
ACCOUNT VALUE
The sum of the values under the separate account, the guaranteed account and the
loan account of a certificate. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
ACTIVELY AT WORK
To be actively at work for the purposes of this policy, the eligible person must
be currently working at the employer's normal place of business at least ____
hours a week. A person is not considered actively at work if not at work due to
illness or injury.
AGE
Age at last birthday.
CERTIFICATE ANNIVERSARY
The same day in each succeeding year as the certificate date.
CERTIFICATE DATE
The first day of the calendar month on or following a certificate's effective
date of coverage. This is the date from which we determine certificate monthly
anniversaries, certificate months and certificate years.
CERTIFICATE MONTH
A calendar month in which insurance is provided under a certificate of this
policy.
CERTIFICATE YEAR
A period of twelve consecutive months, measured from the certificate date and
each successive certificate anniversary, during which coverage is provided under
a certificate of this policy.
ELIGIBLE INSURED
A person who meets the requirements on the specifications page attached to this
policy.
FACE AMOUNT
The face amount of insurance on the life of the insured as shown on the
specifications page of the owner's certificate.
94-18660 Rev. 1-95 Minnesota Mutual 2
<PAGE>
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
GUARANTEED ACCOUNT VALUE
Assets other than the loan account value that are held in our general account
and attributable to a certificate issued under this policy, and others of its
class.
INSURED
An eligible insured who becomes insured under a certificate issued under this
policy.
ISSUE DATE
The date coverage under this policy may become effective. The issue date is
shown on the policy specifications page attached to this policy.
LAPSE
A lapse of a certificate means the insurance coverage under that certificate has
terminated due to non-payment of a premium during its grace period in an amount
that, after the deduction of percentage of premium charges, is sufficient to
cover the monthly deductions due at the time the notice was sent.
LOAN ACCOUNT
The portion of the general account which is attributable to policy loans under
certificates issued under this policy and others of its class.
LOAN ACCOUNT VALUE
The sum of all outstanding loans and accrued policy loan interest credited under
a given certificate issued under this policy.
MATURITY DATE
The 95th birthday of the insured.
----
MONTHLY ANNIVERSARY
The same day of each succeeding month as the certificate date.
94-18660 Rev. 1-95 Minnesota Mutual 3
<PAGE>
NET CASH VALUE
The account value under a certificate issued under this policy, less any
outstanding policy loans and accrued policy loan interest charged and any
charges over due. It is the amount an owner may obtain through surrender of
that certificate.
NET PREMIUM
The premium less policy charges assessed against the premium. The net premium is
the amount or amounts which are allocated to the guaranteed account and/or the
separate account on behalf of an insured.
OWNER
An owner of a certificate issued under this policy.
POLICY ANNIVERSARY
The same day and month in each succeeding year as the policy date.
POLICY DATE
The first day of the calendar month on or following the issue date of the
policy.
POLICYHOLDER
The owner of this group policy as specified and identified on the specifications
page attached to this policy.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net premiums
received for a certificate issued under this policy. The particular Separate
Account for this policy is the Variable Universal Life Account. We established
this separate account for this class of policies under Minnesota Law. The
separate account is composed of several sub-accounts. We own the assets of the
separate account. However, those assets not in excess of separate account
liabilities are not subject to claims arising out of any other business in which
we engage.
SEPARATE ACCOUNT VALUE
The sum of all sub-account values.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
94-18660 Rev. 1-95 Minnesota Mutual 4
<PAGE>
The current number of sub-account units credited to a certificate issued under
this policy multiplied by the current sub-account unit value.
UNIT
A measure of the owner's interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
WE, OUR, US
The Minnesota Mutual Life Insurance Company
GENERAL INFORMATION
- --------------------
WHAT IS THE POLICYHOLDER'S AGREEMENT WITH US?
This policy and the policyholder's application contain the entire contract
between the policyholder and us. Any statements the policyholder makes in the
application or an insured makes in his or her application will, in the absence
of fraud, be considered representation and not warranties. Also, any statement
the policyholder makes will not be used to void this policy nor defend against a
claim under this policy unless the statement is contained in the policyholder's
application. Any statement an insured makes will not be used to void the
insured's insurance unless the statement is contained in the application
attached to the insured's certificate.
No change or waiver of any of the provisions of this policy, or of any
certificate issued under it, will be valid unless made in writing by us. It
must be signed by our president, a vice president, secretary or an assistant
secretary. No agent or other person has the authority to change or waive any
provision of this policy or of any certificate issued under it.
WHAT IS THE EFFECTIVE DATE OF AN ELIGIBLE INSURED'S INSURANCE?
Upon receipt of an application for insurance under this policy from an eligible
insured, the effective date of the insured person's insurance will be the later
of:
1. the date on which we approve that person's application; and
2. the date on which the first premium contribution is paid for that person.
This effective date is shown on the specifications page of the owner's
certificate.
94-18660 Rev. 1-95 Minnesota Mutual 5
<PAGE>
MAY THIS POLICY BE AMENDED?
This policy may be amended at any time the policyholder and we agree to amend
it. The consent of the insureds is not required to amend this policy or any
certificates issued under it. Any amendment will be without prejudice to any
claim in connection with a loss sustained prior to the effective date of the
amendment.
DEATH BENEFIT
- --------------
WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
The amount of the death benefit depends on whether Option A or Option B is
selected by the policyholder as the death benefit option under this policy. The
death benefit option selected by the policyholder will be the death benefit
option for all certificates issued under this policy. Once elected, the death
benefit option shall remain unchanged.
The amount of the death benefit for Option A will be determined as follows:
1. the amount of the cost of insurance for the portion of the certificate month
from the date of death to the end of the certificate month; less
2. The face amount of insurance on the insured's date of death while the policy
is in force; plus
3. any outstanding policy loans and accrued policy loan interest charged; less
4. any unpaid monthly deductions determined as of the date of the insured's
death.
The amount of the death benefit for Option B will be determined as follows:
1. The face amount of insurance on the insured's date of death while the policy
is in force; plus
2. the amount of the owner's account value as of the date we receive due proof
of death satisfactory to us; plus
3. the amount of the cost of insurance for the portion of the certificate month
from the date of death to the end of the certificate month; plus
4. any monthly deductions taken under the certificate since the date of death;
less
5. any outstanding policy loans and accrued policy loan interest charged; less
6. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under the certificate
for which the death benefit has been paid.
We intend that each certificate under this policy qualify as a life insurance
policy as defined by Section 7702 of the Internal Revenue Code, as amended. We
reserve the right to either increase the face amount of insurance on the life of
the insured for which a certificate has been issued hereunder, return any excess
net cash value or limit the amount of premium contributions
we will accept on behalf of any certificate issued hereunder in order to
maintain such qualification.
CAN THE OWNER CHANGE THE DEATH BENEFIT OPTION?
No.
94-18660 Rev. 1-95 Minnesota Mutual 6
<PAGE>
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF AN INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page of the owner's certificate.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to the policy and to
the certificate. If an increase in the current face amount is applied for, we
reserve the right to require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on any insured may not be reduced to
less than the amount shown on the specifications page attached to this policy.
If following a decrease in face amount, the certificate would not comply with
the maximum premium limitations required by federal law, the decrease may be
limited or net cash value may be returned to the owner (at the owner's
election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly
certificate anniversary on or following receipt of the written request by us.
However, if the owner requests that the decrease become effective on a specified
future date, we will make the decrease effective on the certificate monthly
anniversary on or next following the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between the
policyholder and us.
WHEN WILL THE DEATH BENEFIT BE PAID?
We will pay the death benefit upon due proof satisfactory to us that the insured
died while insured under a certificate issued hereunder. Under Option A, we
will pay interest on the death benefit from the date of the insured's death
until the date of payment.
Under Option B, we will pay interest on the face amount of insurance from the
date of the insured's death until the date of payment. We will pay interest on
any charges taken under the certificate since the date of death from the date
the charge was taken until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of four percent per year compounded annually, or the rate required by
law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
94-18660 Rev. 1-95 Minnesota Mutual 7
<PAGE>
PAYMENT OF PROCEEDS
- --------------------
TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified on
the certificate owner's application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
policy ends with that beneficiary's death. Only those beneficiaries who survive
the insured will be eligible to share in the proceeds. If no beneficiary
survives the insured or if a beneficiary is not named, we will pay the proceeds
according to the following order of priority:
1. the insured's lawful spouse; if living; otherwise,
2. the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
Yes, if the owner has reserved the right to change the beneficiary, the owner
may file a written request with us to change the beneficiary. If the owner has
not reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. The owner's written request will not
be effective until it is recorded in our home office records. After it has been
so recorded, it will take effect as of the date the owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
Each settlement option is paid in fixed amounts as described below. If the
owner of the certificate requests a settlement option, he or she will be asked
to sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
1. INTEREST PAYMENTS: Payment of interest on the proceeds at such times and for
a period as may be agreed upon between the owner of a certificate and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
94-18660 Rev. 1-95 Minnesota Mutual 8
<PAGE>
3. LIFE ANNUITY: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount until
the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner or insured may provide that the beneficiary will not
be permitted to change the elected settlement option.
PREMIUMS
- ---------
WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put a certificate issued hereunder in force. This
initial premium must be of an amount that, after the deduction of percentage-of-
premium charges, will cover the first month's deductions plus $20. A premium
must also be paid at such time when there is insufficient net cash value to pay
the monthly deductions necessary to keep the certificate in force. Premiums paid
after the initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Certificates issued under this policy have a 61-day grace period. The grace
period will start on the day we mail the owner a notice of lapse. This will
notify the owner that the certificate will lapse if the premium amount specified
in the notice is not paid by the end of the grace period and the net cash value
is insufficient to cover the monthly deductions. We will mail this notice on
any certificate monthly anniversary date when the net cash value for the insured
under the certificate is insufficient to cover the monthly deductions for that
insured. The certificate of insurance will remain in effect during the 61-day
grace period. If sufficient premium is not paid by the end of the grace period,
the insured's coverage with insufficient net cash value will lapse at the end of
that 61-day period. The grace period does not apply to the first premium
payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
The death benefit amount stated above will be paid if death occurs during the
grace period.
POLICY CHARGES
- ---------------
WHAT TYPE OF CHARGES ARE THERE UNDER THIS POLICY?
Charges under this policy are those which we assess against the premiums and the
account value under each certificate and the separate account assets
attributable to the policy.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
94-18660 Rev. 1-95 Minnesota Mutual 9
<PAGE>
1. The sales load is for distribution expenses for this class of policies. This
sales load charge shall not exceed five percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal income
taxes that result from a sale of this policy. The federal tax charge is 1.25
percent of each premium paid if the policy is deemed to be an individual
contract under the Omnibus Budget Reconciliation Act of 1990, as amended, and
0.25 percent if deemed a group contract under that Act.
3. The state premium tax charge is the average premium tax we pay to state and
local governments for this class of policies. This charge is currently two
percent. The charge is not guaranteed and may be increased in the future, but
only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THE CERTIFICATES ISSUED
UNDER THE POLICY?
Against the net cash value of any certificate issued under this policy, we
assess as monthly deductions: (1) the administration charge; (2) the cost of
insurance charge; and (3) the charge for any additional benefits provided by
rider. We also will assess against the net cash value a transaction charge at
the end of the day on which the transaction occurs.
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for the policy. The
maximum administration charge is $4 per month. This charge will be assessed
on the certificate date and on each succeeding certificate monthly
anniversary.
2. The cost of insurance charge is for providing the death benefit under each
certificate under this policy. The charge is calculated by multiplying the
net amount at risk under each certificate by a rate which varies with the
insured's age and rate class. The rate is guaranteed not to exceed rates
determined on the basis of 125 percent of the 1980 Commissioners Standard
Ordinary Mortality Table. The net amount at risk for each certificate is the
difference between the death benefit and the account value. This charge will
be assessed on the certificate date and on each succeeding certificate
monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between sub-
accounts. The amount charged will not exceed $10. Any transaction charge will
be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of each certificate. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value of each such sub-account bears to the separate account value.
94-18660 Rev. 1-95 Minnesota Mutual 10
<PAGE>
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of any certificate issued under this policy. We also reserve the right to
charge or make provision for income taxes payable by us based on separate
account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the policy. The mortality and
expense risk charge is deducted from the separate account assets daily at an
annual rate not to exceed 0.50 percent of the separate account assets.
SEPARATE ACCOUNT
- -----------------
HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of this policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
policy are listed on the specifications page attached to this policy. Net
premiums will be allocated to the various sub-accounts of the separate account
or any other sub-account which we may add in the future, as elected by the owner
of each certificate issued under the policy. We reserve the right to add,
combine or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the policies of this class, we may substitute
another fund. Substitution may be with respect to both existing policy values
and future premiums. The investment policy of the separate account may not be
changed, however, without the approval of the regulatory authorities of the
State of Minnesota. If required, that approval process will be on file with the
regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If
94-18660 Rev. 1-95 Minnesota Mutual 11
<PAGE>
such a transfer is made, the term "separate account" as used in this policy,
shall then mean the separate account to which the assets are transferred. A
transfer of this kind may require the advance approval of state regulatory
authorities.
We reserve the right to, when permitted by law:
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of 1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the sub-accounts
of the separate account. Initially, the allocation elected is indicated in the
application for a certificate of insurance issued hereunder. Allocations may be
changed for future premiums. The owner may do this by giving us a written
request. A change will not take effect until it is recorded by us in our home
office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least ten percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than fifty
percent of the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of a
certificate under this policy. This right will be exercised by us only when we
believe economic conditions make such a delay necessary to reduce market risk
during the free look period of the certificate. If we exercise this right, net
premiums will be allocated to the money market sub-account until the end of that
period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THE POLICY?
Yes. Transfers from a sub-account of the separate account may be made in writing
or by telephone. For transfers out of the separate account or among the sub-
accounts of the separate account, we will credit and cancel units based on the
sub-account unit values as of the end of the valuation period during which the
owner's written or telephone request is received at our home office. For
transfers out of the guaranteed account, a dollar amount will be transferred
based on the owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made each certificate month for each certificate
issued hereunder. The amount to be transferred to or from a sub-account of the
separate account or the guaranteed
94-18660 Rev. 1-95 Minnesota Mutual 12
<PAGE>
account must be at least $250. If the balance in the guaranteed account or in
the sub-account from which the transfer is to be made is less than $250, the
entire account value attributable to that sub-account or the guaranteed account
must be transferred. If a transfer would reduce the account value in the sub-
account from which the transfer is to be made to less than $250 we reserve the
right to include that remaining amount in the sub-account with the amount
transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to twenty
percent (or $250 if greater) of the guaranteed account value. Transfers to or
from the guaranteed account may be limited to one such transfer per certificate
year. We may further restrict transfers by requiring that the request is
received by us or postmarked in the 30-day period before or after the last day
of the certificate anniversary. Requests for transfers which meet these
conditions would be effective after we approve and record them at our home
office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units credited to a sub-account under an owner's certificate will
be increased by the allocation of subsequent net premiums, policy dividends,
loan repayments, loan interest credits and transfers to that sub-account. The
number of units credited to a sub-account under an owner's certificate will be
decreased by deductions to that sub-account, policy loans and loan interest
charged, transfers from that sub-account and partial surrenders from that sub-
account. The number of sub-account units will decrease to zero on a certificate
termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account. The value of a unit for each sub-account
was originally set at $1.00 on the first valuation date. For any subsequent
valuation date, its value is equal to its value on the preceding valuation date
multiplied by the net investment factor for that sub-account for the valuation
period ending on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this policy
which are assessed against separate account assets. The gross investment rate is
equal to:
94-18660 Rev. 1-95 Minnesota Mutual 13
<PAGE>
1. The net asset value per share of a fund share held in the sub-account of the
separate account determined at the end of the current valuation period; plus
2. the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
- --------------
WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to the certificate's net cash value. The net cash
value is the account value of the certificate issued under this policy, less any
outstanding policy loans and accrued policy loan interest charged and any
charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for each certificate and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the certificate, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to a sub-account under an owner's
certificate will not be affected by changes in the unit value. However, the
number of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
certificate will be decreased by deductions to that sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero on a certificate termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value of each insured is not guaranteed.
The guaranteed account value of each insured is guaranteed by us. It cannot be
reduced by the investment experience of the guaranteed account.
IS INTEREST CREDITED ON THE GUARANTEED ACCOUNT VALUE?
Yes. Interest is credited on the guaranteed account value of each insured under
this policy. Interest is credited daily at a rate of not less than four percent
per year, compounded annually. We guarantee this minimum rate for the life of
the policy.
94-18660 Rev. 1-95 Minnesota Mutual 14
<PAGE>
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
SURRENDERS AND WITHDRAWALS
- ---------------------------
MAY A CERTIFICATE BE SURRENDERED?
Yes. The owner of a certificate may request the surrender of a certificate at
any time while the insured under that certificate is living.
WHAT IS THE SURRENDER VALUE OF THE CERTIFICATE?
The surrender value of a certificate is the net cash value.
The determination of the surrender value is made as of the end of the valuation
period during which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value of a
certificate. The amount of a partial surrender must be $500 or more and it
cannot exceed the amount available as a policy loan. A partial surrender will
cause a decrease in the face amount equal to the amount surrendered under those
certificates issued with a level death benefit, Option A. A partial surrender
has no effect on the face amount of an Option B death benefit. However, since
the account value is reduced by the amount of the partial surrender, the death
benefit under Option B will be reduced by this same amount at the time of the
partial surrender. We reserve the right to change the minimum amount or limit
the number of times the owner may make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the guaranteed
account as to the certificate of any insured. If the owner does not, partial
surrenders will be deducted from the guaranteed account value and separate
account value in the same proportion that those values bear to each other and,
as to the separate account value, from each sub-account in the proportion that
the sub-account value of each such sub-account bears to the separate account
value.
HOW WILL THE OWNER KNOW THE STATUS OF A CERTIFICATE?
Each year we will send the owner of each certificate a report. This report will
show the status of the certificate. It will include the account value, the face
amount as of the date of the report, the premiums paid during the year and their
allocation, policy charges, policy loan activity and the net cash value. The
report will be sent without cost to the owner. If the policyholder owns all of
the certificates, a consolidated report will be sent. The report will be as of a
date within two months of its mailing.
94-18660 Rev. 1-95 Minnesota Mutual 15
<PAGE>
POLICY LOANS
- -------------
CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the policyholder's
request for a loan. We will require the owner's written or telephone request
for a policy loan. The policy and its certificate will be the only security
required for a loan. We will charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone payment of a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN ON ANY CERTIFICATE?
The total amount available for a loan under any certificate is (a) minus (b),
where (a) is ninety percent of the account value and (b) is any outstanding
policy loans plus accrued policy loan interest charged. The maximum loan amount
will be determined as of the date we receive the policyholder's written or
telephone request for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When a loan is taken on a certificate, we will reduce the net cash value of the
certificate by the amount borrowed. This determination will be made as of the
end of the valuation period during which the loan request is received at our
home office. The amount borrowed continues to be a part of the account value,
as the amount borrowed becomes part of the loan account value where it will
accrue loan interest credits and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON A CERTIFICATE?
Unless the owner directs us otherwise, the policy loan will be taken from a
certificate's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value of
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of any certificate may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount borrowed or in the interest due on the loan of
the certificate. If a certificate has a policy loan and no net cash value, the
certificate will lapse.
WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be eight percent per year.
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the certificate month. If the total interest
accrued at the end of the certificate month is
94-18660 Rev. 1-95 Minnesota Mutual 16
<PAGE>
not paid, this interest will be added to the loan amount borrowed and charged
the same rate of interest as the loan.
WHAT IS THE RATE OF INTEREST CREDITED TO A CERTIFICATE AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate which
is not less than six percent per year.
---
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO A CERTIFICATE'S
GUARANTEED ACCOUNT VALUE?
Interest credits are allocated to the guaranteed account value at the time of a
loan repayment.
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the certificate is in force.
The loan may also be repaid within 60 days after the date of the insured's
death, if we have not paid any of the death benefits under that certificate.
Any loan repayment must be at least $100 unless the balance due is less than
$100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
Loan repayments increase the net cash value of a certificate by the amount of
the loan repayment The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON A CERTIFICATE IS NOT REPAID?
If a certificate has a policy loan, the certificate will remain in force so long
as it has net cash value. If it does not have sufficient net cash value, it
will lapse.
In this event, to keep a certificate in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate a
certificate and the loan repayment required to keep it in force. The time for
repayment will be within 61 days after our mailing of the warning notice of
lapse.
TERMINATION
- ------------
WHEN DOES THIS GROUP POLICY TERMINATE?
The may terminate this group policy by giving us 31 days prior written notice.
In addition, we may terminate the group policy or any of its provisions on 61
days prior written notice. No
94-18660 Rev. 1-95 Minnesota Mutual 17
<PAGE>
individual may become insured under this group policy after the effective date
of such a notice of termination. After termination of the policy, the
certificates issued thereunder, may be allowed to convert to individual coverage
as described below under the "Conversion Privilege" section.
WHEN DOES A CERTIFICATE OF INSURANCE UNDER THIS GROUP POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1 61 days after we mail a warning notice of lapse on a certificate monthly
anniversary in which the net cash value is insufficient to pay for the
monthly deductions and no premium is paid during the grace period;
2 the date the group policy terminates, if no conversion or continuation is
made effective;
3 the date an owner surrenders the certificate or requests that we terminate
the insurance;
4 the 95th birthday of the insured.
----
WILL THE OWNER OF A CERTIFICATE RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice of lapse before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage of premium charges, is large enough to cover all monthly deductions
which have accrued on that certificate up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to 3 years from the date
of lapse.
CONVERSION PRIVILEGE
- ---------------------
IS THERE A CONVERSION PRIVILEGE TO AN INDIVIDUAL POLICY?
Yes. If life insurance provided by a certificate under this policy ceases
because of termination of employment or of membership in the class or classes
eligible for coverage under this policy, or if the group policy terminates or is
amended so as to terminate the insurance, an owner under this policy may convert
the insurance under the group policy to an individual policy of life insurance
with us subject to the following:
1. The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home office
within 31 days of the date the insurance terminates under the group policy.
2. The owner may convert all or a part of the group insurance in effect on the
date that his or her coverage is terminated to an individual life insurance
policy offered by us, except a policy of
94-18660 Rev. 1-95 Minnesota Mutual 18
<PAGE>
term insurance. We will issue the individual policy on the policy forms we
then use for the plan of insurance the owner has requested. The premium
charge for this insurance will be based upon the insured's age as of his or
her nearest birthday.
3. If the insured should die within 31 days of the date that insurance
terminated under the group policy, the full amount of insurance that could
have been converted under this policy will be paid.
In the case of the termination of the group policy, we may require that an
insured under a certificate be so insured for at least five years prior to the
termination date in order to qualify for the above conversion privilege.
CAN GROUP INSURANCE COVERAGE BE CONTINUED ONCE THE OWNER'S ELIGIBILITY ENDS?
If the owner's eligibility under this policy ends, the current group coverage
may continue unless the certificate is no longer in force or the limitations
below are true:
1. The group policy has terminated; or
2. There is less than $10 in the certificate's net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter the administration fee not to exceed $4 per month and
the monthly cost of insurance up to the maximum in Table A if the insurance is
continued.
ADDITIONAL INFORMATION
- -----------------------
WILL THIS POLICY RECEIVE DIVIDENDS?
Each year we will determine if this policy and other policies of its class will
share in our divisible surplus. Dividends, if received, will be added to the
account value of a certificate issued under this policy or, if elected by the
owner, may be paid in cash. A dividend applied to the account value will be
allocated to the guaranteed account value or the sub-accounts of the separate
account in accordance with the owner's current instructions for the allocation
of net premiums. In the absence of such instructions, dividends will be
allocated to the guaranteed account and the separate account in the same
proportion as those values bear to each other and, as to the separate account
value, to each sub-account in the proportion that the sub-account value of each
such sub-account bears to the separate account value.
MAY AN OWNER ASSIGN ANY INTEREST UNDER THE CERTIFICATE ISSUED UNDER THIS POLICY?
Yes. However, we will not be bound by an assignment of the certificate or of
any interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
94-18660 Rev. 1-95 Minnesota Mutual 19
<PAGE>
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the certificate date, we cannot contest the insurance for any
loss that is incurred more than two years after the certificate date, unless the
net cash value has dropped below the amount necessary to pay the insured's cost
of insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
IS THERE A SUICIDE EXCLUSION?
If an insured, whether sane or insane, dies by suicide, within two years of the
certificate date, our liability will be limited to an amount equal to the
premiums paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the effective date of the increase,
our liability with respect to that increase will be limited to the cost of
insurance charge attributable to such increase.
If the insured is a Missouri citizen when the certificate of insurance becomes
effective, this provision does not apply on the certificate date, or on the
effective date of any increase in the face amount of insurance, unless the
insured intended suicide when the certificate of insurance, or any increase, was
applied for.
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two years.
ARE INSURANCE AND RELATED RECORDS OF THE POLICYHOLDER'S POLICY OPEN FOR
INSPECTION?
Yes. The records shall be open to inspection by us, at all reasonable times,
for any purposes relating to the provisions of this policy.
94-18660 Rev. 1-95 Minnesota Mutual 20
<PAGE>
WILL THE INSURED RECEIVE A CERTIFICATE OF PARTICIPATION?
Within 30 days of the effective date of an owner's insurance, we will furnish
the with a certificate of insurance for delivery to the owner.
DOES THE OWNER HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If the owner has separate account units under this policy the owner may
direct us with respect to the voting rights of fund shares held by us and
attributable to this policy.
COULD THE PAYMENT OF POLICY PROCEEDS BE POSTPONED?
Normally, we will pay any policy proceeds within seven days after our receipt of
all the documents required for such a payment. Other than the death proceeds,
which are determined as of the date of death of the insured, the amount of
payment will be determined as of the end of the during which a request is
received at our home office. If such payments are based upon policy values which
do not depend on the investment performance of the separate account, however, we
reserve the right to defer policy payments, including policy loans, for up to
six months from the date of the owner's request. In that case, if we postpone a
payment other than a policy loan payment for more than 31 days, we will pay the
owner interest at the greater of four percent per year or the rate required by
law for the period beyond that time that payment is postponed. For payments
based on account values which do depend on the investment performance of the
separate account, we may defer payment only: (a) for any period during which the
New York Stock Exchange is closed for trading (except for normal holiday
closing); or (b) when the Securities and Exchange Commission has determined that
a state of emergency exists which may make such payment impractical.
WILL THE PROVISIONS OF THIS POLICY CONFORM WITH STATE LAW?
Yes. If any provision in this policy, or in the certificates issued under this
policy, is in conflict with the laws of the state governing the policy or the
certificates, the provision will be deemed to be amended to conform to such
laws.
COULD ANY PAYMENTS MADE UNDER THIS POLICY BE SUBJECT TO CLAIMS OF CREDITORS?
To the extent permitted by law, neither this policy, certificates issued under
this policy, nor any payment thereunder will be subject to the claims of
creditors or to any legal process.
WHEN WILL THE POLICY BE ISSUED?
The policy will be issued upon receipt of a signed policy application signed by
a duly authorized officer of the group sponsor and acceptance by a duly
authorized officer of Minnesota Mutual at our home office.
94-18660 Rev. 1-95 Minnesota Mutual 21
<PAGE>
WHO HAS OWNERSHIP OF THE POLICY?
The policyholder shown on the specifications page attached to this policy owns
the group policy. The group policy may be changed or ended by agreement between
us and the policyholder without the consent of, or notice to, any person
claiming rights or benefits under the policy. However, unless the policyholder
is the owner of all the certificates issued under the group policy, the
policyholder does not have any ownership interest in the certificates issued
under the group policy. The rights and benefits under the certificates are that
of the owners of the certificates and of the insureds and beneficiaries as set
forth in this policy and in the certificates.
ARE POLICY CHANGES LIMITED?
We reserve the right to limit the number of policy changes to one per
certificate year and to restrict such changes in the first certificate year. For
this purpose, changes include increases or decreases in the face amount of
insurance.
94-18660 Rev. 1-95 Minnesota Mutual 22
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Guaranteed Maximum Monthly Cost of Insurance Rate
on a Smoker Distinct Basis
per $1,000 Net Amount at Risk
<TABLE>
<CAPTION>
Maximum Maximum Maximum
Attained Monthly Attained Monthly Attained Monthly
Age* Rate Age* Rate Age* Rate
---- ---- ---- ---- ---- ----
Non-Smokers Smokers Non-Smokers Smokers Non-Smokers Smokers
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
* This is the insured employee's attained age as of the last certificate
anniversary.
94-18660 Rev. 1-95 Minnesota Mutual 23
<PAGE>
================================================================================
MINNESOTA MUTUAL CERTIFICATE OF INSURANCE
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North .
St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
RIGHT TO CANCEL
- ----------------
It is important to us that you are satisfied with this certificate after it is
issued. If you are not satisfied with it, you may return the certificate to us
or our agent within 10 days after you receive it. You may also cancel this
certificate by delivering or mailing a written notice or sending a telegram to
The Minnesota Mutual Life Insurance Company (Minnesota Mutual), 400 Robert
Street North, St. Paul, Minnesota 55101-2098 and returning the certificate
before midnight of the 10th day after you received this certificate. Notice
given by mail and return of the certificate by mail are effective on being
postmarked, properly addressed and postage prepaid. If you return this
certificate, you will receive, within 7 days of the date we receive a notice of
cancellation, a full refund of any premiums you have paid. Upon cancellation of
this certificate, it will be void from the beginning as if it never had been
issued.
THE INITIAL DEATH BENEFIT WILL EQUAL THE FACE AMOUNT SHOWN ON THIS CERTIFICATE.
THE ACCOUNT VALUES UNDER THIS CERTIFICATE WILL VARY FROM DAY TO DAY. IT MAY
INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
THERE IS NO GUARANTEED MINIMUM ACCOUNT VALUE.
TABLE OF CONTENTS
General Information.............. 2 Account Values................... 7
Definitions...................... 2 Surrenders and Withdrawals....... 8
Death Benefit.................... 3 Policy Loans..................... 8
Payment of Proceeds.............. 4 Termination...................... 9
Premiums......................... 5 Conversion Privilege............. 10
Policy Charges................... 5 Additional Information........... 10
Separate Account................. 6
VARIABLE GROUP UNIVERSAL LIFE INSURANCE . LEVEL DEATH BENEFIT
94-18661 Rev 1-95 Minnesota Mutual 1
<PAGE>
================================================================================
MINNESOTA MUTUAL SPECIFICATIONS
INDIVIDUAL POLICY
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The Minnesota Mutual Life Insurance Company . 400 Robert Street North .
St. Paul, Minnesota 55101-1098
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POLICYHOLDER: POLICY ID:
Insured:
INSURANCE INFORMATION
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Face Amount: $ Effective Date:
Variable Death Benefit $ Anniversary Date:
Minimum Face Amount Available: $
Maximum Face Amount Available: $
Planned Monthly Premium: $
Non-tobacco status
Age at Issue:
Identification Number:
CHARGES AGAINST PREMIUM FIXED MONTHLY CHARGES
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Sales Load % Administration Fee: $
Federal Tax % Child Term Rider: $
State Tax % Accidental Death &
Dismemberment: $
If a partial surrender is made, we will assess a charge of $25 or two percent of
the amount withdrawn, whichever is less.
ELECTED RIDERS ADDITIONAL AGREEMENTS
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Child Term Rider: $ . Waiver of Premium
Accidental Death & . Accelerated Death Benefit
Dismemberment: $ These agreements are included
in the planned monthly premium
above.
. See attached certificate
supplements for full details.
ACCOUNT OPTIONS AND ELECTIONS
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Guaranteed Account %
SUB-ACCOUNT OPTIONS AND ELECTIONS
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Growth % Money Market % Index 500 %
Small Company % Mortgage Securities % Bond %
Asset Allocation % Capital Appreciation % Value Stock %
International Stock %
F.47898 11-94
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GENERAL INFORMATION
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WHAT IS YOUR AGREEMENT WITH US?
You are insured under the group policy identified on the application attached to
this certificate. The attached application is a part of this certificate. This
certificate summarizes the principal provisions of the group policy that affect
your life insurance coverage. The provisions summarized in this certificate are
subject in every respect to the group policy. You may examine the group policy
at the principal office of the policyholder during regular working hours.
We retain the right to amend this certificate at any time without your consent.
Any amendment will be without prejudice to any claim incurred for benefits prior
to the date of the amendment.
Any statement made in your application will, in the absence of fraud, be
considered representations and not warranties. Also, any statement made will not
be used to void this certificate nor defend against a claim unless the statement
is contained in your application.
This certificate is issued in consideration of your application and the payment
of the required premium contributions.
WHAT IS THE EFFECTIVE DATE OF YOUR INSURANCE?
Upon receipt of your application for insurance, the effective date of your
insurance will be the later of:
1. the date on which we approve your application; and
2. the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this
certificate.
DEFINITIONS
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When we use the following words, this is what we mean:
ACCOUNT VALUE
The sum of the values under the separate account, the guaranteed account and the
loan account of this certificate. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
ACTIVELY AT WORK
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least ____ hours a week.
A person is not considered actively at work if not at work due to illness or
injury.
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AGE
Your age at last birthday.
CERTIFICATE ANNIVERSARY
The same day in each succeeding year as the certificate date.
CERTIFICATE DATE
The first day of the calendar month on or following a certificate's effective
date of coverage. This is the date from which we determine monthly
anniversaries, certificate months and certificate years.
CERTIFICATE MONTH
A calendar month in which insurance is provided under this certificate.
CERTIFICATE YEAR
A period of twelve consecutive certificate months, measured from the certificate
date and each successive certificate anniversary, during which coverage is
provided under this certificate.
ELIGIBLE INSURED
You are an eligible insured if you:
1. are under age ___; and
2. were actively at work for each of the ____ weeks immediately prior to the
date your application for coverage under the group policy is approved by us;
and
3. are identified by the policyholder as a person eligible to be insured under
the Policyholder's policy.
FACE AMOUNT
The minimum death benefit under this certificate so long as the insurance
coverage under this certificate remains in force.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
GUARANTEED ACCOUNT VALUE
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Assets other than the loan account value that are held in our general account
and attributable to a certificate issued under this policy, and others of its
class.
INSURED
An eligible insured who becomes insured under this certificate.
LAPSE
A lapse of this certificate means the insurance coverage under this certificate
has terminated due to non-payment of a premium during its grace period in an
amount that, after the deduction of percentage-of-premium charges, is sufficient
to cover the monthly deductions due at the time we provide notice of lapse.
LOAN ACCOUNT
The portion of the general account which is attributable to loans under this
certificate.
LOAN ACCOUNT VALUE
The sum of all outstanding loans and accrued policy loan interest credited under
this certificate.
MATURITY DATE
The 95th birthday of the insured.
MONTHLY ANNIVERSARY
The same date in each succeeding month as the certificate date.
NET CASH VALUE
The account value under this certificate, less any outstanding policy loans and
accrued policy loan interest charged and any charges over due. It is the amount
you may obtain through surrender of this certificate.
NET PREMIUM
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
OWNER
An owner of a certificate issued under the group policy.
POLICYHOLDER
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The owner of the group policy, as identified on the specifications page attached
to this certificate.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net premiums
received for the certificate. The particular separate account for this
certificate is the Variable Universal Life Account. We established this
separate account for this class of policies under Minnesota Law. The separate
account is composed of several sub-accounts. We own the assets of the separate
account. However, those assets not in excess of separate account liabilities
are not subject to claims arising out of any other business in which we engage.
SEPARATE ACCOUNT VALUE
The sum of all sub-account values.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
The current number of sub-account units credited to your certificate multiplied
by the current sub-account unit value.
UNIT
A measure of the owner's interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
YOU, YOUR
The owner of this certificate named on the application.
DEATH BENEFIT
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WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
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This certificate of insurance provides for a level death benefit.
The amount of the death benefit will be determined as follows:
1. The face amount of insurance on the insured's date of death while this
certificate is in force; plus
2. the amount of the cost of insurance for the portion of the certificate
month from the date of death to the end of the certificate month; less
3. any outstanding policy loans and accrued policy loan interest charged; less
4. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this
certificate.
We intend that this certificate qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right to
either increase the face amount of insurance on the life of the insured, return
any excess net cash value or limit the amount of premium contributions we will
accept under this certificate in order to maintain such qualification.
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF THE INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this certificate.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this certificate.
If an increase in the current face amount is applied for, we reserve the right
to require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced to
less than the amount shown on the specifications page attached to this
certificate. If following a decrease in face amount, this certificate would not
comply with the maximum premium limitations required by federal law, the
decrease may be limited or net cash value may be returned to the owner (at the
owner's election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly
anniversary on or following receipt by us of your written request. However, if
the owner requests that the decrease become effective on a specified future
date, we will make the decrease effective on the monthly anniversary on or next
following the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between the
policyholder and us.
WHEN WILL THE DEATH BENEFIT BE PAID?
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We will pay the death benefit upon due proof satisfactory to us that the insured
died while insured under this certificate. We will pay interest on the death
benefit from the date of the insured's death until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of four percent per year compounded annually, or the rate required by
law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
PAYMENT OF PROCEEDS
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TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified on
the application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
certificate ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no beneficiary
survives the insured or if a beneficiary is not named, we will pay the proceeds
according to the following order of priority:
1. the insured's lawful spouse, if living; otherwise
2. the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has not
reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. The owner's written request will not
be effective until it is recorded in our home office records. After it has been
so recorded, it will take effect as of the date the owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
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Each settlement option is paid in fixed amounts as described below. If the
owner of this certificate requests a settlement option, he or she will be asked
to sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
1. INTEREST PAYMENTS: Payment of interest on the proceeds at such times and for
a period as may be agreed upon between the owner of this certificate and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
3. LIFE ANNUITY: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount
until the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner or insured may provide that the beneficiary will not
be permitted to change the elected settlement option.
PREMIUMS
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WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put this certificate in force. This initial premium
must be of an amount that, after the deduction of percentage-of-premium charges,
will cover the first month's deductions plus $20. A premium must also be paid at
such time when there is insufficient net cash value to pay the monthly
deductions necessary to keep this certificate in force. Premiums paid after the
initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Yes. This certificates has a 61-day grace period. The grace period will start
on the day we mail the owner a notice of lapse. This certificate will lapse if
the premium amount specified in the notice is not paid by the end of the grace
period and the net cash value is insufficient to cover the monthly deductions.
We will mail this notice on any certificate monthly anniversary date when the
net cash value for the insured under this certificate is insufficient to cover
the monthly deductions. This certificate of insurance will remain in effect
during the 61-day grace period. If sufficient premium is not paid by the end of
the grace period, the insured's coverage will lapse. The grace period does not
apply to the first premium payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
The death benefit amount provided under this certificate will be paid if death
occurs during the grace period.
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POLICY CHARGES
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WHAT TYPE OF CHARGES ARE THERE UNDER THIS CERTIFICATE?
Charges under this certificate are those which we assess against the premiums
and the account value under this certificate and the separate account assets
attributable to this certificate.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
1. The sales load is for distribution expenses for this class of certificates.
This sales load charge shall not exceed five percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal income
taxes that result from a sale of this certificate. The federal tax charge is
1.25 percent of each premium paid if this certificate is deemed to be an
individual contract under the Omnibus Budget Reconciliation Act of 1990, as
amended, and 0.25 percent if deemed a group contract under that Act.
3. The state premium tax charge is the average premium tax we pay to state and
local governments for this class of certificates. This charge is currently
two percent. The charge is not guaranteed and may be increased in the
future, but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS CERTIFICATE?
We assess as monthly deductions: (1) the administration charge; (2) the cost of
insurance charge; and (3) the charge for any additional benefits provided by
rider. We also will assess against the net cash value a transaction charge at
the end of the day on which the transaction occurs.
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this certificate. The
maximum administration charge is $4 per month. This charge will be assessed
on the certificate date and on each succeeding monthly anniversary.
2. The cost of insurance charge is for providing the death benefit under this
certificate. The charge is calculated by multiplying the net amount at risk
under this certificate by a rate which varies with the insured's age and
rate class. The rate is guaranteed not to exceed rates determined on the
basis of 125 percent of the 1980 Commissioners Standard Ordinary Mortality
Table. The net amount at risk for this certificate is the difference between
the death benefit and the account value. This charge will be assessed on the
certificate date and on each succeeding monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between
94-18661 Rev 1-95 Minnesota Mutual 9
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sub-accounts. The amount charged will not exceed $10. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this certificate. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value of each such sub-account bears to the separate account value.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this certificate. We also reserve the right to charge or make
provision for income taxes payable by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the group policy. The mortality
and expense risk charge is deducted from the separate account assets daily at an
annual rate not to exceed 0.50 percent of the separate account assets.
SEPARATE ACCOUNT
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How was the separate account established?
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of the group policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
certificate are listed on the specifications page attached to this certificate.
Net premiums will be allocated to the various sub-accounts of the separate
account or any other sub-account which we may add in the future, as elected by
the owner of this certificate. We reserve the right to add, combine or remove
any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the certificates of this class, we may substitute
another fund. Substitution may be with respect to both existing certificate
values and future premiums. The investment policy of the separate account may
not be changed, however,
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without the approval of the regulatory authorities of the State of Minnesota. If
required, that approval process will be on file with the regulatory authorities
of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which the group policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this certificate, shall then mean the separate
account to which the assets are transferred. A transfer of this kind may
require the advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of
1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the sub-accounts
of the separate account. Initially, the allocation elected is indicated in the
application for this certificate. Allocations may be changed for future
premiums. The owner may do this by giving us a written request. A change will
not take effect until it is recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least ten percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than fifty
percent of the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of this
certificate. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this period.
If we exercise this right, net premiums will be allocated to the money market
sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS CERTIFICATE?
Yes. Transfers from a sub-account of the separate account may be made in
writing or by telephone. For transfers out of the separate account or among
the sub-accounts of the separate account, we will credit and cancel units based
on the sub-account unit values as of the end of the valuation period during
which the owner's written or telephone request is received at our home office.
For transfers
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out of the guaranteed account, a dollar amount will be transferred based on the
owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this certificate each month. The
amount to be transferred to or from a sub-account of the separate account or
the guaranteed account must be at least $250. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less than
$250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the account
value in the sub-account from which the transfer is to be made to less than $250
we reserve the right to include that remaining amount in the sub-account with
the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to twenty
percent (or $250 if greater) of the guaranteed account value. Transfers to or
from the guaranteed account may be limited to one such transfer per certificate
year. We may further restrict transfers by requiring that the request is
received by us or postmarked in the 30-day period before or after the last day
of the certificate anniversary. Requests for transfers which meet these
conditions would be effective after we approve and record them at our home
office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this certificate will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account under this certificate will be decreased by
deductions to that sub-account, policy loans and loan interest charged,
transfers from that sub-account and partial surrenders from that sub-account.
The number of sub-account units will decrease to zero on this certificate's
termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account. The value of a unit for each sub-account
was originally set at $1.00 on the first valuation date. For any subsequent
valuation, its value is equal to its value on the preceding valuation date
multiplied by the net investment factor for that sub-account for the valuation
period ending on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
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The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this
certificate which are assessed against separate account assets. The gross
investment rate is equal to:
1. The net asset value per share of a fund share held in the sub-account of the
separate account determined at the end of the current valuation period; plus
2. the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
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WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to this certificate's net cash value. The net cash
value is the account value of this certificate, less any outstanding policy
loans and accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this certificate and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the certificate, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to a sub-account under an owner's
certificate will not be affected by changes in the unit value. However, the
number of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
certificate will be decreased by deductions to that sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero on a certificate termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
IS INTEREST CREDITED ON THE GUARANTEED ACCOUNT VALUE?
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Yes. Interest is credited on the guaranteed account value of each insured under
the group policy. Interest is credited daily at a rate of not less than four
percent per year, compounded annually. We guarantee this minimum rate for the
life of the group policy.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
SURRENDERS AND WITHDRAWALS
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MAY THIS CERTIFICATE BE SURRENDERED?
Yes. The owner of this certificate may request the surrender of this
certificate at any time while the insured under this certificate is living.
WHAT IS THE SURRENDER VALUE OF THIS CERTIFICATE?
The surrender value of this certificate is the net cash value.
The determination of the surrender value is made as of the end of the valuation
period during which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value under this
certificate. The amount of a partial surrender must be $500 or more and it
cannot exceed the amount available as a policy loan. A partial surrender will
cause a decrease in the face amount equal to the amount surrendered. We reserve
the right to change the minimum amount or limit the number of times the owner
may make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the guaranteed
account. If the owner does not, partial surrenders will be deducted from the
guaranteed account value and separate account value in the same proportion that
those values bear to each other and, as to the separate account value, from each
sub-account in the proportion that the sub-account value of each such sub-
account bears to the separate account value.
HOW WILL THE OWNER KNOW THE STATUS OF A CERTIFICATE?
Each year we will send the owner of this certificate a report. This report
will show the status of this certificate. It will include the account value, the
face amount as of the date of the report, the premiums paid during the year and
their allocation, certificate charges, policy loan activity and the net cash
value. The report will be sent without cost to the owner. If the policyholder
owns all of
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the certificates, a consolidated report will be sent. The report will be as of a
date within two months of its mailing.
POLICY LOANS
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CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the request for a
loan. We will require the owner's written or telephone request for a policy
loan. The certificate will be the only security required for a loan. We will
charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN ON THIS CERTIFICATE?
The total amount available for a loan under any certificate is (a) minus (b),
where (a) is ninety percent of the account value and (b) is outstanding policy
loans plus accrued policy loan interest charged. The maximum loan amount will
be determined as of the date we receive the owner's written or telephone request
for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When a loan is taken on this certificate, we will reduce the net cash value of
this certificate by the amount borrowed. This determination will be made as of
the end of the valuation period during which the loan request is received at our
home office. The amount borrowed continues to be a part of the account value,
as the amount borrowed becomes part of the loan account value where it will
accrue loan interest credits and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON THIS CERTIFICATE?
Unless the owner directs us otherwise, the policy loan will be taken from this
certificate's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value of
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of this certificate may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount borrowed or in the interest due on the loan of
this certificate. If this certificate has a policy loan and no net cash value,
this certificate will lapse.
WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be eight percent per year.
94-18661 Rev. 1-95 Minnesota Mutual 15
<PAGE>
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the certificate month. If the total interest
accrued at the end of the certificate month is not paid, this interest will be
added to the loan amount borrowed and charged the same rate of interest as the
loan.
WHAT IS THE RATE OF INTEREST CREDITED TO THIS CERTIFICATE AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate of
not less than six percent per year.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO THIS CERTIFICATE'S
GUARANTEED ACCOUNT VALUE?
Interest credits are allocated to the guaranteed account value at the time of a
loan repayment.
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the certificate is in force.
The loan may also be repaid within 60 days after the date of the insured's
death, if we have not paid any of the death benefits under this certificate.
Any loan repayment must be at least $100 unless the balance due is less than
$100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
Loan repayments increase the net cash value of a certificate by the amount of
the loan repayment The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON THIS CERTIFICATE IS NOT REPAID?
If this certificate has a policy loan, the certificate will remain in force so
long as it has net cash value. If it does not have sufficient net cash value,
it will lapse.
In this event, to keep this certificate in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate this
certificate and the loan repayment required to keep it in force. The time for
repayment will be within 61 days after our mailing of the warning notice of
lapse.
TERMINATION
- -----------
WHEN DOES THE GROUP POLICY TERMINATE?
94-18661 Rev. 1-95 Minnesota Mutual 16
<PAGE>
The policyholder may terminate this group policy by giving us 31 days prior
written notice. In addition, we may terminate the group policy or any of its
provisions on 61 days prior written notice. No individual may become insured
under the group policy after the effective date of such a notice of termination.
After termination of the group policy, this certificate may be allowed to
convert to individual coverage as described below under the "Conversion
Privilege" section.
WHEN DOES A CERTIFICATE OF INSURANCE UNDER THE GROUP POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1 61 days after we mail a warning notice of lapse on a certificate monthly
anniversary in which the net cash value is insufficient to pay for the
monthly deductions and no premium is paid during the grace period;
2 the date the group policy terminates, if no conversion or continuation is
made effective;
3 the date an owner surrenders this certificate or requests that we terminate
the insurance;
4 the 95th birthday of the insured.
WILL THE OWNER OF THIS CERTIFICATE RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice of lapse before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage of premium charges, is large enough to cover all monthly deductions
which have accrued on this certificate up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to three years from the
date of lapse.
CONVERSION PRIVILEGE
- --------------------
IS THERE A CONVERSION PRIVILEGE TO AN INDIVIDUAL POLICY?
Yes. If the life insurance provided by this certificate ceases because of
termination of employment or of membership in the class or classes eligible for
coverage under the group policy, or if the group policy terminates or is amended
so as to terminate the insurance, an owner under this certificate may convert
the insurance under this certificate to an individual policy of life insurance
with us subject to the following:
1. The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home office
within 31 days of the date the insurance terminates under the group policy.
94-18661 Rev. 1-95 Minnesota Mutual 17
<PAGE>
2. The owner may convert all or a part of the group insurance in effect on the
date that his or her coverage is terminated to an individual life insurance
policy offered by us, except a policy of term insurance. We will issue the
individual policy on the policy forms we then use for the plan of insurance
the owner has requested. The premium charge for this insurance will be based
upon the insured's age as of his or her nearest birthday.
3. If the insured should die within 31 days of the date that insurance
terminated under the group policy, the full amount of insurance that could
have been converted under this policy will be paid.
In the case of the termination of the group policy, we may require that an
insured under this certificate be so insured for at least five years prior to
the termination date in order to qualify for the above conversion privilege.
CAN GROUP INSURANCE COVERAGE BE CONTINUED ONCE THE OWNER'S ELIGIBILITY ENDS?
If the owner's eligibility under the group policy ends, the current group
coverage may continue unless the certificate is no longer in force or the
limitations below are true:
1. The group policy has terminated; or
2. There is less than $10 in the certificate's net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter the administration fee not to exceed $4 per month and
the monthly cost of insurance up to the maximum in Table A if the insurance is
continued.
ADDITIONAL INFORMATION
- ----------------------
WILL THIS CERTIFICATE RECEIVE DIVIDENDS?
Each year we will determine if this certificate and other certificates of its
class will share in our divisible surplus. Dividends, if received, will be
added to the account value of this certificate, or if elected by the owner, the
dividends may be paid in cash. A dividend applied to the account value will be
allocated to the guaranteed account value or the sub-accounts of the separate
account in accordance with the owner's current instructions for the allocation
of net premiums. In the absence of such instructions, dividends will be
allocated to the guaranteed account and the separate account in the same
proportion as those values bear to each other and, as to the separate account
value, to each sub-account in the proportion that the sub-account value of each
such sub-account bears to the separate account value.
MAY THE OWNER ASSIGN ANY INTEREST UNDER THIS CERTIFICATE?
Yes. However, we will not be bound by an assignment of this certificate or of
any interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
94-18661 Rev. 1-95 Minnesota Mutual 18
<PAGE>
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the certificate date, we cannot contest the insurance for any
loss that is incurred more than two years after the certificate date, unless the
net cash value has dropped below the amount necessary to pay the insured's cost
of insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
IS THERE A SUICIDE EXCLUSION?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the certificate date, our liability will be limited to an amount equal to the
premiums paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the certificate date of the
increase, our liability with respect to that increase will be limited to the
cost of insurance charge attributable to such increase.
If the insured is a Missouri citizen when the certificate of insurance becomes
effective, this provision does not apply on the certificate's effective date, or
on the effective date of any increase in the face amount of insurance, unless
the insured intended suicide when the certificate of insurance, or any increase,
was applied for.
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two years.
DOES THE OWNER HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If the owner has separate account units under this certificate the owner
may direct us with respect to the voting rights of fund shares held by us and
attributable to this certificate.
COULD THE PAYMENT OF CERTIFICATE PROCEEDS BE POSTPONED?
94-18661 Rev 1-95 Minnesota Mutual 19
<PAGE>
Normally, we will pay any certificate proceeds within seven days after our
receipt of all the documents required for such a payment. Other than the death
proceeds, which are determined as of the date of death of the insured, the
amount of payment will be determined as of the end of the valuation period
during which a request is received at our home office. If such payments are
based upon certificate values which do not depend on the investment performance
of the separate account, however, we reserve the right to defer certificate
payments, including certificate loans, for up to six months from the date of the
owner's request. In that case, if we postpone a payment other than a policy loan
payment for more than 31 days, we will pay the owner interest at the greater of
four percent per year or the rate required by law for the period beyond that
time that payment is postponed. For payments based on account values which do
depend on the investment performance of the separate account, we may defer
payment only: (a) for any period during which the New York Stock Exchange is
closed for trading (except for normal holiday closing); or (b) when the
Securities and Exchange Commission has determined that a state of emergency
exists which may make such payment impractical.
WILL THE PROVISIONS OF THIS CERTIFICATE CONFORM WITH STATE LAW?
Yes. If any provision in this certificate is in conflict with the laws of the
state governing the certificate, the provision will be deemed to be amended to
conform to such laws.
COULD ANY PAYMENTS MADE UNDER THIS CERTIFICATE BE SUBJECT TO CLAIMS OF
CREDITORS?
To the extent permitted by law, neither the group policy, certificates issued
under the group policy, nor any payment thereunder will be subject to the claims
of creditors or to any legal process.
WHO HAS OWNERSHIP OF THE GROUP POLICY?
The policyholder owns the group policy. The group policy may be changed or
ended by agreement between us and the policyholder without the consent of, or
notice to, any person claiming rights or benefits under the policy. However,
unless the policyholder is the owner of all the certificates issued under the
group policy, the policyholder does not have any ownership interest in the
certificates issued under the group policy. The rights and benefits under the
certificates are that of the owners of the certificates, and that of the
insureds and beneficiaries as set forth in this certificate.
ARE POLICY CHANGES LIMITED?
Currently, the frequency of policy changes are not limited. However, we reserve
the right to limit the number of policy changes to one per certificate year and
to restrict such changes in the first certificate year. For this purpose,
changes include increases or decreases in the face amount of insurance.
94-18661 Rev 1-95 Minnesota Mutual 20
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Guaranteed Maximum Monthly Cost of Insurance Rate
on a Smoker Distinct Basis
per $1,000 Net Amount at Risk
<TABLE>
<CAPTION>
Maximum Maximum Maximum
Attained Monthly Attained Monthly Attained Monthly
Age* Rate Age* Rate Age* Rate
---- ---- ---- ---- ---- ----
Non-Smokers Smokers Non-Smokers Smokers Non-Smokers Smokers
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
* This is the insured employee's attained age as of the last certificate
anniversary.
94-18661 Rev 1-95 Minnesota Mutual 21
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Guaranteed Maximum Monthly Cost of Insurance Rate
on a Uni-Smoker Basis
per $1,000 Net Amount at Risk
<TABLE>
<CAPTION>
Maximum Maximum Maximum
Attained Monthly Attained Monthly Attained Monthly
Age* Rate Age* Rate Age* Rate
---- ---- ---- ---- ---- ----
Uni-Smokers Uni-Smokers Uni-Smokers
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
</TABLE>
* This is the insured employee's attained age as of the last certificate
anniversary.
94-18661 Rev 1-95 Minnesota Mutual 22
<PAGE>
EX99.A5C
================================================================================
MINNESOTA MUTUAL CERTIFICATE OF INSURANCE
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North .
St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
RIGHT TO CANCEL
- ---------------
It is important to us that you are satisfied with this certificate after it is
issued. If you are not satisfied with it, you may return the certificate to us
or our agent within 10 days after you receive it. You may also cancel this
certificate by delivering or mailing a written notice or sending a telegram to
The Minnesota Mutual Life Insurance Company (Minnesota Mutual), 400 Robert
Street North, St. Paul, Minnesota 55101-2098 and returning the certificate
before midnight of the 10th day after you received this certificate. Notice
given by mail and return of the certificate by mail are effective on being
postmarked, properly addressed and postage prepaid. If you return this
certificate, you will receive, within 7 days of the date we receive a notice of
cancellation, a full refund of any premiums you have paid. Upon cancellation of
this certificate, it will be void from the beginning as if it never had been
issued.
THE INITIAL DEATH BENEFIT FOR THE PERSON INSURED UNDER THIS CERTIFICATE WILL
EQUAL THE FACE AMOUNT SHOWN ON THIS CERTIFICATE PLUS THE INITIAL ACCOUNT VALUE
IF ANY. THEREAFTER, IT MAY INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT
INVESTMENT EXPERIENCE.
THE ACCOUNT VALUES UNDER THIS CERTIFICATE WILL VARY FROM DAY TO DAY. IT MAY
INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
THERE IS NO GUARANTEED MINIMUM ACCOUNT VALUE.
TABLE OF CONTENTS
General Information............ 2 Account Values...................... 7
Definitions.................... 2 Surrender and Withdrawals........... 8
Death Benefit.................. 3 Policy Loans........................ 8
Payment of Proceeds............ 4 Termination......................... 9
Premiums....................... 5 Conversion Privilege................ 10
Policy Charges................. 5 Additional Information.............. 10
Separate Account............... 6
VARIABLE GROUP UNIVERSAL LIFE INSURANCE . VARIABLE DEATH BENEFIT
94-18662 Rev. 1-95 Minnesota Mutual 1
<PAGE>
================================================================================
MINNESOTA MUTUAL SPECIFICATIONS
INDIVIDUAL POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North .
St. Paul, Minnesota 55101-1098
- --------------------------------------------------------------------------------
POLICYHOLDER: POLICY ID:
Insured:
INSURANCE INFORMATION
- ---------------------
Face Amount: $ Effective Date:
Variable Death Benefit $ Anniversary Date:
Minimum Face Amount Available: $
Maximum Face Amount Available: $
Planned Monthly Premium: $
Non-tobacco status
Age at Issue:
Identification Number:
CHARGES AGAINST PREMIUM FIXED MONTHLY CHARGES
- ----------------------- ---------------------
Sales Load % Administration Fee: $
Federal Tax % Child Term Rider: $
State Tax % Accidental Death &
Dismemberment: $
If a partial surrender is made, we will assess a charge of $25 or two percent of
the amount withdrawn, whichever is less.
ELECTED RIDERS ADDITIONAL AGREEMENTS
- -------------- ---------------------
Child Term Rider: $ . Waiver of Premium
Accidental Death & . Accelerated Death Benefit
Dismemberment: $ These agreements are included in
the planned monthly premium
above.
. See attached certificate
supplements for full details.
ACCOUNT OPTIONS AND ELECTIONS
- -----------------------------
Guaranteed Account %
SUB-ACCOUNT OPTIONS AND ELECTIONS
- ---------------------------------
Growth % Money Market % Index 500 %
Small Company % Mortgage Securities % Bond %
Asset Allocation % Capital Appreciation % Value Stock %
International Stock %
F.47898 11-94
<PAGE>
GENERAL INFORMATION
- -------------------
WHAT IS YOUR AGREEMENT WITH US?
You are insured under the group policy identified on the application attached to
this certificate. The attached application is a part of this certificate. This
certificate summarizes the principal provisions of the group policy that affect
your life insurance coverage. The provisions summarized in this certificate are
subject in every respect to the group policy. You may examine the group policy
at the principal office of the policyholder during regular working hours.
We retain the right to amend this certificate at any time without your consent.
Any amendment will be without prejudice to any claim incurred for benefits prior
to the date of the amendment.
Any statement made in your application will, in the absence of fraud, be
considered representations and not warranties. Also, any statement made will not
be used to void this certificate nor defend against a claim unless the statement
is contained in your application.
This certificate is issued in consideration of your application and the payment
of the required premium contributions.
WHAT IS THE EFFECTIVE DATE OF YOUR INSURANCE?
Upon receipt of your application for insurance, the effective date of your
insurance will be the later of:
1. the date on which we approve your application; and
2. the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this
certificate.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
ACCOUNT VALUE
The sum of the values under the separate account, the guaranteed account and the
loan account of this certificate. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
ACTIVELY AT WORK
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least _____ hours a week.
A person is not considered actively at work if not at work due to illness or
injury.
94-18662 Rev. 1-95 Minnesota Mutual 2
<PAGE>
AGE
Your age at last birthday.
CERTIFICATE ANNIVERSARY
The same day in each succeeding year as the certificate date.
CERTIFICATE DATE
The first day of the calendar month on or following a certificate's effective
date of coverage. This is the date from which we determine monthly
anniversaries, certificate months and certificate years.
CERTIFICATE MONTH
A calendar month in which insurance is provided under this certificate.
CERTIFICATE YEAR
A period of twelve consecutive certificate months, measured from the certificate
date and each successive certificate anniversary, during which coverage is
provided under this certificate.
ELIGIBLE INSURED
You are an eligible insured if you:
1. are under age _____; and
2. were actively at work for each of the _____ weeks immediately prior to the
date your application for coverage under the group policy is approved by
us; and
3. are identified by the policyholder as a person eligible to be insured under
the Policyholder's policy.
FACE AMOUNT
The minimum death benefit under this certificate so long as the insurance
coverage under this certificate remains in force.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
GUARANTEED ACCOUNT VALUE
94-18662 Rev. 1-95 Minnesota Mutual 3
<PAGE>
Assets other than the loan account value that are held in our general account
and attributable to a certificate issued under this policy, and others of its
class.
INSURED
An eligible insured who becomes insured under this certificate.
LAPSE
A lapse of this certificate means the insurance coverage under this certificate
has terminated due to non-payment of a premium during its grace period in an
amount that, after the deduction of percentage-of-premium charges, is sufficient
to cover the monthly deductions due at the time we provide notice of the lapse.
LOAN ACCOUNT
The portion of the general account which is attributable to loans under this
certificate.
LOAN ACCOUNT VALUE
The sum of all outstanding loans and accrued policy loan interest credited under
this certificate.
MATURITY DATE
The 95th birthday of the insured.
MONTHLY ANNIVERSARY
The same date in each succeeding month as the certificate date.
NET CASH VALUE
The account value under this certificate issued, less any outstanding policy
loans and accrued policy loan interest charged and any charges over due. It is
the amount you may obtain through surrender of this certificate.
NET PREMIUM
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
OWNER
An owner of a certificate issued under the group policy.
POLICYHOLDER
94-18662 Rev. 1-95 Minnesota Mutual 4
<PAGE>
The owner of the group policy, as identified on the specifications page attached
to this certificate.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net premiums
received for the certificate. The particular separate account for this
certificate is the Variable Universal Life Account. We established this
separate account for this class of policies under Minnesota Law. The separate
account is composed of several sub-accounts. We own the assets of the separate
account. However, those assets not in excess of separate account liabilities
are not subject to claims arising out of any other business in which we engage.
SEPARATE ACCOUNT VALUE
The sum of all sub-account values.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
The current number of sub-account units credited to your certificate multiplied
by the current sub-account unit value.
UNIT
A measure of the owner's interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
YOU, YOUR
The owner of this certificate named on the application.
DEATH BENEFIT
- -------------
94-18662 Rev. 1-95 Minnesota Mutual 5
<PAGE>
WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
This certificate of insurance provides for a variable death benefit, varying
with the amount of the net cash value of the certificate. The amount of the
death benefit will be determined as follows:
1. The face amount of insurance on the insured's date of death while this
certificate is in force; plus
2. the amount of the owner's account value as of the date we receive due proof
of death satisfactory to us; plus
3. the amount of the cost of insurance for the portion of the certificate
month from the date of death to the end of the certificate month; plus
4. any monthly deductions taken under the certificate since the date of death;
less
5. any outstanding policy loans and accrued policy loan interest charged; less
6. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this
certificate.
We intend that this certificate qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right to
either increase the face amount of insurance on the life of the insured, return
any excess net cash value or limit the amount of premium contributions we will
accept under this certificate in order to maintain such qualification.
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF THE INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this certificate.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this certificate.
If an increase in the current face amount is applied for, we reserve the right
to require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced to
less than the amount shown on the specifications page attached to this
certificate. If following a decrease in face amount, this certificate would not
comply with the maximum premium limitations required by federal law, the
decrease may be limited or net cash value may be returned to the owner (at the
owner's election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly
anniversary on or following receipt by us of your written request. However, if
the owner requests that the decrease become effective on a specified future date
we will make the decrease effective on the monthly anniversary or next following
the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between the
policyholder and us.
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WHEN WILL THE DEATH BENEFIT BE PAID?
We will pay interest on the face amount of insurance from the date of the
insured's death until the date of payment. We will pay interest on any charges
taken under this certificate since the date of death from the date the charge
was taken until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of four percent per year compounded annually, or the rate required by
law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
PAYMENT OF PROCEEDS
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TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified on
the application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
certificate ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no beneficiary
survives the insured or if a beneficiary is not named, we will pay the proceeds
according to the following order of priority:
1. the insured's lawful spouse, if living; otherwise;
2. the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has not
reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. The owner's written request will not
be effective until it is recorded in our home office records. After it has been
so recorded, it will take effect as of the date the owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
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WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
Each settlement option is paid in fixed amounts as described below. If the
owner of this certificate requests a settlement option, he or she will be asked
to sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
1. INTEREST PAYMENTS: Payment of interest on the proceeds at such times and for
a period as may be agreed upon between the owner of this certificate and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
3. LIFE ANNUITY: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount
until the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner or insured may provide that the beneficiary will not
be permitted to change the elected settlement option.
PREMIUMS
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WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put this certificate in force. This initial premium
must be of an amount that, after the deduction of percentage-of-premium charges,
will cover the first month's deductions plus $20. A premium must also be paid at
such time when there is insufficient net cash value to pay the monthly
deductions necessary to keep this certificate in force. Premiums paid after the
initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Yes. This certificates has a 61-day grace period. The grace period will start
on the day we mail the owner a notice of lapse. This certificate will lapse if
the premium amount specified in the notice is not paid by the end of the grace
period and the net cash value is insufficient to cover the monthly deductions.
We will mail this notice on any certificate monthly anniversary date when the
net cash value for the insured under this certificate is insufficient to cover
the monthly deductions. This certificate of insurance will remain in effect
during the 61-day grace period. If sufficient premium is not paid by the end of
the grace period, the insured's coverage will lapse. The grace period does not
apply to the first premium payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
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The death benefit amount provided under this certificate will be paid if death
occurs during the grace period.
POLICY CHARGES
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WHAT TYPE OF CHARGES ARE THERE UNDER THIS CERTIFICATE?
Charges under this certificate are those which we assess against the premiums
and the account value under this certificate and the separate account assets
attributable to this certificate.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
1. The sales load is for distribution expenses for this class of certificates.
This sales load charge shall not exceed five percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal income
taxes that result from a sale of this certificate. The federal tax charge is
1.25 percent of each premium paid if this certificate is deemed to be an
individual contract under the Omnibus Budget Reconciliation Act of 1990, as
amended, and 0.25 percent if deemed a group contract under that Act.
3. The state premium tax charge is the average premium tax we pay to state and
local governments for this class of certificates. This charge is currently
two percent. The charge is not guaranteed and may be increased in the
future, but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS CERTIFICATES?
We assess as monthly deductions: (1) the administration charge; (2) the cost of
insurance charge; and (3) the charge for any additional benefits provided by
rider. We also will assess against the net cash value a transaction charge at
the end of the day on which the transaction occurs.
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this certificate. The
maximum administration charge is $4 per month. This charge will be assessed
on the certificate date and on each succeeding monthly anniversary.
2. The cost of insurance charge is for providing the death benefit under this
certificate. The charge is calculated by multiplying the net amount at risk
under this certificate by a rate which varies with the insured's age and
rate class. The rate is guaranteed not to exceed rates determined on the
basis of 125 percent of the 1980 Commissioners Standard Ordinary Mortality
Table. The net amount at risk for this certificate is the difference between
the death benefit and the account value. This charge will be assessed on the
certificate date and on each succeeding monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
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<PAGE>
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between
sub-accounts. The amount charged will not exceed $10. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this certificate. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value of each such sub-account bears to the separate account value.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this certificate. We also reserve the right to charge or make
provision for income taxes payable by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the group policy. The mortality
and expense risk charge is deducted from the separate account assets daily at an
annual rate not to exceed 0.50 percent of the separate account assets.
SEPARATE ACCOUNT
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HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of the group policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
certificate are listed on the specifications page attached to this certificate.
Net premiums will be allocated to the various sub-accounts of the separate
account or any other sub-accounts which we may add in the future, as elected by
the owner of this certificate. We reserve the right to add, combine or remove
any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
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For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the certificates of this class, we may substitute
another fund. Substitution may be with respect to both existing certificate
values and future premiums. The investment policy of the separate account may
not be changed, however, without the approval of the regulatory authorities of
the State of Minnesota. If required, that approval process will be on file with
the regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which the group policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this certificate, shall then mean the separate
account to which the assets are transferred. A transfer of this kind may
require the advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of
1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the sub-accounts
of the separate account. Initially, the allocation elected is indicated in the
application for this certificate. Allocations may be changed for future
premiums. The owner may do this by giving us a written request. A change will
not take effect until it is recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least ten percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than fifty
percent of the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of this
certificate. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this period.
If we exercise this right, net premiums will be allocated to the money market
sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
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MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS CERTIFICATE?
Yes. Transfers from a sub-account of the separate account may be made in
writing or by telephone. For transfers out of the separate account or among
the sub-accounts of the separate account, we will credit and cancel units based
on the sub-account unit values as of the end of the valuation period during
which the owner's written or telephone request is received at our home office.
For transfers out of the guaranteed account, a dollar amount will be transferred
based on the owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this certificate each month. The
amount to be transferred to or from a sub-account of the separate account or
the guaranteed account must be at least $250. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less than
$250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the account
value in the sub-account from which the transfer is to be made to less than
$250, we reserve the right to include that remaining amount in the sub-account
with the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to twenty
percent (or $250 if greater) of the guaranteed account value. Transfers to or
from the guaranteed account may be limited to one such transfer per certificate
year. We may further restrict transfers by requiring that the request is
received by us or postmarked in the 30-day period before or after the last day
of the certificate anniversary. Requests for transfers which meet these
conditions would be effective after we approve and record them at our home
office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this certificate will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account under this certificate will be decreased by
deductions to the sub-account, policy loans and loan interest charged, transfers
from that sub-account and partial surrenders from that sub-account. The number
of sub-account units will decrease to on this certificate's termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account.
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The value of a unit for each sub-account was originally set at $1.00 on the
first valuation date. For any subsequent valuation date, its value is equal to
its value on the preceding valuation date multiplied by the net investment
factor for that sub-account for the valuation period ending on the subsequent
valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this
certificate which are assessed against separate account assets. The gross
investment rate is equal to:
1. The net asset value per share of a fund share held in the sub-account of the
separate account determined at the end of the current valuation period; plus
2. the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
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WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to this certificate's net cash value. The net cash
value is the account value of this certificate, less any outstanding policy
loans and accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this certificate and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the certificate, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to a sub-account under an owner's
certificate will not be affected by changes in the unit value. However, the
number of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
certificate will be decreased by deductions to that sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero on a certificate termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
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<PAGE>
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
IS INTEREST CREDITED ON THE GUARANTEED ACCOUNT VALUE?
Yes. Interest is credited on the guaranteed account value of each insured under
the group policy. Interest is credited daily at a rate of not less than four
percent per year, compounded annually. We guarantee this minimum rate for the
life of the group policy.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
SURRENDERS AND WITHDRAWALS
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MAY THIS CERTIFICATE BE SURRENDERED?
Yes. The owner of this certificate may request the surrender of this
certificate at any time while the insured under this certificate is living.
WHAT IS THE SURRENDER VALUE OF THIS CERTIFICATE?
The surrender value of this certificate is the net cash value.
The determination of the surrender value is made as of the end of the during
which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value under this
certificate. The amount of a partial surrender must be $500 or more and it
cannot exceed the amount available as a policy loan. A partial surrender has no
effect on the face amount of the death benefit. However, since the account
value is reduced by the amount of the partial surrender, the death benefit will
be reduced by this same amount at the time of the partial surrender. We reserve
the right to change the minimum amount or limit the number of times the owner
may make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the guaranteed
account. If the owner does not, partial surrenders will be deducted from the
guaranteed account value and separate account value in the same proportion that
those values bear to each other and, as to the separate account value, from each
sub-account in the proportion that the sub-account value of each such sub-
account bears to the separate account value.
HOW WILL THE OWNER KNOW THE STATUS OF A CERTIFICATE?
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Each year we will send the owner of this certificate a report. This report will
show the status of this certificate. It will include the account value, the
face amount as of the date of the report, the premiums paid during the year and
their allocation, certificate charges, policy loan activity and the net cash
value. The report will be sent without cost to the owner. If the policyholder
owns all of the certificates, a consolidated report will be sent. The report
will be as of a date within two months of its mailing.
POLICY LOANS
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CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the request for a
loan. We will require the owner's written or telephone request for a policy
loan. The certificate will be the only security required for a loan. We will
charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN ON THIS CERTIFICATE?
The total amount available for a loan under any certificate is (a) minus (b),
where (a) is ninety percent of the account value and (b) is any outstanding
policy loans plus accrued policy loan interest charged. The maximum loan amount
will be determined as of the date we receive the owner's written or telephone
request for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When a loan is taken on this certificate, we will reduce the net cash value of
this certificate by the amount borrowed. This determination will be made as of
the end of the valuation period during which the loan request is received at our
home office. The amount borrowed continues to be a part of the account value,
as the amount borrowed becomes part of the loan account value where it will
accrue loan interest credit, and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON THIS CERTIFICATE?
Unless the owner directs us otherwise, the policy loan will be taken from this
certificate's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value of
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of this certificate may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount borrowed or in the interest due on the loan of
this certificate. If this certificate has a policy loan and no net cash value,
this certificate will lapse.
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WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be eight percent per year.
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the certificate month. If the total interest
accrued at the end of the certificate month is not paid, this interest will be
added to the loan amount borrowed and charged the same rate of interest as the
loan.
WHAT IS THE RATE OF INTEREST CREDITED TO THIS CERTIFICATE AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate not
less than six percent per year.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO THIS CERTIFICATE'S
GUARANTEED ACCOUNT VALUE?
As interest credits on a policy loan accrue, the account value increases.
Interest credits are allocated to the guaranteed account or sub-accounts of the
separate account at the time of a loan repayment.
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the certificate is in force. The loan may also be repaid within 60 days
after the date of the insured's death, if we have not paid any of the death
benefits under this certificate. Any loan repayment must be at least $100
unless the balance due is less than $100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
Loan repayments increase the net cash value of a certificate by the amount of
the loan repayment. The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON THIS CERTIFICATE IS NOT REPAID?
If this certificate has a policy loan, the certificate will remain in force so
long as it has net cash value. If it does not have sufficient cash value, it
will lapse.
In this event, to keep this certificate in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate this
certificate and the loan repayment required to keep it in force. The time for
repayment will be within 61 days after our mailing of the warning notice of
lapse.
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TERMINATION
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WHEN DOES THE GROUP POLICY TERMINATE?
The policyholder may terminate this group policy by giving us 31 days prior
written notice. In addition, we may terminate the group policy or any of its
provisions on 61 days prior written notice. No individual may become insured
under the group policy after the effective date of such a notice of termination.
After termination of the group policy, this certificate may be allowed to
convert to individual coverage as described below under the "Conversion
Privilege" section.
WHEN DOES A CERTIFICATE OF INSURANCE UNDER THE GROUP POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1. 61 days after we mail a warning notice of lapse on a certificate monthly
anniversary in which the net cash value is insufficient to pay for the
monthly deductions and no premium is paid during the grace period;
2. the date the group policy terminates, if no conversion or continuation is
made effective;
3. the date an owner surrenders this certificate or requests that we terminate
the insurance;
4. the 95th birthday of the insured.
WILL THE OWNER OF THIS CERTIFICATE RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage-of-premium charges, is large enough to cover all monthly deductions
which have accrued on this certificate up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to 3 years from the date
of lapse.
CONVERSION PRIVILEGE
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IS THERE A CONVERSION PRIVILEGE TO AN INDIVIDUAL POLICY?
Yes. If the life insurance provided by this certificate ceases because of
termination of employment or of membership in the class or classes eligible for
coverage under the group policy, or if the group policy terminates or is amended
so as to terminate the insurance, an owner under this certificate may
94-18662 Rev. 1-95 Minnesota Mutual 17
<PAGE>
convert the insurance under this certificate to an individual policy of life
insurance with us subject to the following:
1. The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home office
within 31 days of the date the insurance terminates under the group policy.
2. The owner may convert all or a part of the group insurance in effect on the
date that his or her coverage is terminated to an individual life insurance
policy offered by us, except a policy of term insurance. We will issue the
individual policy on the policy forms we then use for the plan of insurance
the owner has requested. The premium charge for this insurance will be based
upon the insured's age as of his or her nearest birthday.
3. If the insured should die within 31 days of the date that insurance
terminated under the group policy, the full amount of insurance that could
have been converted under this policy will be paid.
In the case of the termination of the group policy, we may require that an
insured under this certificate be so insured for at least five years prior to
the termination date in order to qualify for the above conversion privilege.
CAN GROUP INSURANCE COVERAGE BE CONTINUED ONCE THE OWNER'S ELIGIBILITY ENDS?
If the owner's eligibility under the group policy ends, the current group
coverage may continue unless the certificate is no longer in force or the
limitations below are true:
1. The group policy has terminated; or
2. There is less than $10 in the certificate's net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter the administration fee not to exceed $4 per month and
the monthly cost of insurance up to the maximum in Table A if the insurance is
continued.
ADDITIONAL INFORMATION
- ----------------------
WILL THIS CERTIFICATE RECEIVE DIVIDENDS?
Each year we will determine if this certificate and other certificates of its
class will share in our divisible surplus.
Dividends, if received, will be added to the account value of this certificate,
or if elected by the owner, the dividends may be paid in cash. A dividend
applied to the account value will be allocated to the guaranteed account value
or the sub-accounts of the separate account in accordance with the owner's
current instructions for the allocation of net premiums. In the absence of such
instructions, dividends will be allocated to the guaranteed account and the
separate account in the same proportion as those values bear to each other and,
as to the separate account value, to each sub-account in the proportion that the
sub-account value of each such sub-account bears to the separate account value.
MAY THE OWNER ASSIGN ANY INTEREST UNDER THIS CERTIFICATE?
94-18662 Rev. 1-95 Minnesota Mutual 18
<PAGE>
Yes. However, we will not be bound by an assignment of this certificate or of
any interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the certificate date, we cannot contest the insurance for any
loss that is incurred more than two years after the certificate date, unless the
net cash value has dropped below the amount necessary to pay the insured's cost
of insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
IS THERE A SUICIDE EXCLUSION?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the certificate date, our liability will be limited to an amount equal to the
premiums paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the effective date of the increase,
our liability with respect to that increase will be limited to the cost of
insurance charge attributable to such increase.
If the insured is a Missouri citizen when the certificate of insurance becomes
effective, this provision does not apply on the certificate's effective date, or
on the effective date of any increase in the face amount of insurance, unless
the insured intended suicide when the certificate of insurance, or any increase,
was applied for.
94-18662 Rev. 1-95 Minnesota Mutual 19
<PAGE>
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two years.
DOES THE OWNER HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If the owner has separate account units under this certificate the owner
may direct us with respect to the voting rights of fund shares held by us and
attributable to this certificate.
COULD THE PAYMENT OF CERTIFICATE PROCEEDS BE POSTPONED?
Normally, we will pay any certificate proceeds within seven days after our
receipt of all the documents required for such a payment. Other than the death
proceeds, which are determined as of the date of death of the insured, the
amount of payment will be determined as of the end of the valuation period
during which a request is received at our home office. If such payments are
based upon certificate values which do not depend on the investment performance
of the separate account, however, we reserve the right to defer certificate
payments, including certificate loans, for up to six months from the date of the
owner's request. In that case, if we postpone a payment other than a policy
loan payment for more than 31 days, we will pay the owner interest at the
greater of four percent per year or the rate required by law for the period
beyond that time that payment is postponed. For payments based on account values
which do depend on the investment performance of the separate account, we may
defer payment only: (a) for any period during which the New York Stock Exchange
is closed for trading (except for normal holiday closing); or (b) when the
Securities and Exchange Commission has determined that a state of emergency
exists which may make such payment impractical.
WILL THE PROVISIONS OF THIS CERTIFICATE CONFORM WITH STATE LAW?
Yes. If any provision in this certificate is in conflict with the laws of the
state governing the certificate, the provision will be deemed to be amended to
conform to such laws.
COULD ANY PAYMENTS MADE UNDER THIS CERTIFICATE BE SUBJECT TO CLAIMS OF
CREDITORS?
To the extent permitted by law, neither the group policy, certificates issued
under the group policy, nor any payment thereunder will be subject to the claims
of creditors or to any legal process.
WHO HAS OWNERSHIP OF THE GROUP POLICY?
The policyholder owns the group policy. The group policy may be changed or
ended by agreement between us and the policyholder without the consent of, or
notice to, any person claiming rights or benefits under the policy. However,
unless the policyholder is the owner of all the certificates issued under the
group policy, the policyholder does not have any ownership interest in the
certificates issued under the group policy. The rights and benefits under the
certificates are that of the owners of the certificates, and that of the
insureds and beneficiaries as set forth in this certificate.
ARE POLICY CHANGES LIMITED?
Currently, the frequency of policy changes are not limited. However, we reserve
the right to limit the number of policy changes to one per certificate year and
to restrict such changes in the first
94-18662 Rev. 1-95 Minnesota Mutual 20
<PAGE>
certificate year. For this purpose, changes include increases or decreases in
the face amount of insurance.
94-18662 Rev. 1-95 Minnesota Mutual 21
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Guaranteed Maximum Monthly Cost of Insurance Rate
on a Smoker Distinct Basis
per $1,000 Net Amount at Risk
<TABLE>
<CAPTION>
Maximum Maximum Maximum
Attained Monthly Attained Monthly Attained Monthly
Age* Rate Age* Rate Age* Rate
---- ---- ---- ---- ---- ----
Non-Smokers Smokers Non-Smokers Smokers Non-Smokers Smokers
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
* This is the insured employee's attained age as of the last certificate
anniversary.
94-18662 Rev. 1-95 Minnesota Mutual 22
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Guaranteed Maximum Monthly Cost of Insurance Rate
on a Uni-Smoker Basis
per $1,000 Net Amount at Risk
<TABLE>
<CAPTION>
Maximum Maximum Maximum
Attained Monthly Attained Monthly Attained Monthly
Age* Rate Age* Rate Age* Rate
---- ---- ---- ---- ---- ----
Uni-Smokers Uni-Smokers Uni-Smokers
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
* This is the insured employee's attained age as of the last certificate
anniversary.
</TABLE>
94-18662 Rev. 1-95 Minnesota Mutual 23
<PAGE>
================================================================================
MINNESOTA MUTUAL SPOUSE'S COVERAGE RIDER
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - 400 Robert Street North - St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This agreement amends the group policy to which it is attached, and is issued in
consideration of the timely payment of the required premium. This agreement is
subject to every term, condition, limitation, and provision of the group policy
unless otherwise expressly provided herein. The policyholder is a member of The
Minnesota Mutual Life Insurance Company. Our annual meetings are held at our
home office on the first Tuesday in March of each year at three o'clock in the
afternoon.
WHAT IS THE PURPOSE OF THE AGREEMENT?
This agreement makes available variable universal life insurance on the life of
the eligible employee's eligible spouse.
DEFINITIONS
- -----------
For purposes of construing the terms and conditions of coverage for spouses
under the terms of the group policy, the terms and definitions listed below are
used in place of the terms and definitions stated in the policy:
ACTIVELY AT WORK
To be actively at work for purposes of this policy, the eligible spouse must be
currently working at his or her normal place of business at least ____ hours a
week. A person is not considered actively at work if not at work due to illness
or injury.
ELIGIBLE INSURED
A spouse is an eligible insured if he or she:
1. is under ____; and
2. was actively at work for each of the _____ weeks immediately prior to the
date his or her application for coverage under this policy is approved by
us; and
3. is currently legally married to an individual defined as an eligible
insured under the terms of the group policy to which this rider is
attached.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18672 Rev. 1-95 Minnesota Mutual 1
<PAGE>
================================================================================
EX99.A5E
MINNESOTA MUTUAL CERTIFICATE OF INSURANCE
SPOUSE COVERAGE
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company.400 Robert Street North.St. Paul,
Minnesota 55101-2098
- --------------------------------------------------------------------------------
RIGHT TO CANCEL
- ---------------
It is important to us that you are satisfied with this certificate after it is
issued. If you are not satisfied with it, you may return the certificate to us
or our agent within 10 days after you receive it. You may also cancel this
certificate by delivering or mailing a written notice or sending a telegram to
The Minnesota Mutual Life Insurance Company (Minnesota Mutual), 400 Robert
Street North, St. Paul, Minnesota 55101-2098 and returning the certificate
before midnight of the 10th day after you received this certificate. Notice
given by mail and return of the certificate by mail are effective on being
postmarked, properly addressed and postage prepaid. If you return this
certificate, you will receive, within 7 days of the date we receive a notice of
cancellation, a full refund of any premiums you have paid. Upon cancellation of
this certificate, it will be void from the beginning as if it never had been
issued.
THE INITIAL DEATH BENEFIT WILL EQUAL THE FACE AMOUNT SHOWN ON THIS CERTIFICATE.
THE ACCOUNT VALUES UNDER THIS CERTIFICATE WILL VARY FROM DAY TO DAY. IT MAY
INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
THERE IS NO GUARANTEED MINIMUM ACCOUNT VALUE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
General Information......................... 2 Account Values......................... 7
Definitions................................. 2 Surrenders and Withdrawals............. 8
Death Benefit............................... 3 Policy Loans........................... 8
Payment of Proceeds......................... 4 Termination............................ 9
Premiums.................................... 5 Conversion Privilege................... 10
Policy Charges.............................. 5 Additional Information................. 10
Separate Account............................ 6
</TABLE>
VARIABLE GROUP UNIVERSAL LIFE INSURANCE . LEVEL DEATH BENEFIT
94-18670 Rev. 1-95 Minnesota Mutual 1
<PAGE>
================================================================================
MINNESOTA MUTUAL SPECIFICATIONS
INDIVIDUAL POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company 400 Robert Street North St.
Paul, Minnesota 55101-1098
- --------------------------------------------------------------------------------
POLICYHOLDER: POLICY ID:
Insured:
INSURANCE INFORMATION
- ---------------------
Face Amount: $ Effective Date:
Variable Death Benefit $ Anniversary Date:
Minimum Face Amount Available: $
Maximum Face Amount Available: $
Planned Monthly Premium: $
Non-tobacco status
Age at Issue:
Identification Number:
CHARGES AGAINST PREMIUM FIXED MONTHLY CHARGES
- ----------------------- ---------------------
Sales Load % Administration Fee: $
Federal Tax % Child Term Rider: $
State Tax % Accidental Death &
Dismemberment: $
If a partial surrender is made, we will assess a charge of $25 or two percent of
the amount withdrawn, whichever is less.
ELECTED RIDERS ADDITIONAL AGREEMENTS
- -------------- ---------------------
Child Term Rider: $ .Waiver of Premium
Accidental Death & .Accelerated Death Benefit
Dismemberment: $ These agreements are included in the
planned monthly premium above.
.See attached certificate supplements
for full details.
ACCOUNT OPTIONS AND ELECTIONS
- -----------------------------
Guaranteed Account %
SUB-ACCOUNT OPTIONS AND ELECTIONS
- ---------------------------------
Growth % Money Market % Index 500 %
Small Company % Mortgage Securities % Bond %
Asset Allocation % Capital Appreciation % Value Stock %
International Stock %
F.47898 11-94
<PAGE>
GENERAL INFORMATION
- -------------------
WHAT IS YOUR AGREEMENT WITH US?
You are insured under the group policy identified on the application attached to
this certificate. The attached application is a part of this certificate. This
certificate summarizes the principal provisions of the group policy that affect
your life insurance coverage. The provisions summarized in this certificate are
subject in every respect to the group policy. You may examine the group policy
at the principal office of the policyholder during regular working hours.
We retain the right to amend this certificate at any time without your consent.
Any amendment will be without prejudice to any claim incurred for benefits prior
to the date of the amendment.
Any statement made in your application will, in the absence of fraud, be
considered representations and not warranties. Also, any statement made will not
be used to void this certificate nor defend against a claim unless the statement
is contained in your application.
This certificate is issued in consideration of your application and the payment
of the required premium contributions.
WHAT IS THE EFFECTIVE DATE OF YOUR INSURANCE?
Upon receipt of your application for insurance, the effective date of your
insurance will be the later of:
1. the date on which we approve your application; and
2. the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this
certificate.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
account value
The sum of the values under the separate account, the guaranteed account and the
loan account of this certificate. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
actively at work
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least _____ hours a week.
A person is not considered actively at work if not at work due to illness or
injury.
94-18670 Rev. 1-95 Minnesota Mutual 2
<PAGE>
age
Your age at last birthday.
certificate anniversary
The same day in each succeeding year as the certificate date.
certificate date
The first day of the calendar month on or following a certificate's effective
date of coverage. This is the date from which we determine monthly
anniversaries, certificate months and certificate years.
certificate month
A calendar month in which insurance is provided under this certificate.
certificate year
A period of twelve consecutive certificate months, measured from the certificate
date and each successive certificate anniversary, during which coverage is
provided under this certificate.
eligible insured
You are an eligible insured if you:
1. are under age _____; and
2. were actively at work for each of the _____ weeks immediately prior to the
date your application for coverage under the group policy is approved by us;
and
3. are currently legally married to an individual defined as an eligible
insured under the terms of the group policy.
face amount
The minimum death benefit under this certificate so long as the insurance
coverage under this certificate remains in force.
fund
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
general account
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
guaranteed account value
94-18670 Rev. 1-95 Minnesota Mutual 3
<PAGE>
Assets other than the loan account value that are held in our general account
and attributable to a certificate issued under this policy, and others of its
class.
insured
An eligible insured who becomes insured under this certificate.
lapse
A lapse of this certificate means the insurance coverage under this certificate
has terminated due to non-payment of a premium during its grace period in an
amount that, after the deduction of percentage-of-premium charges, is sufficient
to cover the monthly deductions due at the time we provide notice of lapse.
loan account
The portion of the general account which is attributable to loans under this
certificate.
loan account value
The sum of all outstanding loans and accrued policy loan interest credited under
this certificate.
maturity date
The 95th birthday of the insured.
monthly anniversary
The same date in each succeeding month as the certificate date.
net cash value
The account value under this certificate, less any outstanding policy loans and
accrued policy loan interest charged and any charges over due. It is the amount
you may obtain through surrender of this certificate.
net premium
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
owner
An owner of a certificate issued under the group policy.
policyholder
94-18670 Rev. 1-95 Minnesota Mutual 4
<PAGE>
The owner of the group policy, as identified on the specifications page attached
to this certificate.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net premiums
received for the certificate. The particular separate account for this
certificate is the Variable Universal Life Account. We established this separate
account for this class of policies under Minnesota Law. The separate account is
composed of several sub-accounts. We own the assets of the separate account.
However, those assets not in excess of separate account liabilities are not
subject to claims arising out of any other business in which we engage.
SEPARATE ACCOUNT VALUE
The sum of all sub-account values.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
The current number of sub-account units credited to your certificate multiplied
by the current sub-account unit value.
UNIT
A measure of the owner's interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
YOU, YOUR
The owner of this certificate named on the application.
DEATH BENEFIT
- -------------
94-18670 Rev. 1-95 Minnesota Mutual 5
<PAGE>
WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
This certificate of insurance provides for a level death benefit. The amount of
the death benefit will be determined as follows:
1. The face amount of insurance on the insured's date of death while this
certificate is in force; plus
2. the amount of the cost of insurance for the portion of the certificate
month from the date of death to the end of the certificate month; less
3. any outstanding policy loans and accrued policy loan interest charged; less
4. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this
certificate.
We intend that this certificate qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right to
either increase the face amount of insurance on the life of the insured, return
any excess net cash value or limit the amount of premium contributions we will
accept under this certificate in order to maintain such qualification.
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF THE INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this certificate.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this certificate.
If an increase in the current face amount is applied for, we reserve the right
to require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced to
less than the amount shown on the specifications page attached to this
certificate. If following a decrease in face amount, this certificate would not
comply with the maximum premium limitations required by federal law, the
decrease may be limited or net cash value may be returned to the owner (at the
owner's election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly
anniversary on or following receipt by us of your written request. However, if
the owner requests that the decrease become effective on a specified future date
we will make the decrease effective on the monthly anniversary on or next
following the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between the
policyholder and us.
WHEN WILL THE DEATH BENEFIT BE PAID?
94-18670 Rev. 1-95 Minnesota Mutual 6
<PAGE>
We will pay the death benefit upon due proof satisfactory to us that the insured
died while insured under this certificate. We will pay interest on the death
benefit from the date of the insured's death until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of four percent per year compounded annually, or the rate required by
law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
PAYMENT OF PROCEEDS
- -------------------
TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified on
the application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
certificate ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no beneficiary
survives the insured or if a beneficiary is not named, we will pay the proceeds
according to the following order of priority:
1. the insured's lawful spouse, if living; otherwise;
2. the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has not
reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. The owner's written request will not
be effective until it is recorded in our home office records. After it has been
so recorded, it will take effect as of the date the owner signed the request .
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
94-18670 Rev. 1-95 Minnesota Mutual 7
<PAGE>
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
Each settlement option is paid in fixed amounts as described below. If the
owner of this certificate requests a settlement option, he or she will be asked
to sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
1. INTEREST PAYMENTS: Payment of interest on the proceeds at such times and for
a period as may be agreed upon between the owner of this certificate and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
3. LIFE ANNUITY: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount
until the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner or insured may provide that the beneficiary will not
be permitted to change the elected settlement option.
PREMIUMS
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WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put this certificate in force. This initial premium
must be of an amount that, after the deduction of percentage-of-premium charges,
will cover the first month's deductions plus $20. A premium must also be paid at
such time when there is insufficient net cash value to pay the monthly
deductions necessary to keep this certificate in force. Premiums paid after the
initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Yes. This certificate has a 61-day grace period. The grace period will start
on the day we mail the owner a notice of lapse. This certificate will lapse if
the premium amount specified in the notice is not paid by the end of the grace
period and the net cash value is insufficient to cover the monthly deductions.
We will mail this notice on any certificate monthly anniversary date when the
net cash
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value for the insured under this certificate is insufficient to cover
the monthly deductions. This certificate of insurance will remain in effect
during the 61-day grace period. If sufficient premium is not paid by the end of
the grace period, the insured's coverage will lapse. The grace period does not
apply to the first premium payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
The death benefit amount provided under this certificate will be paid if death
occurs during the grace period.
POLICY CHARGES
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WHAT TYPE OF CHARGES ARE THERE UNDER THIS CERTIFICATE?
Charges under this certificate are those which we assess against the premiums
and the account value under this certificate and the separate account assets
attributable to this certificate.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
1. The sales load is for distribution expenses for this class of certificates.
This sales load charge shall not exceed five percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal income
taxes that result from a sale of this certificate. The federal tax charge is
1.25 percent of each premium paid if this certificate is deemed to be an
individual contract under the Omnibus Budget Reconciliation Act of 1990, as
amended, and 0.25 percent if deemed a group contract under that Act.
3. The state premium tax charge is the average premium tax we pay to state and
local governments for this class of certificates. This charge is currently
two percent. The charge is not guaranteed and may be increased in the
future, but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS CERTIFICATE?
We assess as monthly deductions: (1) the administration charge; (2) the cost of
insurance charge; and (3) the charge for any additional benefits provided by
rider. We also will assess against the net cash value a transaction charge at
the end of the day on which the transaction occurs.
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this certificate. The
maximum administration charge is $4 per month. This charge will be assessed
on the certificate date and on each succeeding monthly anniversary.
2. The cost of insurance charge is for providing the death benefit under this
certificate. The charge is calculated by multiplying the net amount at risk
under this certificate by a rate which varies with the insured's age and
rate class. The rate is guaranteed not to exceed rates determined on the
basis of 125 percent of the 1980 Commissioners Standard Ordinary Mortality
Table. The net amount at risk for this certificate is the difference between
the death benefit and the account
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value. This charge will be assessed on the certificate date and on each
succeeding monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between
sub-accounts. The amount charged will not exceed $10. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this certificate. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value of each such sub-account bears to the separate account value.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this certificate. We also reserve the right to charge or make
provision for income taxes payable by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the group policy. The mortality
and expense risk charge is deducted from the separate account assets daily at an
annual rate not to exceed 0.50 percent of the separate account assets.
SEPARATE ACCOUNT
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HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of the group policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
certificate are listed on the specifications page attached to this certificate.
Net premiums will be allocated to the various sub-accounts of the separate
account or any other sub-account which we may add in the future, as
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elected by the owner of this certificate. We reserve the right to add, combine
or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the certificates of this class, we may substitute
another fund. Substitution may be with respect to both existing certificate
values and future premiums. The investment policy of the separate account may
not be changed, however, without the approval of the regulatory authorities of
the State of Minnesota. If required, that approval process will be on file with
the regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which the group policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this certificate, shall then mean the separate
account to which the assets are transferred. A transfer of this kind may require
the advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of 1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the sub-accounts
of the separate account. Initially, the allocation elected is indicated in the
application for this certificate. Allocations may be changed for future
premiums. The owner may do this by giving us a written request. A change will
not take effect until it is recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least ten percent of the net premium. We reserve the
right to restrict the allocation of premium.
If we do so, no more than fifty percent of the net premium may be allocated to
the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of this
certificate. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this period.
If we exercise this right, net premiums will be allocated to the money market
sub-account until the end of that period.
WHAT IS A TRANSFER?
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A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS CERTIFICATE?
Yes. Transfers from a sub-account of the separate account may be made in writing
or by telephone. For transfers out of the separate account or among the sub-
accounts of the separate account, we will credit and cancel units based on the
sub-account unit values as of the end of the valuation period during which the
owner's written or telephone request is received at our home office. For
transfers out of the guaranteed account, a dollar amount will be transferred
based on the owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this certificate each month. The amount
to be transferred to or from a sub-account of the separate account or the
guaranteed account must be at least $250. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less than
$250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the account
value in the sub-account from which the transfer is to be made to less than
$250, we reserve the right to include that remaining amount in the sub-account
with the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to 20 percent
(or $250 if greater) of the guaranteed account value. Transfers to or from the
guaranteed account may be limited to one such transfer per certificate year. We
may further restrict transfers by requiring that the request is received by us
or postmarked in the 30-day period before or after the last day of the
certificate anniversary. Requests for transfers which meet these conditions
would be effective after we approve and record them at our home office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this certificate will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account under this certificate will be decreased by
deductions to the sub-account, policy loans and loan interest charged, transfers
from that sub-account and partial surrenders from that sub-account. The number
of sub-account units will decrease to zero on this certificate's termination.
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HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account. The value of a unit for each sub-account
was originally set at $1.00 on the first valuation date. For any subsequent
valuation period, its value is equal to its value on the preceding valuation
date multiplied by the net investment factor for that sub-account for the
valuation period ending on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this
certificate which are assessed against separate account assets. The gross
investment rate is equal to:
1. The net asset value per share of a fund share held in the sub-account of the
separate account determined at the end of the current valuation period; plus
2. the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
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WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to this certificate's net cash value. The net cash
value is the account value of this certificate, less any outstanding policy
loans and accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this certificate and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the certificate, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to a sub-account under an owner's
certificate will not be affected by changes in the unit value. However, the
number of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
certificate will be decreased by deductions to that sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero on a certificate termination.
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IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
IS INTEREST CREDITED ON THE GUARANTEED ACCOUNT VALUE?
Yes. Interest is credited on the guaranteed account value of each insured under
the group policy. Interest is credited daily at a rate of not less than four
percent per year, compounded annually. We guarantee this minimum rate for the
life of the group policy.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
SURRENDERS AND WITHDRAWALS
- --------------------------
MAY THIS CERTIFICATE BE SURRENDERED?
Yes. The owner of this certificate may request the surrender of this certificate
at any time while the insured under this certificate is living.
WHAT IS THE SURRENDER VALUE OF THIS CERTIFICATE?
The surrender value of this certificate is the net cash value.
The determination of the surrender value is made as of the end of the valuation
period during which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value under this
certificate. The amount of a partial surrender must be $500 or more and it
cannot exceed the amount available as a policy loan. A partial surrender will
cause a decrease in the face amount equal to the amount surrendered. We reserve
the right to change the minimum amount or limit the number of times the owner
may make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is to
be taken or whether it is to be taken in whole or in part from the guaranteed
account. If the owner does not, inform us of his or her choice, partial
surrenders will be deducted from the guaranteed account value and separate
account value in the same proportion that those values bear to each other and,
as to the separate account value, from each sub-account in the proportion that
the sub-account value of each such sub-account bears to the separate account
value.
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HOW WILL THE OWNER KNOW THE STATUS OF A CERTIFICATE?
Each year we will send the owner of this certificate a report. This report will
show the status of this certificate. It will include the account value, the
face amount as of the date of the report, the premiums paid during the year and
their allocation, certificate charges, policy loan activity and the net cash
value. The report will be sent without cost to the owner. If the policyholder
owns all of the certificates, a consolidated report will be sent. The report
will be as of a date within two months of its mailing.
POLICY LOANS
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CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the request for a
loan. We will require the owner's written or telephone request for a policy
loan. The certificate will be the only security required for a loan. We will
charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN ON THIS CERTIFICATE?
The total amount available for a loan under any certificate is (a) minus (b),
where (a) is ninety percent of the account value and (b) is any outstanding
policy loans plus accrued policy loan interest charged. The maximum loan amount
will be determined as of the date we receive the owner's written or telephone
request for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When a loan is taken on this certificate, we will reduce the net cash value of
this certificate by the amount borrowed. This determination will be made as of
the end of the valuation period during which the loan request is received at our
home office. The amount borrowed continues to be a part of the account value,
as the amount borrowed becomes part of the loan account value where it will
accrue loan interest credit, and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON THIS CERTIFICATE?
Unless the owner directs us otherwise, the policy loan will be taken from this
certificate's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value of
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of this certificate may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount
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borrowed or in the interest due on the loan of this certificate. If this
certificate has a policy loan and no net cash value, this certificate will
lapse.
WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be eight percent per year.
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the certificate month. If the total interest
accrued at the end of the certificate month is not paid, this interest will be
added to the loan amount borrowed and charged the same rate of interest as the
loan.
WHAT IS THE RATE OF INTEREST CREDITED TO THIS CERTIFICATE AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate of
not less than six percent per year.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO THIS CERTIFICATE'S
GUARANTEED ACCOUNT VALUE?
Interest credits are allocated to the guaranteed account value at the time of a
loan repayment.
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the certificate is in force. The loan may also be repaid within 60 days
after the date of the insured's death, if we have not paid any of the death
benefits under this certificate. Any loan repayment must be at least $100
unless the balance due is less than $100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
Loan repayments increase the net cash value of a certificate by the amount of
the loan repayment. The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON THIS CERTIFICATE IS NOT REPAID?
If this certificate has a policy loan, the certificate will remain in force so
long as it has net cash value. If it does not have sufficient net cash value,
it will lapse.
In this event, to keep this certificate in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate this
certificate and the loan repayment required to
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keep it in force. The time for repayment will be within 61 days after our
mailing of the warning notice of lapse.
TERMINATION
- -----------
WHEN DOES THE GROUP POLICY TERMINATE?
The policyholder may terminate this group policy by giving us 31 days prior
written notice. In addition, we may terminate the group policy or any of its
provisions on 61 days prior written notice. No individual may become insured
under the group policy after the effective date of such a notice of termination.
After termination of the group policy, this certificate may be allowed to
convert to individual coverage as described below under the "Conversion
Privilege" section.
WHEN DOES A CERTIFICATE OF INSURANCE UNDER THE GROUP POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1. 61 days after we mail a warning notice of lapse on a certificate monthly
anniversary in which the net cash value is insufficient to pay for the
monthly deductions and no premium is paid during the grace period;
2. the date the group policy terminates, if no conversion or continuation is
made effective;
3. the date an owner surrenders this certificate or requests that we terminate
the insurance;
4. the 95th birthday of the insured.
WILL THE OWNER OF THIS CERTIFICATE RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice of lapse before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage-of-premium charges, is large enough to cover all monthly deductions
which have accrued on this certificate up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to three years from the
date of lapse.
CONVERSION PRIVILEGE
- --------------------
IS THERE A CONVERSION PRIVILEGE TO AN INDIVIDUAL POLICY?
Yes. If the life insurance provided by this certificate ceases because of
termination of employment or of membership in the class or classes eligible for
coverage under the group policy, or if the group
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policy terminates or is amended so as to terminate the insurance, an owner under
this certificate may convert the insurance under this certificate to an
individual policy of life insurance with us subject to the following:
1. The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home office
within 31 days of the date the insurance terminates under the group policy.
2. The owner may convert all or a part of the group insurance in effect on the
date that his or her coverage is terminated to an individual life insurance
policy offered by us, except a policy of term insurance. We will issue the
individual policy on the policy forms we then use for the plan of insurance
the owner has requested. The premium charge for this insurance will be based
upon the insured's age as of his or her nearest birthday.
3. If the insured should die within 31 days of the date that insurance
terminated under the group policy, the full amount of insurance that could
have been converted under this policy will be paid.
In the case of the termination of the group policy, we may require that an
insured under this certificate be so insured for at least five years prior to
the termination date in order to qualify for the above conversion privilege.
CAN GROUP INSURANCE COVERAGE BE CONTINUED ONCE THE OWNER'S ELIGIBILITY ENDS?
If the owner's eligibility under the group policy ends, the current group
coverage may continue unless the certificate is no longer in force or the
limitations below are true:
1. The group policy has terminated; or
2. There is less than $10 in the certificate's net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter the administration fee not to exceed $4 per month and
the monthly cost of insurance up to the maximum in Table A if the insurance is
continued.
ADDITIONAL INFORMATION
- ----------------------
WILL THIS CERTIFICATE RECEIVE DIVIDENDS?
Each year we will determine if this certificate and other certificates of its
class will share in our divisible surplus. Dividends, if received, will be added
to the account value of this certificate, or if elected by the owner, the
dividends may be paid in cash. A dividend applied to the account value will be
allocated to the guaranteed account value or the sub-accounts of the separate
account in accordance with the owner's current instructions for the allocation
of net premiums. In the absence of such instructions, dividends will be
allocated to the guaranteed account and the separate account in the same
proportion as those values bear to each other and, as to the separate account
value, to each sub-account in the proportion that the sub-account value of each
such sub-account bears to the separate account value.
MAY THE OWNER ASSIGN ANY INTEREST UNDER THIS CERTIFICATE?
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Yes. However, we will not be bound by an assignment of this certificate or of
any interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the certificate date, we cannot contest the insurance for any
loss that is incurred more than two years after the certificate date, unless the
net cash value has dropped below the amount necessary to pay the insured's cost
of insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
IS THERE A SUICIDE EXCLUSION?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the certificate date, our liability will be limited to an amount equal to the
premiums paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the certificate date of the
increase, our liability with respect to that increase will be limited to the
cost of insurance charge attributable to such increase.
If the insured is a Missouri citizen when the certificate of insurance becomes
effective, this provision does not apply on the certificate's effective date, or
on the effective date of any increase in the face amount of insurance, unless
the insured intended suicide when the certificate of insurance, or any increase,
was applied for.
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two years.
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DOES THE OWNER HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If the owner has separate account units under this certificate the owner
may direct us with respect to the voting rights of fund shares held by us and
attributable to this certificate.
COULD THE PAYMENT OF CERTIFICATE PROCEEDS BE POSTPONED?
Normally, we will pay any certificate proceeds within seven days after our
receipt of all the documents required for such a payment. Other than the death
proceeds, which are determined as of the date of death of the insured, the
amount of payment will be determined as of the end of the valuation period
during which a request is received at our home office. If such payments are
based upon certificate values which do not depend on the investment performance
of the separate account, however, we reserve the right to defer certificate
payments, including certificate loans, for up to six months from the date of the
owner's request. In that case, if we postpone a payment other than a policy loan
payment for more than 31 days, we will pay the owner interest at the greater of
four percent per year or the rate required by law for the period beyond that
time that payment is postponed. For payments based on account values which do
depend on the investment performance of the separate account, we may defer
payment only: (a) for any period during which the New York Stock Exchange is
closed for trading (except for normal holiday closing); or (b) when the
Securities and Exchange Commission has determined that a state of emergency
exists which may make such payment impractical.
WILL THE PROVISIONS OF THIS CERTIFICATE CONFORM WITH STATE LAW?
Yes. If any provision in this certificate is in conflict with the laws of the
state governing the certificate, the provision will be deemed to be amended to
conform to such laws.
COULD ANY PAYMENTS MADE UNDER THIS CERTIFICATE BE SUBJECT TO CLAIMS OF
CREDITORS?
To the extent permitted by law, neither the group policy, certificates issued
under the group policy, nor any payment thereunder will be subject to the claims
of creditors or to any legal process.
WHO HAS OWNERSHIP OF THE GROUP POLICY?
The policyholder owns the group policy. The group policy may be changed or
ended by agreement between us and the policyholder without the consent of, or
notice to, any person claiming rights or benefits under the policy. However,
unless the policyholder is the owner of all the certificates issued under the
group policy, the policyholder does not have any ownership interest in the
certificates issued under the group policy. The rights and benefits under the
certificates are that of the owners of the certificates, and that of the
insureds and beneficiaries as set forth in this certificate.
ARE POLICY CHANGES LIMITED?
Currently, the frequency of policy changes are not limited. However, we reserve
the right to limit the number of policy changes to one per certificate year and
to restrict such changes in the first certificate year. For this purpose,
changes include increases or decreases in the face amount of insurance.
94-18670 Rev. 1-95 Minnesota Mutual 20
<PAGE>
<TABLE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A SMOKER DISTINCT BASIS
PER $1,000 NET AMOUNT AT RISK
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
-------- ------- --------- ------- -------- -------
NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS
------------ ------- ----------- ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11 .456 13.886
13 0.104 0.104 48 0.439 0.813 83 12 .649 15.034
14 0.118 0.118 49 0.474 0.882 84 13 .943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
*This is the insured employee's attained age as of the last certificate
anniversary.
</TABLE>
94-18670 Rev. 1-95 Minnesota Mutual 21
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A UNI-SMOKER BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
- ---------- ----------- -------- ----------- -------- -----------
UNI-SMOKERS UNI-SMOKERS UNI-SMOKERS
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18670 Rev. 1-95 Minnesota Mutual 22
<PAGE>
Minnesota Mutual
400 Robert Street North . St. Paul, Minnesota 55101-2098
VARIABLE UNIVERSAL LIFE INSURANCE . LEVEL DEATH BENEFIT
<PAGE>
================================================================================
MINNESOTA MUTUAL CERTIFICATE OF INSURANCE
SPOUSE COVERAGE
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company 400 Robert Street North St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
RIGHT TO CANCEL
- ---------------
It is important to us that you are satisfied with this certificate after it is
issued. If you are not satisfied with it, you may return the certificate to us
or our agent within 10 days after you receive it. You may also cancel this
certificate by delivering or mailing a written notice or sending a telegram to
The Minnesota Mutual Life Insurance Company (Minnesota Mutual), 400 Robert
Street North, St. Paul, Minnesota 55101-2098 and returning the certificate
before midnight of the tenth day after you received this certificate. Notice
given by mail and return of the certificate by mail are effective on being
postmarked, properly addressed and postage prepaid. If you return this
certificate, you will receive, within 7 days of the date we receive a notice of
cancellation, a full refund of any premiums you have paid. Upon cancellation of
this certificate, it will be void from the beginning as if it never had been
issued.
THE INITIAL DEATH BENEFIT FOR THE PERSON INSURED UNDER THIS CERTIFICATE WILL
EQUAL THE FACE AMOUNT SHOWN ON THIS CERTIFICATE PLUS THE INITIAL ACCOUNT VALUE,
IF ANY. THEREAFTER, IT MAY INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT
INVESTMENT EXPERIENCE.
THE ACCOUNT VALUES UNDER THIS CERTIFICATE WILL VARY FROM DAY TO DAY. IT MAY
INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
THERE IS NO GUARANTEED MINIMUM ACCOUNT VALUE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <S> <C>
General Information.............2 Account Values...........................13
Definitions.....................2 Surrenders and Withdrawals...............14
Death Benefit...................6 Policy Loans.............................15
Payment of Proceeds.............7 Termination..............................17
Premiums........................8 Conversion Privilege.....................18
Policy Charges..................9 Additional Information...................19
Separate Account................10
</TABLE>
VARIABLE GROUP UNIVERSAL LIFE INSURANCE VARIABLE DEATH BENEFIT
94-18671 Rev. 1-95 Minnesota Mutual 1
<PAGE>
================================================================================
MINNESOTA MUTUAL SPECIFICATIONS
INDIVIDUAL POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company 400 Robert Street North St.
Paul, Minnesota 55101-1098
- --------------------------------------------------------------------------------
POLICYHOLDER: POLICY ID:
Insured:
INSURANCE INFORMATION
- ---------------------
Face Amount: $ Effective Date:
Variable Death Benefit $ Anniversary Date:
Minimum Face Amount Available: $
Maximum Face Amount Available: $
Planned Monthly Premium: $
Non-tobacco status
Age at Issue:
Identification Number:
CHARGES AGAINST PREMIUM FIXED MONTHLY CHARGES
- ----------------------- ---------------------
Sales Load % Administration Fee: $
Federal Tax % Child Term Rider: $
State Tax % Accidental Death &
Dismemberment: $
If a partial surrender is made, we will assess a charge of $25 or two percent of
the amount withdrawn, whichever is less.
ELECTED RIDERS ADDITIONAL AGREEMENTS
- -------------- ---------------------
Child Term Rider: $ .Waiver of Premium
Accidental Death & .Accelerated Death Benefit
Dismemberment: $ These agreements are included
in the planned monthly
premium above.
.See attached certificate
supplements for full details.
ACCOUNT OPTIONS AND ELECTIONS
- -----------------------------
Guaranteed Account %
SUB-ACCOUNT OPTIONS AND ELECTIONS
- ---------------------------------
Growth % Money Market % Index 500 %
Small Company % Mortgage Securities % Bond %
Asset Allocation % Capital Appreciation % Value Stock %
International Stock %
F.47898 11-94
<PAGE>
GENERAL INFORMATION
- -------------------
WHAT IS YOUR AGREEMENT WITH US?
You are insured under the group policy identified on the application attached to
this certificate. The attached application is a part of this certificate. This
certificate summarizes the principal provisions of the group policy that affect
your life insurance coverage. The provisions summarized in this certificate are
subject in every respect to the group policy. You may examine the group policy
at the principal office of the policyholder during regular working hours.
We retain the right to amend this certificate at any time without your consent.
Any amendment will be without prejudice to any claim incurred for benefits prior
to the date of the amendment.
Any statement made in your application will, in the absence of fraud, be
considered representations and not warranties. Also, any statement made will not
be used to void this certificate nor defend against a claim unless the statement
is contained in your application.
This certificate is issued in consideration of your application and the payment
of the required premium contributions.
WHAT IS THE EFFECTIVE DATE OF YOUR INSURANCE?
Upon receipt of your application for insurance, the effective date of your
insurance will be the later of:
1. the date on which we approve your application; and
2. the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this
certificate.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
ACCOUNT VALUE
The sum of the values under the separate account, the guaranteed account and the
loan account of this certificate. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
ACTIVELY AT WORK
94-18671 Rev. 1-95 Minnesota Mutual 2
<PAGE>
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least _____ hours a week.
A person is not considered actively at work if not at work due to illness or
injury.
AGE
Your age at last birthday.
CERTIFICATE ANNIVERSARY
The same day in each succeeding year as the certificate date.
CERTIFICATE DATE
The first day of the calendar month on or following a certificate's effective
date of coverage. This is the date from which we determine monthly
anniversaries, certificate months and certificate years.
CERTIFICATE MONTH
A calendar month in which insurance is provided under this certificate.
CERTIFICATE YEAR
A period of twelve consecutive certificate months, measured from the
certificate date and each successive certificate anniversary, during which
coverage is provided under this certificate.
ELIGIBLE INSURED
You are an eligible insured if you:
1. are under age _____; and
2. were actively at work for each of the _____ weeks immediately prior to the
date your application for coverage under the group policy is approved by us;
and
3. are currently legally married to an individual defined as an eligible
insured under the terms of the group policy.
FACE AMOUNT
The minimum death benefit under this certificate so long as the insurance
coverage under this certificate remains in force.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
94-18671 Rev. 1-95 Minnesota Mutual 3
<PAGE>
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
GUARANTEED ACCOUNT VALUE
Assets other than the loan account value that are held in our general account
and attributable to a certificate issued under this policy, and others of its
class.
INSURED
An eligible insured who becomes insured under this certificate.
LAPSE
A lapse of this certificate means the insurance coverage under this certificate
has terminated due to non-payment of a premium during its grace period in an
amount that, after the deduction of percentage-of-premium charges, is sufficient
to cover the monthly deductions due at the time we provide notice of the lapse.
LOAN ACCOUNT
The portion of the general account which is attributable to loans under this
certificate.
LOAN ACCOUNT VALUE
The sum of all outstanding loans and accrued policy loan interest credited under
this certificate.
MATURITY DATE
The 95th birthday of the insured.
MONTHLY ANNIVERSARY
The same date in each succeeding month as the certificate date.
NET CASH VALUE
The account value under this certificate issued, less any outstanding policy
loans and accrued policy loan interest charged and any charges over due. It is
the amount you may obtain through surrender of this certificate.
NET PREMIUM
94-18671 Rev. 1-95 Minnesota Mutual 4
<PAGE>
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
OWNER
An owner of a certificate issued under the group policy.
POLICYHOLDER
The owner of the group policy, as identified on the specifications page attached
to this certificate.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net premiums
received for the certificate. The particular separate account for this
certificate is the Variable Universal Life Account. We established this
separate account for this class of policies under Minnesota Law. The separate
account is composed of several sub-accounts. We own the assets of the separate
account. However, those assets not in excess of separate account liabilities
are not subject to claims arising out of any other business in which we engage.
SEPARATE ACCOUNT VALUE
The sum of all sub-account values.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
The current number of sub-account units credited to your certificate multiplied
by the current sub-account unit value.
UNIT
A measure of the owner's interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
94-18671 Rev. 1-95 Minnesota Mutual 5
<PAGE>
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
YOU, YOUR
The owner of this certificate named on the application.
DEATH BENEFIT
- -------------
WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
This certificate of insurance provides for a variable death benefit, varying
with the amount of the net cash value of the certificate. The amount of the
death benefit will be determined as follows:
1. The face amount of insurance on the insured's date of death while this
certificate is in force; plus
2. the amount of the owner's account value as of the date we receive due
proof of death satisfactory to us; plus
3. the amount of the cost of insurance for the portion of the certificate
month from the date of death to the end of the certificate month; plus
4. any monthly deductions taken under the certificate since the date of
death; less
5. any outstanding policy loans and accrued policy loan interest charged;
less
6. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this
certificate.
We intend that this certificate qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right to
either increase the face amount of insurance on the life of the insured, return
any excess net cash value or limit the amount of premium contributions we will
accept under this certificate in order to maintain such qualification.
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF THE INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this certificate.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this certificate.
If an increase in the current face amount is applied for, we reserve the right
to require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced to
less than the amount shown on the specifications page attached to this
certificate. If following a decrease in face amount, this certificate would not
comply with the maximum premium limitations required by federal law, the
decrease may
94-18671 Rev. 1-95 Minnesota Mutual 6
<PAGE>
be limited or net cash value may be returned to the owner (at the
owner's election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly
anniversary on or following receipt by us of your written request. However, if
the owner requests that the decrease become effective on a specified future date
we will make the decrease effective on the monthly anniversary or next following
the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between the
policyholder and us.
WHEN WILL THE DEATH BENEFIT BE PAID?
We will pay interest on the face amount of insurance from the date of the
insured's death until the date of payment. We will pay interest on any charges
taken under this certificate since the date of death from the date the charge
was taken until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of 4 percent per year compounded annually, or the rate required by law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
PAYMENT OF PROCEEDS
- -------------------
TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified on
the application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
certificate ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no
beneficiary survives the insured or if a beneficiary is not named, we will pay
the proceeds according to the following order of priority:
1. the insured's lawful spouse, if living; otherwise;
2. the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has not
reserved the right to change the beneficiary,
94-18671 Rev. 1-95 Minnesota Mutual 7
<PAGE>
the written consent of the irrevocable beneficiary will be required. The owner's
written request will not be effective until it is recorded in our home office
records. After it has been so recorded, it will take effect as of the date the
owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
Each settlement option is paid in fixed amounts as described below. If the
owner of this certificate requests a settlement option, he or she will be asked
to sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
1. INTEREST PAYMENTS: Payment of interest on the proceeds at such times and for
a period as may be agreed upon between the owner of this certificate and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
3. LIFE ANNUITY: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount
until the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner or insured may provide that the beneficiary will not
be permitted to change the elected settlement option.
PREMIUMS
- --------
WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put this certificate in force. This initial premium
must be of an amount that, after the deduction of percentage-of-premium charges,
will cover the first month's deductions plus $20. A premium must also be paid at
such time when there is insufficient net cash value to pay
94-18671 Rev. 1-95 Minnesota Mutual 8
<PAGE>
the monthly deductions necessary to keep this certificate in force. Premiums
paid after the initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Yes. This certificate has a 61-day grace period. The grace period will start
on the day we mail the owner a notice of lapse. This certificate will lapse if
the premium amount specified in the notice is not paid by the end of the grace
period and the net cash value is insufficient to cover the monthly deductions.
We will mail this notice on any certificate monthly anniversary date when the
net cash value for the insured under this certificate is insufficient to cover
the monthly deductions. This certificate of insurance will remain in effect
during the 61-day grace period. If sufficient premium is not paid by the end of
the grace period, the insured's coverage will lapse. The grace period does not
apply to the first premium payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
The death benefit amount provided under this certificate will be paid if death
occurs during the grace period.
POLICY CHARGES
- --------------
WHAT TYPE OF CHARGES ARE THERE UNDER THIS CERTIFICATE?
Charges under this certificate are those which we assess against the premiums
and the account value under this certificate and the separate account assets
attributable to this certificate.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
1. The sales load is for distribution expenses for this class of certificates.
This sales load charge shall not exceed 5 percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal
income taxes that result from a sale of this certificate. The federal tax
charge is 1.25 percent of each premium paid if this certificate is deemed
to be an individual contract under the Omnibus Budget Reconciliation Act
of 1990, as amended, and 0.25 percent if deemed a group contract under
that Act.
3. The state premium tax charge is the average premium tax we pay to state
and local governments for this class of certificates. This charge is
currently 2 percent. The charge is not guaranteed and may be increased in
the future, but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS CERTIFICATE?
We assess as monthly deductions: (1) the administration charge; (2) the cost of
insurance charge; and (3) the charge for any additional benefits provided by
rider. We also will assess against the net cash value a transaction charge at
the end of the day on which the transaction occurs.
94-18671 Rev. 1-95 Minnesota Mutual 9
<PAGE>
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this certificate.
The maximum administration charge is $4 per month. This charge will be
assessed on the certificate date and on each succeeding monthly
anniversary.
2. The cost of insurance charge is for providing the death benefit under this
certificate. The charge is calculated by multiplying the net amount at
risk under this certificate by a rate which varies with the insured's age
and rate class. The rate is guaranteed not to exceed rates determined on
the basis of 125 percent of the 1980 Commissioners Standard Ordinary
Mortality Table. The net amount at risk for this certificate is the
difference between the death benefit and the account value. This charge
will be assessed on the certificate date and on each succeeding monthly
anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between
sub-accounts. The amount charged will not exceed $10. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this certificate. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value of each such sub-account bears to the separate account value.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this certificate. We also reserve the right to charge or make
provision for income taxes payable by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the group policy. The mortality
and expense risk charge is deducted from the separate account assets daily at an
annual rate not to exceed 0.50 percent of the separate account assets.
SEPARATE ACCOUNT
- ----------------
HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
94-18671 Rev. 1-95 Minnesota Mutual 10
<PAGE>
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of the group policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
certificate are listed on the specifications page attached to this certificate.
Net premiums will be allocated to the various sub-accounts of the separate
account or any other sub-accounts which we may add in the future, as elected by
the owner of this certificate. We reserve the right to add, combine or remove
any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the certificates of this class, we may substitute
another fund. Substitution may be with respect to both existing certificate
values and future premiums. The investment policy of the separate account may
not be changed, however, without the approval of the regulatory authorities of
the State of Minnesota. If required, that approval process will be on file with
the regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which the group policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this certificate, shall then mean the separate
account to which the assets are transferred. A transfer of this kind may
require the advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of
1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the sub-accounts
of the separate account. Initially, the allocation elected is indicated in the
application for this certificate. Allocations
94-18671 Rev. 1-95 Minnesota Mutual 11
<PAGE>
may be changed for future premiums. The owner may do this by giving us a written
request. A change will not take effect until it is recorded by us in our home
office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least 10 percent of the net premium. We reserve the right
to restrict the allocation of premium. If we do so, no more than 50 percent of
the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of this
certificate. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this period.
If we exercise this right, net premiums will be allocated to the money market
sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS CERTIFICATE?
Yes. Transfers from a sub-account of the separate account may be made in
writing or by telephone. For transfers out of the separate account or among
the sub-accounts of the separate account, we will credit and cancel units based
on the sub-account unit values as of the end of the valuation period during
which the owner's written or telephone request is received at our home office.
For transfers out of the guaranteed account, a dollar amount will be transferred
based on the owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this certificate each month. The
amount to be transferred to or from a sub-account of the separate account or
the guaranteed account must be at least $250. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less than
$250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the account
value in the sub-account from which the transfer is to be made to less than
$250, we reserve the right to include that remaining amount in the sub-account
with the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to 20 percent
(or $250 if greater) of the guaranteed account value. Transfers to or from the
guaranteed account may be limited to one such transfer per certificate year. We
may further restrict transfers by requiring that the request is received by us
or postmarked in the 30-day period before or after the last day of the
certificate anniversary. Requests for transfers which meet these conditions
would be effective after we approve and record them at our home office.
94-18671 Rev. 1-95 Minnesota Mutual 12
<PAGE>
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this certificate will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account under this certificate will be decreased by
deductions to that sub-account, policy loans and loan interest charged,
transfers from that sub-account and partial surrenders from that sub-account.
The number of sub-account units will decrease to zero on this certificate's
termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account. The value of a unit for each sub-account
was originally set at $1.00 on the first valuation date. For any subsequent
valuation date, its value is equal to its value on the preceding valuation date
multiplied by the net investment factor for that sub-account for the valuation
period ending on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such, less a deduction for the charges under this certificate which are
assessed against separate account assets. The gross investment rate is equal
to:
1. The net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
2. the per share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
- --------------
WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
94-18671 Rev. 1-95 Minnesota Mutual 13
<PAGE>
Yes. The owner has access to this certificate's net cash value. The net cash
value is the account value of this certificate, less any outstanding policy
loans and accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this certificate and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the certificate, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to a sub-account under an owner's
certificate will not be affected by changes in the unit value. However, the
number of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
certificate will be decreased by deductions to that sub-account, policy loans
and loan interest charged, transfers from that sub-account and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero on a certificate termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
IS INTEREST CREDITED ON THE GUARANTEED ACCOUNT VALUE?
Yes. Interest is credited on the guaranteed account value of each insured under
the group policy. Interest is credited daily at a rate of not less than 4
percent per year, compounded annually. We guarantee this minimum rate for the
life of the group policy.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
SURRENDERS AND WITHDRAWALS
- --------------------------
MAY THIS CERTIFICATE BE SURRENDERED?
Yes. The owner of this certificate may request the surrender of this
certificate at any time while the insured under this certificate is living.
WHAT IS THE SURRENDER VALUE OF THIS CERTIFICATE?
94-18671 Rev. 1-95 Minnesota Mutual 14
<PAGE>
The surrender value of this certificate is the net cash value.
The determination of the surrender value is made as of the end of the valuation
period during which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value under this
certificate. The amount of a partial surrender must be $500 or more and it
cannot exceed the amount available as a policy loan. A partial surrender has no
effect on the face amount of the death benefit. However, since the account
value is reduced by the amount of the partial surrender, the death benefit will
be reduced by this same amount at the time of the partial surrender. We reserve
the right to change the minimum amount or limit the number of times the owner
may make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the guaranteed
account. If the owner does not inform us of his or her choice, partial
surrenders will be deducted from the guaranteed account value and separate
account value in the same proportion that those values bear to each other and,
as to the separate account value , from each sub-account in the proportion that
the sub-account value of each such sub-account bears to the separate account
value.
HOW WILL THE OWNER KNOW THE STATUS OF A CERTIFICATE?
Each year we will send the owner of this certificate a report. This report will
show the status of this certificate. It will include the account value, the
face amount as of the date of the report, the premiums paid during the year and
their allocation, certificate charges, policy loan activity and the net cash
value. The report will be sent without cost to the owner. If the policyholder
owns all of the certificates, a consolidated report will be sent. The report
will be as of a date within two months of its mailing.
POLICY LOANS
- ------------
CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the request for a
loan. We will require the owner's written or telephone request for a policy
loan. The certificate will be the only security required for a loan. We will
charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN ON THIS CERTIFICATE?
94-18671 Rev. 1-95 Minnesota Mutual 15
<PAGE>
The total amount available for a loan under any certificate is (a) minus (b),
where (a) is 90 percent of the account value and (b) is any outstanding policy
loans plus accrued policy loan interest charged. The maximum loan amount will be
determined as of the date we receive the owner's written or telephone request
for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When a loan is taken on this certificate, we will reduce the net cash value of
this certificate by the amount borrowed. This determination will be made as of
the end of the valuation period during which the loan request is received at our
home office. The amount borrowed continues to be a part of the account value, as
the amount borrowed becomes part of the loan account value where it will accrue
loan interest credits and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON THIS CERTIFICATE?
Unless the owner directs us otherwise, the policy loan will be taken from this
certificate's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value of
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of this certificate may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount borrowed or in the interest due on the loan of
this certificate. If this certificate has a policy loan and no net cash value,
this certificate will lapse.
WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be 8 percent per year.
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the certificate month. If the total interest
accrued at the end of the certificate month is not paid, this interest will be
added to the loan amount borrowed and charged the same rate of interest as the
loan.
WHAT IS THE RATE OF INTEREST CREDITED TO THIS CERTIFICATE AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate not
less than 6 percent per year.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO THIS CERTIFICATE'S
GUARANTEED ACCOUNT VALUE?
Interest credits are allocated to the guaranteed account value at the time of a
loan repayment.
94-18671 Rev. 1-95 Minnesota Mutual 16
<PAGE>
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the certificate is in force. The loan may also be repaid within 60 days
after the date of the insured's death, if we have not paid any of the death
benefits under this certificate. Any loan repayment must be at least $100
unless the balance due is less than $100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
Loan repayments increase the net cash value of a certificate by the amount of
the loan repayment. The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON THIS CERTIFICATE IS NOT REPAID?
If this certificate has a policy loan, the certificate will remain in force so
long as it has net cash value. If it does not have sufficient cash value, it
will lapse.
In this event, to keep this certificate in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate this
certificate and the loan repayment required to keep it in force. The time for
repayment will be within 61 days after our mailing of the warning notice of
lapse.
TERMINATION
- -----------
WHEN DOES THE GROUP POLICY TERMINATE?
The policyholder may terminate this group policy by giving us 31 days prior
written notice. In addition, we may terminate the group policy or any of its
provisions on 61 days prior written notice. No individual may become insured
under the group policy after the effective date of such a notice of termination.
After termination of the group policy, this certificate may be allowed to
convert to individual coverage as described below under the "Conversion
Privilege" section.
WHEN DOES A CERTIFICATE OF INSURANCE UNDER THE GROUP POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1 61 days after we mail a warning notice of lapse on a certificate monthly
anniversary in which the net cash value is insufficient to pay for the monthly
deductions and no premium is paid during the grace period;
94-18671 Rev. 1-95 Minnesota Mutual 17
<PAGE>
2 the date the group policy terminates, if no conversion or continuation is
made effective;
3 the date an owner surrenders this certificate or requests that we terminate
the insurance;
4 the 95th birthday of the insured.
WILL THE OWNER OF THIS CERTIFICATE RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage-of-premium charges, is large enough to cover all monthly deductions
which have accrued on this certificate up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to three years from the
date of lapse.
CONVERSION PRIVILEGE
- --------------------
IS THERE A CONVERSION PRIVILEGE TO AN INDIVIDUAL POLICY?
Yes. If the life insurance provided by this certificate ceases because of
termination of employment or of membership in the class or classes eligible for
coverage under the group policy, or if the group policy terminates or is amended
so as to terminate the insurance, an owner under this certificate may convert
the insurance under this certificate to an individual policy of life insurance
with us subject to the following:
1. The owner's written application to convert to an individual policy and the
first premium for the individual policy must be received in our home office
within 31 days of the date the insurance terminates under the group policy.
2. The owner may convert all or a part of the group insurance in effect on the
date that his or her coverage is terminated to an individual life insurance
policy offered by us, except a policy of term insurance. We will issue the
individual policy on the policy forms we then use for the plan of insurance
the owner has requested. The premium charge for this insurance will be based
upon the insured's age as of his or her nearest birthday.
3. If the insured should die within 31 days of the date that insurance
terminated under the group policy, the full amount of insurance that could
have been converted under this policy will be paid.
In the case of the termination of the group policy, we may require that an
insured under this certificate be so insured for at least five years prior to
the termination date in order to qualify for the above conversion privilege.
94-18671 Rev. 1-95 Minnesota Mutual 18
<PAGE>
CAN GROUP INSURANCE COVERAGE BE CONTINUED ONCE THE OWNER'S ELIGIBILITY ENDS?
If the owner's eligibility under the group policy ends, the current group
coverage may continue unless the certificate is no longer in force or the
limitations below are true:
1. The group policy has terminated; or
2. There is less than $10 in the certificate's net cash value after deduction
of charges for the month in which eligibility ends.
The insurance amount will not change unless the owner requests a change. We
reserve the right to alter the administration fee not to exceed $4 per month and
the monthly cost of insurance up to the maximum in Table A if the insurance is
continued.
ADDITIONAL INFORMATION
- ----------------------
WILL THIS CERTIFICATE RECEIVE DIVIDENDS?
Each year we will determine if this certificate and other certificates of its
class will share in our divisible surplus.
Dividends, if received, will be added to the account value of this certificate,
or if elected by the owner, the dividends may be paid in cash. A dividend
applied to the account value will be allocated to the guaranteed account value
or the sub-accounts of the separate account in accordance with the owner's
current instructions for the allocation of net premiums. In the absence of such
instructions, dividends will be allocated to the guaranteed account and the
separate account in the same proportion as those values bear to each other, and
as to the separate account value, to each sub-account in the proportion that the
sub-account value of each such sub-account bears to the separate account value.
MAY THE OWNER ASSIGN ANY INTEREST UNDER THIS CERTIFICATE?
Yes. However, we will not be bound by an assignment of this certificate or of
any interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
94-18671 Rev. 1-95 Minnesota Mutual 19
<PAGE>
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the certificate date, we cannot contest the insurance for any
loss that is incurred more than two years after the certificate date, unless the
net cash value has dropped below the amount necessary to pay the insured's cost
of insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then, to
the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
IS THERE A SUICIDE EXCLUSION?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the certificate date, our liability will be limited to an amount equal to the
premiums paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the effective date of the increase,
our liability with respect to that increase will be limited to the cost of
insurance charge attributable to such increase.
If the insured is a Missouri citizen when the certificate of insurance becomes
effective, this provision does not apply on the certificate's effective date, or
on the effective date of any increase in the face amount of insurance, unless
the insured intended suicide when the certificate of insurance, or any increase,
was applied for.
If the insured is a citizen of Colorado or North Dakota, the duration of this
suicide provision is for one year instead of two years.
DOES THE OWNER HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If the owner has separate account units under this certificate, the owner
may direct us with respect to the voting rights of fund shares held by us and
attributable to this certificate.
COULD THE PAYMENT OF CERTIFICATE PROCEEDS BE POSTPONED?
Normally, we will pay any certificate proceeds within seven days after our
receipt of all the documents required for such a payment. Other than the death
proceeds, which are determined as of the date of death of the insured, the
amount of payment will be determined as of the end of the
94-18671 Rev. 1-95 Minnesota Mutual 20
<PAGE>
valuation period during which a request is received at our home office. If such
payments are based upon certificate values which do not depend on the investment
performance of the separate account, however, we reserve the right to defer
certificate payments, including certificate loans, for up to six months from the
date of the owner's request. In that case, if we postpone a payment other than
a policy loan payment for more than 31 days, we will pay the owner interest at
the greater of 4 percent per year or the rate required by law for the period
beyond that time that payment is postponed. For payments based on account
values which do depend on the investment performance of the separate account, we
may defer payment only: (a) for any period during which the New York Stock
Exchange is closed for trading (except for normal holiday closing); or (b) when
the Securities and Exchange Commission has determined that a state of emergency
exists which may make such payment impractical.
WILL THE PROVISIONS OF THIS CERTIFICATE CONFORM WITH STATE LAW?
Yes. If any provision in this certificate is in conflict with the laws of the
state governing the certificate, the provision will be deemed to be amended to
conform to such laws.
COULD ANY PAYMENTS MADE UNDER THIS CERTIFICATE BE SUBJECT TO CLAIMS OF
CREDITORS?
To the extent permitted by law, neither the group policy, certificates issued
under the group policy, nor any payment thereunder will be subject to the claims
of creditors or to any legal process.
WHO HAS OWNERSHIP OF THE GROUP POLICY?
The policyholder owns the group policy. The group policy may be changed or
ended by agreement between us and the policyholder without the consent of, or
notice to, any person claiming rights or benefits under the policy. However,
unless the policyholder is the owner of all the certificates issued under the
group policy, the policyholder does not have any ownership interest in the
certificates issued under the group policy. The rights and benefits under the
certificates are that of the owners of the certificates, and that of the
insureds and beneficiaries as set forth in this certificate.
ARE POLICY CHANGES LIMITED?
Currently, the frequency of policy changes are not limited. However, we reserve
the right to limit the number of policy changes to one per certificate year and
to restrict such changes in the first certificate year. For this purpose,
changes include increases or decreases in the face amount of insurance.
94-18671 Rev. 1-95 Minnesota Mutual 21
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A SMOKER DISTINCT BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
---- ---- ---- ---- ---- ----
NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18671 Rev. 1-95 Minnesota Mutual 22
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A UNI-SMOKER BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
---- ---- ---- ---- ---- ----
UNI-SMOKERS UNI-SMOKERS UNI-SMOKERS
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18671 Rev. 1-95 Minnesota Mutual 23
<PAGE>
Minnesota Mutual
400 Robert Street North . St. Paul, Minnesota 55101-2098
VARIABLE UNIVERSAL LIFE INSURANCE . VARIABLE DEATH BENEFIT
<PAGE>
================================================================================
MINNESOTA MUTUAL CERTIFICATE SUPPLEMENT (WAIVER AGREEMENT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company 400 Robert Street North St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This is issued in consideration of your application and the timely payment of
the additional required premium. The provisions summarized in this supplement
are subject in every respect to the group policy and amendments thereto.
WHAT DOES THE WAIVER OF DEDUCTION BENEFIT PROVIDE?
If you become totally and permanently disabled, as hereinafter defined, while
under age 60, upon receipt of due proof of such disability, your insurance
(including all applicable riders) under the group policy will be continued in
force, subject to the following provisions and without payment of premiums for
you during the uninterrupted continuance of such total and permanent disability.
WHAT IS "TOTAL" DISABILITY?
Total disability is a disability which occurs while your insurance is in force
and results from an accidental injury or a disease that continuously prevents
you from engaging in an occupation. You must be under the care of a licensed
physician other than yourself. During the first 24 months of total disability,
"occupation" means your regular occupation. After 24 months, it means any
occupation for which you are reasonably fitted by education, training or
experience.
Your total and irrevocable loss of the following shall be considered total
disability even if you engage in an occupation:
1. the sight of both eyes; or
2. the use of both hands; or
3. the use of both feet; or
4. the use of one hand and one foot.
WHAT IS "PERMANENT" DISABILITY?
Total disability will be considered permanent only after it has exited
continuously for at least six months.
HOW LONG WILL INSURANCE BE CONTINUED?
If you become totally and permanently disabled, insurance will be continued;
1. until your 95th birthday; or
2. until the date you are no longer totally and permanently disabled; or
3. until the date you terminate or surrender your insurance;
94-18676 Minnesota Mutual 1
<PAGE>
whichever occurs first.
WHAT WILL BE CONSIDERED DUE PROOF OF DISABILITY?
You must furnish evidence satisfactory to us that your total disability:
1. commenced while insurance on your life under the group policy was in force;
and
2. commenced before your 60th birthday; and
3. was continuous for six months or more.
We will, from time to time, also require additional proof satisfactory to us
that you continue to be totally and permanently disabled. We may also required
you to submit to one or more medical examinations at our expense. However, we
will not require a medical examination of you more frequently than once a year
if the total disability has continued for two years.
ARE THERE ANY LIMITATIONS?
This benefit will not be effective if your total disability results directly
from intentionally self-inflicted injuries or from an act of war while you are
serving in the military, naval or air forces of any country at war, declared or
undeclared.
WHEN MUST WE BE NOTIFIED?
We must receive written notice of your total disability at our home office:
1. while you are living and totally disabled; and
2. not later than one year after the termination of your insurance under the
group policy; and
3. within one year of the date you request as the date for the commencement of
this benefit.
However, the failure to give this notice within the time provided will not
invalidate the claim if it is shown that notice was given as soon as reasonably
possible.
WHAT IS YOUR COST FOR THIS BENEFIT?
Your cost for this benefit is shown on the specifications page attached to your
certificate.
WHAT IF YOU INSURANCE UNDER THE GROUP POLICY LAPSES?
If your insurance lapses before notice of your total and permanent disability is
received at our home office, your insurance will be continued only if the notice
is received within one year after your insurance lapses. Also, the total
disability must have commenced prior to the date the net cash value became zero
or during the grace period allowed.
WHEN IS THE BENEFIT UNDER THIS AGREEMENT INCONTESTABLE?
This agreement is subject to the incontestability provision of the group policy
for each insured.
CAN INSURANCE THAT WAS CONTINUED UNDER THIS AGREEMENT BE CONVERTED?
94-18676 Minnesota Mutual 2
<PAGE>
Yes. Insurance under the group policy may be converted as set forth in your
certificate during the insured's lifetime and within 31 days after the insured
ceases to be totally and permanently disabled.
IS THIS BENEFIT RETROACTIVE?
Yes. The cost of insurance, cost of riders, and administration fees falling due
before we approve the insured's total disability claim will be deducted from
your account value. If the claim is approved, those charges which were deducted
after the insured became totally and permanently disabled will be credited to
your account value.
WILL YOUR ACCOUNT BE CREDITED WITH PREMIUM CONTRIBUTIONS AS A RESULT OF THIS
BENEFIT?
No. Except for interest which accrues on the account value, the account value
will not increase whole insurance is being continued under this agreement.
Nothing contained herein will prohibit you from paying premiums.
This agreement is effective as of the policy date.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18676 Minnesota Mutual 3
<PAGE>
EX.99A5H
================================================================================
MINNESOTA MUTUAL CERTIFICATE SUPPLEMENT (CHILDREN'S BENEFIT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This supplement is issued in consideration for your application for children's
coverage and for the payment of the additional monthly charge. The provisions
summarized in this supplement are subject to every term, condition, exclusion,
limitation and provision of the group policy as amended, unless otherwise
expressly provided for herein.
WHAT DOES THIS SUPPLEMENT PROVIDE?
This supplement provides life insurance on the lives of your eligible children.
WHAT MEMBERS OF YOUR FAMILY ARE ELIGIBLE FOR CHILDREN'S COVERAGE?
The following members of your family are eligible for insurance under this
supplement:
Your unmarried child or children, including stepchildren living in your
household and children legally adopted, who
(i) are between the ages of 14 days and 23 years; and
(ii) are dependent upon you for financial support.
Any child who, subsequent to your certificate effective date, meets the
requirements of this provision will become insured on the date he or she so
qualifies.
DEATH BENEFIT
- -------------
WHAT IS THE AMOUNT OF LIFE INSURANCE ON EACH INSURED CHILD?
The amount of life insurance on each insured child is shown on the
specifications page attached to your certificate.
WHEN WILL THE DEATH BENEFIT BE PAYABLE?
We will pay the death benefit upon receipt of written proof satisfactory to us
that a child insured under this supplement died. All payments by us are payable
at our home office. Proof of any claim under this supplement must be submitted
in writing to our home office.
TO WHOM WILL WE PAY THE PROCEEDS?
All proceeds payable under this supplement will be paid to you.
94-18679 Minnesota Mutual 1
<PAGE>
ADDITIONAL INFORMATION
- ----------------------
WHEN DOES INSURANCE ON YOUR ELIGIBLE CHILDREN BECOME EFFECTIVE?
Insurance on your eligible children becomes effective when your completed
application for children's coverage is approved by us; however, in no event will
insurance on your eligible children be effective before your insurance under the
group policy is effective.
WHAT IS THE MONTHLY COST TO YOU FOR INSURANCE UNDER THIS SUPPLEMENT?
The monthly cost to you for insurance under this supplement is shown on the
specifications page attached to your certificate.
WHEN WILL YOUR ACCOUNT BE CHARGED?
On the first day of each certificate month, the monthly cost for insurance under
this supplement will be charged to your account.
WHEN DOES INSURANCE ON AN INSURED CHILD TERMINATE?
Insurance on the life of a child insured under this supplement will terminate on
the earliest of:
(1) the date you request that insurance on your eligible children be
terminated:
(2) the date the child is no longer eligible for insurance under this
supplement;
(3) the date you are no longer insured under the group policy.
WILL ACCOUNT VALUES ACCUMULATE FOR AN INSURED CHILD?
No. The insurance on an insured child will not accumulate account values.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18679 Minnesota Mutual 2
<PAGE>
================================================================================
EX99.A5I
MINNESOTA MUTUAL CERTIFICATE SUPPLEMENT
(ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This supplement is issued in consideration for your application for accidental
death and dismemberment coverage and for the payment of the additional monthly
charge. The provisions summarized in this supplement are subject to every term,
condition, exclusion, limitation and provision of the group policy as amended,
unless otherwise expressly provided for herein.
WHAT DOES THIS SUPPLEMENT PROVIDE?
This supplement provides an accidental death and dismemberment benefit which is
subject to all of the provisions of the group policy and this supplement.
"You" as used in this supplement, means the insured person named on the
specifications page attached to your certificate who applied for accidental
death and dismemberment insurance.
ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT
- ------------------------------------------
WHEN WILL THE ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT BE PAYABLE?
We will pay the accidental death and dismemberment benefit upon receipt of
written proof satisfactory to us that you died or suffered dismemberment as a
result of an accidental injury. All payments by us are payable at our home
office. Proof of any claim under this supplement must be submitted in writing to
our home office.
The proceeds will be paid in a single sum. We will pay interest on the proceeds
from the date of your death or dismemberment until the date of payment. Interest
will be at an annual rate determined by us.
WHAT DOES DEATH OR DISMEMBERMENT BY ACCIDENTAL INJURY MEAN?
Death or dismemberment by accidental injury as used in this supplement means
that your death or dismemberment results, directly and independently of all
other causes, from an accidental drowning or from an accidental injury which was
unintended, unexpected, and unforeseen. The injury must occur while your
coverage under this supplement is in force. Your death or dismemberment must
occur within 180 days after the date of the injury. In no event will we pay the
accidental death or dismemberment benefit where your death or dismemberment
results from or is caused, directly or indirectly, by any of the following:
(1) suicide whether sane or insane;
(2) your commission of a felony;
94-18680 Minnesota Mutual 1
<PAGE>
(3) bodily or mental infirmity, illness or disease;
(4) drugs, poisons, gases or fumes, voluntarily taken, administered, absorbed,
inhaled, ingested or injected, unless administered on the advice of a
physician;
(5) bacterial infection, other than infection occurring simultaneously with,
and as a result of, the accidental injury;
(6) travel or flight in or on, or descent from or with, any kind of military
aircraft;
(7) war or any act of war whether declared or undeclared.
WHAT IS THE AMOUNT OF THE ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT?
The amount of your benefit is as listed below.
Life....................................................Face Amount of Insurance
Both Hands or Both Feet or Sight of Both Eyes...........Face Amount of Insurance
One Hand and One Foot...................................Face Amount of Insurance
One Foot and Sight of One Eye...........................Face Amount of Insurance
One Hand and Sight of One Eye...........................Face Amount of Insurance
Sight of One Eye............................One-half of Face Amount of Insurance
One Hand or One Foot........................One-half of Face amount of Insurance
Your Face Amount of Insurance is shown on the specifications page attached to
your certificate. Loss of hands or feet means complete severance at or above the
wrists or ankle joints. Loss of sight means the entire and irrecoverable loss of
sight. Your dismemberment must result from a single accident. Benefits are not
cumulative over successive accidents.
TO WHOM WILL WE PAY THE PROCEEDS?
We will pay death proceeds to the beneficiary or beneficiaries who are named in
your application unless you subsequently change the beneficiary. In that event,
we will pay death proceeds to the beneficiary named in your last change of
beneficiary request. Proceeds for other losses shall be paid to you.
ADDITIONAL INFORMATION
- ----------------------
WHEN DOES INSURANCE UNDER THIS SUPPLEMENT BECOME EFFECTIVE? Insurance under this
supplement becomes effective when your completed application for accidental
death and dismemberment coverage is approved by us and the first premium is
paid; however, in no event will insurance provided by this supplement be
effective before your certificate effective date as shown on the specifications
page attached to your certificate.
WHAT IS THE MONTHLY COST TO YOU FOR INSURANCE UNDER THIS SUPPLEMENT?
94-18680 Minnesota Mutual 2
<PAGE>
The monthly cost to you for insurance under this supplement is shown on the
specifications page attached to your certificate.
WHEN WILL YOUR ACCOUNT BE CHARGED?
On the first day of each certificate month, the monthly cost for insurance under
this supplement will be charged to your account.
WHEN DOES INSURANCE UNDER THIS SUPPLEMENT TERMINATE?
Insurance under this supplement will automatically end on the earliest of the
following dates:
(1) when any premium remains unpaid after the end of the grace period; or
(2) when the group policy is surrendered, matures or ends; or
(3) on the last day for which premiums have been paid following your notice
of termination of coverage provided by this supplement; or
(4) on your 70th birthday; or
(5) when we pay a claim to you under this rider.
WHEN IS THE BENEFIT UNDER THIS SUPPLEMENT INCONTESTABLE?
Coverage provided by this supplement is subject to the incontestability
provision of the group policy.
WILL ACCOUNT VALUES ACCUMULATE UNDER THIS SUPPLEMENT?
No. Your insurance under this supplement will not accumulate account values.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18680 Minnesota Mutual 3
<PAGE>
================================================================================
MINNESOTA MUTUAL ACCELERATED BENEFITS AGREEMENT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company 400 Robert Street North St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This agreement amends the group policy to which it is attached and is subject to
all its terms and conditions.
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement provides for the accelerated payment of the death benefits
provided under the group policy.
If the insured has a terminal condition, as defined in this agreement, the
insured may request an accelerated benefit. If we agree to pay an accelerated
benefit, the cash values, loan values and the death benefit under the insured's
certificate will be reduced.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
DEATH BENEFIT
The face amount of the insured's certificate less any existing loans or
indebtedness under the certificate and less any term insurance provided by an
additional benefit agreement.
ACCELERATED BENEFIT
The amount of the death benefit we will pay if the insured is eligible under
this agreement. We will calculate the accelerated benefit amount by multiplying
the death benefit by the accelerated benefit factor.
PHYSICIAN
An individual who is licensed to practice medicine or treat illness in the state
in which treatment is received. This does not include the insured, or a member
of the insured's immediate family.
IMMEDIATE FAMILY
The insured's spouse, child, parent, grandparent, grandchild, brothers and
sisters and their spouses.
TERMINAL CONDITION
- ------------------
WHAT IS A TERMINAL CONDITION?
94-18677 Minnesota Mutual 1
<PAGE>
A condition caused by sickness or accident which directly results in a life
expectancy of twelve months or less.
WHAT EVIDENCE DO WE REQUIRE OF THE INSURED'S TERMINAL CONDITION?
We must be given evidence that satisfies us that the insured's life expectancy,
because of sickness or accident, is twelve months or less. That evidence must
include certification by a licensed physician. We reserve the right to ask for
independent medical verification of a terminal condition.
PAYMENT OF ACCELERATED BENEFIT
- ------------------------------
HOW DO WE CALCULATE THE ACCELERATED BENEFIT FACTOR?
When we calculate this factor, we will consider the insured's age and sex, and
the option applied for. We will also base our calculation on certain
assumptions, which we may change from time to time, including but not limited to
assumptions about:
1. expected future premiums;
2. future dividends at the scale in effect when we make our calculation;
3. the insured's life expectancy.
HOW DO WE CALCULATE THE ACCELERATED BENEFIT?
We will multiply the death benefit by the accelerated benefit factor to
determine the accelerated benefit available.
IS THERE A PROCESSING CHARGE?
Yes. We will subtract a processing charge of up to $150 from the accelerated
benefit before we pay that benefit.
WHAT ARE THE CONDITIONS FOR THE PAYMENT OF AN ACCELERATED BENEFIT?
We will consider the payment of an accelerated benefit, subject to all of the
following conditions:
1. Coverage must be in force other than as extended term insurance and all
premiums due must be fully paid.
2. Application must be made in writing and in a form which is satisfactory to
us. We will tell an applicant what form is required.
3. The certificate must not be assigned.
4. The certificate must not have an irrevocable beneficiary.
IS THE REQUEST FOR AN ACCELERATED BENEFIT VOLUNTARY?
Yes. An accelerated benefit under this agreement is not intended to cause the
insured to involuntarily reduce the death proceeds ultimately payable to the
named beneficiary. An accelerated benefit will be made available on a voluntary
basis only. Therefore:
94-18677 Minnesota Mutual 2
<PAGE>
1. If an insured is required by law to use this option to meet the claims of
creditors, whether in bankruptcy or otherwise, the insured is not eligible
for this benefit.
2. If an insured is required by a government agency to use this option in order
to apply for, obtain, or keep a government benefit or entitlement, the
insured is not eligible for this benefit.
HOW WILL WE PAY THE ACCELERATED BENEFIT?
We will pay the accelerated benefit in one lump sum or in any other mutually
agreeable manner.
IS THERE A MINIMUM OR MAXIMUM DEATH BENEFIT FOR AN ACCELERATED BENEFIT?
Yes. We reserve the right to set a minimum death benefit to be eligible for an
accelerated benefit under this agreement. If we do so, it will be at least
$10,000.
The maximum death benefit to be eligible for an accelerated benefit is
$1,000,000.
WHAT IS THE EFFECT ON AN INSURED'S COVERAGE OF THE RECEIPT OF AN ACCELERATED
BENEFIT?
If an insured elects to receive accelerated benefits which total the entire
accelerated benefit available under this agreement, the insured's coverage and
all other benefits under the certificate based on the insured's life will end.
Any insurance under an insurd's certificate on the life of someone other than
the insured will stay in effect; we will waive all future premiums for that
insurance, subject to all applicable provisions of the insured's coverage and of
any riders thereto.
DOES AN INSURED HAVE TO TAKE THE ENTIRE ACCELERATED BENEFIT?
No. The insured may choose to receive a partial accelerated benefit. If he or
she does so, the insured's remaining coverage will stay in force.
The insured may reapply or the payment of the remaining accelerated benefit at
any time. However, we may ask for further satisfactory evidence that the insured
meets all requirements for the accelerated benefit. We reserve the right to
charge an additional processing charge.
If a partial accelerated benefit is chosen, coverage will remain in force and
premiums will be reduced. The face amount, cash values and outstanding loans
under the certificate will be reduced. The face amount, cash value and
outstanding loans under the certificate will be reduced in the same proportion
as the reduction in the death benefit resulting from receipt of accelerated
benefits.
If an insured elects to receive only a part of the accelerated benefit amount
available under this agreement, the remaining death benefit under the
certificate must be at least $25,000.
TO WHOM WILL WE PAY ACCELERATED BENEFITS?
All accelerated benefits will be paid to the insured unless the insured validly
assign them otherwise. If the insured dies before all payments have been made,
we will pay the remainder to
94-18677 Minnesota Mutual 3
<PAGE>
the beneficiary under the certificate in one lump sum. The one sum we pay will
be the present value of the payments that remain, using the interest rate we use
to determine the payments.
DO WE HAVE THE RIGHT TO OBTAIN INDEPENDENT MEDICAL VERIFICATION?
Yes. We retain the right to have the insured medically examined at our own
expense to verify the insured's medical condition. We may do this as often as
reasonably required while accelerated benefits are being considered or paid.
TERMINATION OF AGREEMENT
- -------------------------
WHEN DOES THIS AGREEMENT TERMINATE?
This agreement will end at the earliest of:
1. the date any premium due under the insured's certificate remains unpaid at
the end of the grace period; or
2. the date we receive written request to cancel this agreement; or
3. the date an insured's certificate matures, is surrendered, terminated or
continued in force as extended term or reduced paid-up insurance; or
4. the date of the insured's death; or
5. when the group policy is surrendered, matures or ends.
This agreement is effective as of the effective date shown on the specifications
page attached to the insured's certificate.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18677 Minnesota Mutual 4
<PAGE>
================================================================================
EX99.A5K
MINNESOTA MUTUAL CERTIFICATE SUPPLEMENT
ACCELERATED BENEFITS AGREEMENT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Life Company.400 Robert Street North.
St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This certificate supplement amends the certificate to which it is attached and
is subject to all its terms and conditions.
WHAT DOES THIS CERTIFICATE SUPPLEMENT PROVIDE?
This certificate supplement provides for the accelerated payment of the death
benefits provided under the certificate to which it is attached.
If the insured has a terminal condition, as defined in this agreement, the
insured may request an accelerated benefit. If we agree to pay an accelerated
benefit, your cash values, loan values and the death benefit under your
certificate will be reduced.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
DEATH BENEFIT
The face amount of the insured's certificate less any existing loans or
indebtedness under the certificate and less any term insurance provided by an
additional benefit agreement.
ACCELERATED BENEFIT
The amount of the death benefit we will pay if you are eligible under this
certificate supplement. We will calculate the accelerated benefit amount by
multiplying the death benefit by the accelerated benefit factor.
PHYSICIAN
An individual who is licensed to practice medicine or treat illness in the state
in which treatment is received. This does not include you, the insured, or a
member of your or the insured's immediate family.
IMMEDIATE FAMILY
The insured's or your spouse, child, parent, grandparent, grandchild, brothers
and sisters and their spouses.
TERMINAL CONDITION
- ------------------
94-18678 Minnesota Mutual 1
<PAGE>
WHAT IS A TERMINAL CONDITION?
A condition caused by sickness or accident which directly results in a life
expectancy of twelve months or less.
WHAT EVIDENCE DO WE REQUIRE OF THE INSURED'S TERMINAL CONDITION?
We must be given evidence that satisfies us that the insured's life expectancy,
because of sickness or accident, is twelve months or less. That evidence must
include certification by a licensed physician. We reserve the right to ask for
independent medical verification of a terminal condition.
PAYMENT OF ACCELERATED BENEFIT
- ------------------------------
HOW DO WE CALCULATE THE ACCELERATED BENEFIT FACTOR?
When we calculate this factor, we will consider the insured's age and sex, and
the option applied for. We will also base our calculation on certain
assumptions, which we may change from time to time, including but not limited to
assumptions about:
(1) expected future premiums;
(2) future dividends at the scale in effect when we make our calculation;
(3) the insured's life expectancy.
HOW DO WE CALCULATE THE ACCELERATED BENEFIT?
We will multiply the death benefit by the accelerated benefit factor to
determine the accelerated benefit available.
IS THERE A PROCESSING CHARGE?
Yes. We will subtract a processing charge of up to $150 from the accelerated
benefit before we pay that benefit to you.
WHAT ARE THE CONDITIONS FOR THE PAYMENT OF AN ACCELERATED BENEFIT?
We will consider the payment of an accelerated benefit, subject to all of the
following conditions:
(1) Your certificate must be in force other than as extended term insurance
and all premiums due must be fully paid.
(2) You must make application in writing and in a form which is satisfactory
to us. We will tell you what form is required.
(3) The certificate must not be assigned.
(4) The certificate must not have an irrevocable beneficiary.
IS THE REQUEST FOR AN ACCELERATED BENEFIT VOLUNTARY?
94-18678 Minnesota Mutual 2
<PAGE>
Yes. An accelerated benefit under this certificate supplement is not intended to
cause you to involuntarily reduce the death proceeds ultimately payable to the
named beneficiary. An accelerated benefit will be made available on a voluntary
basis only. Therefore:
(1) If you are required by law to use this option to meet the claims of
creditor, whether in bankruptcy or otherwise, you are not eligible for
this benefit.
(2) If you are required by a government agency to use this option in order to
apply for, obtain, or keep a government benefit or entitlement, you are
not eligible for this benefit.
HOW WILL WE PAY THE ACCELERATED BENEFIT?
We will pay the accelerated benefit in one lump sum or in any other mutually
agreeable manner.
IS THERE A MINIMUM OR MAXIMUM DEATH BENEFIT FOR AN ACCELERATED BENEFIT?
Yes. We reserve the right to set a minimum death benefit to be eligible for an
accelerated benefit under this certificate supplement. If we do so, it will be
at least $1,000.
The maximum death benefit to be eligible for an accelerated benefit is
$1,000,000.
WHAT IS THE EFFECT ON YOUR CERTIFICATE OF THE RECEIPT OF AN ACCELERATED BENEFIT?
If an insured elects to receive accelerated benefits which total the entire
accelerated benefit available under this certificate supplement, your
certificate and all other benefits under your certificate based on the
insured's life will end. Any insurance under your certificate on the life of
someone other than the insured will stay in effect; we will waive all future
premiums for that insurance, subject to the provision of your certificate and of
any riders thereto.
DO YOU HAVE TO TAKE THE ENTIRE ACCELERATED BENEFIT?
No. You may choose to receive a partial accelerated benefit. If you do so, your
certificate will stay in force.
You may reapply for the payment of the remaining accelerated benefit at any
time. However, we may ask for further satisfactory evidence that the insured
meets all requirements for the accelerated benefit. We reserve the right to
charge an additional processing charge.
If you choose a partial accelerated benefit, your certificate will remain in
force and premiums will be reduced. The face amount, cash values and outstanding
loans of your certificate will be reduced in the same proportion as the
reduction in the death benefit resulting from your receipt of accelerated
benefits.
If you elect to receive only a part of the accelerated benefit amount available
to you under this certificate supplement, the remaining death benefit under your
certificate must be at least $25,000.
TO WHOM WILL WE PAY ACCELERATED BENEFITS?
94-18678 Minnesota Mutual 3
<PAGE>
All accelerated benefits will be paid to you unless you validly assign them
otherwise. If the insured dies before all payments have been made, we will pay
the remainder to the beneficiary under the certificate in one lump sum. The one
sum we pay will be the present value of the payments that remain, using the
interest rate we use to determine the payments.
DO WE HAVE THE RIGHT TO OBTAIN INDEPENDENT MEDICAL VERIFICATION?
Yes. We retain the right to have the insured medically examined at our own
expense to verify the insured's medical condition. We may do this as often as
reasonably required while accelerated benefits are being considered or paid.
TERMINATION OF AGREEMENT
- ------------------------
WHEN DOES THIS AGREEMENT TERMINATE?
This agreement will end at the earliest of:
(1) the date any premium due for your certificate remains unpaid at the end of
the grace period; or
(2) the date we receive written request to cancel this certificate supplement;
or
(3) the date your certificate matures, is surrendered, terminated or
continued in force as extended term or reduced paid-up insurance; or
(4) the date of the insured's death; or
(5) when the group policy is surrendered, matures or ends.
This certificate supplement is effective as of the effective date on the
specifications page attached to your certificate.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18678 Minnesota Mutual 4
<PAGE>
================================================================================
EX99.A5L
MINNESOTA MUTUAL POLICY RIDER CHILDREN'S BENEFIT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This rider amends the group policy to which it is attached, and is subject to
every term, condition, exclusion, limitation and provision of the group policy
unless otherwise expressly provided for herein.
WHAT IS THE PURPOSE OF THIS RIDER?
This rider provides life insurance on the lives of the primary insured's
eligible children. To obtain children's coverage under this rider, the
primary insured must apply for children's coverage and pay an additional monthly
charge.
WHAT MEMBERS OF THE PRIMARY INSURED'S FAMILY ARE ELIGIBLE FOR CHILDREN'S
COVERAGE?
The following members of the primary insured's family are eligible for insurance
under this rider:
The primary insured's unmarried child or children, including stepchildren living
in his or her household and children legally adopted, who
(i) are between the ages of 14 days and 23 years; and
(ii) are dependent upon the primary insured for financial support.
Any child who, subsequent to the primary insured's certificate effective date,
meets the requirements of this provision will become insured on the date he or
she so qualifies.
DEATH BENEFIT
- -------------
WHAT IS THE AMOUNT OF LIFE INSURANCE ON EACH INSURED CHILD?
The amount of life insurance on each insured child is shown on the
specifications page attached to the primary insured's certificate.
WHEN WILL THE DEATH BENEFIT BE PAYABLE?
We will pay the death benefit upon receipt of written proof satisfactory to us
that a child insured under the rider died. All payments by us are payable at our
home office. Proof of any claim under this rider must be submitted in writing to
our home office.
TO WHOM WILL WE PAY THE PROCEEDS?
All proceeds payable under this rider will be paid to the primary insured.
94-18681 Minnesota Mutual 1
<PAGE>
ADDITIONAL INFORMATION
- -----------------------
WHEN DOES INSURANCE ON THE PRIMARY INSURED'S ELIGIBLE CHILDREN BECOME EFFECTIVE?
Insurance on the primary insured's eligible children becomes effective when the
primary insured's completed application for children's coverage is approved by
us; however, in no event will insurance on the primary insured's eligible
children be effective before the primary insured's insurance under the group
policy is effective.
WHAT IS THE MONTHLY COST TO THE PRIMARY INSURED FOR INSURANCE UNDER THIS RIDER?
The monthly cost to the primary insured for insurance under this rider is shown
on the specifications page attached to the insured's certificate.
WHEN WILL THE PRIMARY INSURED'S ACCOUNT BE CHARGED?
On the first day of each certificate month, the monthly cost for insurance under
this rider will be charged to the primary insured's account.
WHEN DOES INSURANCE ON AN ELIGIBLE CHILD TERMINATE?
Insurance on the life of a child insured under this rider will terminate on the
earliest of:
1. the date the primary insured requests that insurance on his or her eligible
children be terminated;
2. the date the child is no longer eligible for insurance under this rider;
3. the date the primary insured is no longer insured under the group policy.
WILL ACCOUNT VALUES ACCUMULATE FOR AN INSURED CHILD?
No. The insurance on an insured child will not accumulate account values.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18681 Minnesota Mutual 2
<PAGE>
================================================================================
EX99.A5M
MINNESOTA MUTUAL POLICY RIDER
ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This rider amends the group policy to which it is attached, and is subject to
every term, condition, exclusion, limitation and provision of the group policy
unless otherwise expressly provided for herein.
WHAT DOES THIS RIDER PROVIDE?
This rider provides an accidental death and dismemberment benefit which is
subject to all of the provisions of the group policy and this rider.
ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT
- ------------------------------------------
WHEN WILL THE ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT BE PAYABLE?
We will pay the accidental death and dismemberment benefit upon receipt of
written proof satisfactory to us that the insured died or suffered dismemberment
as a result of an accidental injury. All payments by us are payable at our home
office. Proof of any claim under this rider must be submitted in writing to our
home office.
The proceeds will be paid in a single sum. We will pay interest on the proceeds
from the date of the insured's death or dismemberment until the date of payment.
Interest will be at an annual rate determined by us.
WHAT DOES DEATH OR DISMEMBERMENT BY ACCIDENTAL INJURY MEAN?
Death or dismemberment by accidental injury as used in this rider means that the
insured's death or dismemberment results, directly and independently of all
other causes, from an accidental drowning or from an accidental injury which was
unintended, unexpected, and unforeseen. The injury must occur while the
insured's coverage under this rider is in force. The insured's death or
dismemberment must occur within 1809 days after the date of the injury. In no
event will we pay the accidental death or dismemberment benefit where the
insured's death or dismemberment results from or is caused directly or
indirectly by any of the following:
1. suicide, whether sane or insane;
2. the insured's commission of a felony;
3. bodily or mental infirmity, illness or disease;
4. drugs, poisons, gases or fumes, voluntarily taken, administered, absorbed,
inhaled, ingested or injected, unless administered on the advice of a
physician;
5. bacterial infection, other than infection occurring simultaneously with, and
as a result of, the accidental injury;
94-18682 Minnesota Mutual 1
<PAGE>
6. travel or flight in or on, or descent from or with, any kind of military
aircraft;
7. war or any act of war, whether declared or undeclared.
WHAT IS THE AMOUNT OF THE ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT?
The amount of the insured's benefit is as listed below.
FOR LOSS OF
Life....................................................Face Amount of Insurance
Both Hands or Both Feet or Sight of Both Eyes...........Face Amount of Insurance
One Hand and One Foot...................................Face Amount of Insurance
One Foot and Sight of One Eye...........................Face Amount of Insurance
One Hand and Sight of One Eye...........................Face Amount of Insurance
Sight of One Eye............................One-half of Face Amount of Insurance
One Hand or One Foot........................One-half of Face Amount of Insurance
The insured's Face Amount of Insurance is shown on the specifications page
attached to the insured's certificate. Loss of hands or feet means complete
severance at or above the writs or ankle joints. Loss of sight means the entire
and irrevocable loss of sight. An insured's dismemberment must result from a
single accident. Benefits are not cumulative over successive accidents.
TO WHOM WILL WE PAY THE PROCEEDS?
We will pay death proceeds to the beneficiary or beneficiaries who are named in
the insured's application unless the insured subsequently changes the
beneficiary. In that event, we will pay death proceeds to the beneficiary named
in the insured's last change of beneficiary request. Proceeds for other losses
shall be paid to the insured.
ADDITIONAL INFORMATION
- ----------------------
WHEN DOES INSURANCE UNDER THIS RIDER BECOME EFFECTIVE?
Insurance under this rider becomes effective when the insured's complete
application for accidental death and dismemberment coverage is approved by us
and the first premium is paid; however, in no event will insurance provided by
this rider be effective before the insured's insurance under the group policy is
effective.
WHAT IS THE MONTHLY COST TO THE INSURED FOR INSURANCE UNDER THIS RIDER?
The cost of this benefit for each insured is shown on the specifications page
attached to the insured's certificate.
WHEN WILL INSURED'S ACCOUNT BE CHARGED?
On the first day of each policy month the monthly cost for insurance under this
rider will be charged to the insured's account.
94-18682 Minnesota Mutual 2
<PAGE>
WHEN DOES INSURANCE UNDER THIS RIDER TERMINATE?
The insured's coverage under this rider will automatically end on the earliest
of the following dates:
when any premium remains unpaid after the end of the grace period; or
when the group policy is surrendered, matures or ends; or
on the last day for which premiums have been paid following the insured's notice
of termination of coverage provided under this rider; or
on the insured's 70th birthday; or
when we pay a claim to you under this rider.
WHEN IS THE BENEFIT UNDER THIS RIDER INCONTESTABLE?
Coverage provided by this rider is subject to the incontestability provision of
the group policy for each insured.
WILL ACCOUNT VALUES ACCUMULATE UNDER THIS RIDER?
No. The insured's insurance under this rider will not accumulate values.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18682 Minnesota Mutual 3
<PAGE>
EX99.A5N
================================================================================
MINNESOTA MUTUAL POLICY RIDER WAIVER AGREEMENT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------
This agreement amends the group policy to which it is attached, and is issued in
consideration of the required premium. This agreement provides a waiver of
charges for those insured employees whose employer selected the waiver of
premium benefit on its application. This agreement is subject to every term,
condition, exclusion, limitation, and provision of the group policy unless
otherwise expressly provided for herein.
WHAT DOES THE WAIVER OF PREMIUM BENEFIT PROVIDE?
If an insured employee becomes totally and permanently disabled, as hereinafter
defined, while under age 60, upon receipt of due proof of such disability, the
insured employee's insurance under the group policy (including applicable
riders) will be continued in force, subject to the following provisions and
without payment of premiums for such insured employee, during the uninterrupted
continuance of such total and permanent disability.
WHAT IS "TOTAL" DISABILITY?
Total disability is a disability which occurs while the insured employee's
insurance is in force and which results from an accidental injury or a disease
that continuously prevents the insured employee from engaging in an occupation.
The insured employee must be under the care of a licensed physician other than
the insured employee. During the first 24 months of total disability,
"occupation" means the insured employee's regular occupation. After 24 months,
it means any occupation for which the insured employee is reasonably fitted by
education, training or experience.
The insured employee's total and irrevocable loss of the following shall be
considered total disability even if the insured employee engages in an
occupation:
1. the sight of both eyes; or
2. the use of both hands; or
3. the use of both feet; or
4. the use of one hand and one foot.
WHAT IS "PERMANENT" DISABILITY?
Total disability will be considered permanent only after it has existed
continuously for a least six months.
HOW LONG WILL INSURANCE BE CONTINUED?
If the insured employee becomes totally and permanently disabled, insurance will
be continued:
94-18683 Minnesota Mutual 1
<PAGE>
1. until the insured employee's 95th birthday; or
2. until the date the insured employee is no longer totally and permanently
disabled; or
3. until the date the insured employee terminates or surrenders his or her
insurance; or
4. until the date the group policy terminates;
whichever occurs first.
However, the termination of the group policy shall have no effect on the claim
of any insured who is disabled, as set forth in this agreement, at the time the
group policy terminates.
WHAT WILL BE CONSIDERED DUE PROOF OF DISABILITY?
The insured employee must furnish evidence satisfactory to us that his or her
total disability:
1. commenced while his or her insurance under the group policy was in force;
and
2. commenced before the insured employee's 60th birthday; and
3. was continuous for six months or more.
We will, from time to time, also require additional proof satisfactory to us
that the insured employee continues to be totally and permanently disabled. We
may also require the insured employee to submit to one or more medical
examinations at our expense. However, we will not require a medical examination
of the insured employee more frequently than once a year if the total disability
has continued for two years.
ARE THERE ANY LIMITATIONS?
Insurance will not be continued if the insured employee's total disability
results from intentionally self-inflicted injuries or from an act of war while
the insured employee is serving in the military, naval or air forces of any
country at war, declared or undeclared.
WHEN MUST WE BE NOTIFIED?
We must receive written notice of the insured employee's total disability at our
home office:
1. while the insured employee is living and totally disabled; and
2. not later than one year after the termination of the insured employee's
insurance under the group policy; and
3. within one year of the date the insured employee requests as the date for
the commencement of this benefit.
However, the failure to give this notice within the time provided will not
invalidate the claim if it is shown that notice was given as soon as reasonably
possible.
WHAT IS THE INSURED EMPLOYEE'S COST FOR THIS BENEFIT?
The cost of the benefit is included in the planned monthly premium amount shown
on the specifications page attached to the insured's certificate.
94-18683 Minnesota Mutual 2
<PAGE>
WHAT IF THE INSURED EMPLOYEE'S INSURANCE UNDER THE GROUP POLICY LAPSES?
If the insured employee's insurance lapses before notice of the insured
employee's total disability is received at our home office, the insured
employee's insurance will be continued only if the notice is received within one
year after his or her insurance lapses. Also, the total disability must have
commenced prior to the date the net cash value became zero or during the grace
period allowed.
WHEN IS THE BENEFIT UNDER THIS AGREEMENT INCONTESTABLE?
This agreement is subject to the incontestability provision for each insured
employee.
CAN INSURANCE THAT WAS CONTINUED UNDER THIS AGREEMENT BE CONVERTED?
Yes. Insurance under this group policy may be converted during the insured
employee's lifetime and within 31 days after he or she ceases to be totally and
permanently disabled.
IS THIS BENEFIT RETROACTIVE?
Yes. The cost of insurance, cost of riders, and administration fees falling due
before we approve the insured employee's total and permanent disability claim
will be deducted from his or her account value. If the insured employee's claim
for benefits under this agreement is approved, those charges which were deducted
after the total and permanent disability began will be credited to the insured
employee's account value.
WILL THE INSURED EMPLOYEE'S ACCOUNT BE CREDIT WITH PREMIUM CONTRIBUTIONS AS A
RESULT OF THIS BENEFIT?
No. Except for interest which accrues on the account value, the account value
will not increase while insurance is being continued under this agreement.
Nothing contained herein will prohibit an insured employee from making premium
contributions.
This agreement is effective as of the effective date shown on the insured
employee's profile page.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18683 Minnesota Mutual 3
<PAGE>
EX99.A5O
================================================================================
MINNESOTA MUTUAL INDIVIDUAL POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
READ YOUR POLICY CAREFULLY
- --------------------------
This is a legal contract between you and us. We promise to pay the benefits
provided by this policy, subject to the provisions of this policy. We make this
promise and issue this policy in consideration of: (1) the application for this
policy; and (2) the payment of the required premiums.
You are a member of The Minnesota Mutual Life Insurance Company. Our annual
meetings are held at our home office on the first Tuesday in March of each year
at three o'clock in the afternoon.
RIGHT TO CANCEL
- ---------------
It is important to us that you are is satisfied with this policy after it is
issued. If you are not satisfied with it, you may return the policy to us or
our agent within 10 days after you receive it. You may also cancel this policy
by delivering or mailing a written notice or sending a telegram to The Minnesota
Mutual Life Insurance Company (Minnesota Mutual), 400 Robert Street North, St.
Paul, Minnesota 55101-2098 and returning the policy before midnight of the 10th
day after you received this policy. Notice given by mail and return of the
policy by mail are effective on being postmarked, properly addressed and postage
prepaid. If you return this policy, you will receive, within 7 days of the date
we receive a notice of cancellation, a full refund of any premiums you have
paid. Upon cancellation of this policy, it will be void from the beginning as
if it never had been issued.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota on
the policy date.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
THE INITIAL DEATH BENEFIT WILL EQUAL THE FACE AMOUNT SHOWN IN THIS POLICY.
THE ACCOUNT VALUES UNDER THIS POLICY WILL VARY FROM DAY TO DAY. IT MAY INCREASE
OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE. THERE IS NO
GUARANTEED MINIMUM ACCOUNT VALUE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <S> <C>
Definitions.....................2 Separate Account......................10
General Information.............4 Account Values........................13
Death Benefit...................5 Policy Loans..........................14
Payment of Proceeds.............6 Termination...........................16
Premiums........................8 Additional Information................17
Policy Charges..................8
</TABLE>
VARIABLE UNIVERSAL LIFE INSURANCE . LEVEL DEATH BENEFIT
94-18665 Rev. 1-95 Minnesota Mutual 1
<PAGE>
Definitions
- -----------
When we use the following words, this is what we mean:
account value
The sum of the values under the separate account, the guaranteed account and the
loan account of this policy. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
actively at work
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least _____ hours a week.
A person is not considered actively at work if not at work due to illness or
injury.
age
The insured's age at last birthday.
eligible insured
A person is eligible for insurance under this policy if the person:
1. is under age _____; and
2. was actively at work for each of the weeks immediately prior to the date your
application for coverage under this policy is approved by us, or are legally
married to an eligible insured; and
3. is identified by the plan sponsor as a person who is eligible to be insured
under the plan sponsor's employee benefit plan.
face amount
The minimum death benefit under this policy so long as the insurance coverage
under this policy remains in force.
fund
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
general account
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
guaranteed account value
94-18665 Rev. 1-95 Minnesota Mutual 2
<PAGE>
Assets other than the loan account value that are held in our general account
and attributable to this policy, and others of its class.
insured
An eligible insured who becomes insured under this policy.
lapse
A lapse of this policy means the insurance coverage under this policy has
terminated due to non-payment of a premium during its grace period in an amount
that, after the deduction of percentage-of-premium charges, is sufficient to
cover the monthly deductions due at the time we provide notice of lapse.
loan account
The portion of the general account which is attributable to loans under this
policy. A loan account value is the sum of all outstanding loans and accrued
loan interest credited under this policy.
maturity date
The 95th birthday of the insured.
monthly anniversary
The same date in each succeeding month as the policy date.
net cash value
The account value under this policy, less any outstanding policy loans and
accrued policy loan interest charged and any charges over due. It is the amount
you may obtain through surrender of this policy.
net premium
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
plan sponsor
The employer, association, or organization which makes this insurance available
to its eligible insureds.
policy anniversary
The same day in each succeeding year as the policy date.
policy date
94-18665 Rev. 1-95 Minnesota Mutual 3
<PAGE>
The date coverage under this policy may become effective. The policy date is
shown on the specifications page attached to this policy.
separate account
The separate investment account created by us to receive and invest net premiums
received for this policy. The particular Separate Account for this policy is
the Variable Universal Life Account. We established this separate account for
this class of policies under Minnesota Law. The separate account is composed of
several sub-accounts. We own the assets of the separate account. However,
those assets not in excess of separate account liabilities are not subject to
claims arising out of any other business in which we engage.
sub-account
One or more sub-accounts, constituting the separate account.
sub-account value
The current number of sub-account units credited to your policy multiplied by
the current sub-account unit value.
unit
A measure of your interest in a sub-account of the separate account.
valuation date
Any date on which a fund is valued.
valuation period
The period between successive valuation dates measured from the time of one
determination to the next.
we, our, us
The Minnesota Mutual Life Insurance Company.
you, your, policyowner
The owner of the policy, as shown in the application, unless subsequently
changed as provided for in this policy. The owner may be someone other than the
insured.
General Information
- -------------------
What is your agreement with us?
This policy, your application and any supplemental application(s) contain the
entire contract between you and us. Any statements made in your application or
any supplemental application(s) will, in the absence of fraud, be considered
representations and not warranties. Also, any
94-18665 Rev. 1-95 Minnesota Mutual 4
<PAGE>
statement you or an insured made will not be used to void this policy nor defend
against a claim under this policy unless the statement is contained in the
application or any supplemental application(s).
No change or waiver of any of the provisions of this policy will be valid unless
made in writing by us and signed by our president, a vice president, our
secretary or assistant secretary. No agent or other person has the authority to
change or waive any provision of this policy.
Any additional benefit rider attached to this policy will become a part of this
policy and will be subject to all the terms and conditions of this policy unless
we state otherwise in the rider.
Can this policy be amended?
Yes. This policy may be amended at any time you and we agree to amend it. Any
amendment will be without prejudice to any claim in connection with a loss
sustained prior to the effective date of the amendment.
How do you exercise your rights under the policy?
You can exercise all the rights under this policy during an insured's lifetime
by making a written request to us. This includes the right to change the
ownership. If your policy is assigned, we will also require the written consent
of the assignee. If you have designated an irrevocable beneficiary, the written
consent of that beneficiary will also be required.
What is the effective date of this insurance?
Upon receipt of your application for insurance, the effective date of this
insurance will be the later of:
1. the date on which we approve your application; and
2. the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this policy.
Death Benefit
- -------------
What is the amount of the death benefit?
The amount of the death benefit will be determined as follows:
1. The face amount of insurance on the insured's date of death while this policy
is in force; plus
2. the amount of the cost of insurance for the portion of the policy month from
the date of death to the end of the policy month; less
3. any outstanding policy loans and accrued policy loan interest charged; less
4. any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this policy.
94-18665 Rev. 1-95 Minnesota Mutual 5
<PAGE>
We intend that this policy qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right to
either increase the face amount of insurance on the life of the insured, return
any excess net cash value or limit the amount of premium contributions we will
accept under this policy in order to maintain such qualification.
What is the face amount of insurance on the life of the insured?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this policy.
May the face amount of insurance change?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this policy. If
an increase in the current face amount is applied for, we reserve the right to
require evidence of insurability from the insured.
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced to
less than the amount shown on the specifications page attached to this policy.
If, following a decrease in face amount, this policy would not comply with the
maximum premium limitations required by federal law, the decrease may be limited
or net cash value may be returned to the owner (at the owner's election), to the
extent necessary to meet these requirements.
When will changes in the face amount of insurance become effective?
Decreases in the face amount of insurance are effective on the monthly
anniversary on or following receipt of the written request by us. However, if
the owner requests that the decrease become effective on a specified future date
we will make the decrease effective on the policy monthly anniversary on or next
following the date requested.
Increases are effective on the monthly policy anniversary on or following the
date we approve the change, or any other date mutually agreed upon between you
and us.
When will the death benefit be paid?
We will pay interest on the face amount of insurance from the date of the
insured's death until the date of payment. We will pay interest on any charges
taken under this policy since the date of death from the date the charge was
taken until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of 4 percent per year compounded annually or the rate required by law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
Payment of Proceeds
- -------------------
To whom will we pay the death benefit?
94-18665 Rev. 1-95 Minnesota Mutual 6
<PAGE>
We will pay the death benefit proceeds to the surviving beneficiary specified on
the application or as subsequently changed.
What happens if one or all of the beneficiaries die before the insured?
If a beneficiary dies before the insured, that beneficiary's interest in this
policy ends with that beneficiary's death. Only those beneficiaries who survive
the insured will be eligible to share in the proceeds. If no beneficiary
survives the insured or if a beneficiary is not named, we will pay the proceeds
according to the following order of priority:
1. the insured's lawful spouse, if living; otherwise,
2. the personal representative of the insured's estate.
May the owner change the beneficiary?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has not
reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. Your written request will not be
effective until it is recorded in our home office records. After it has been so
recorded, it will take effect as of the date the owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
Can death benefit proceeds be paid in other than a single sum?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected only
if the payments are to be made to a natural person in that person's own right.
What are the settlement options available?
Each settlement option is paid in fixed amounts as described below. If the owner
of this policy requests a settlement option, he or she will be asked to sign an
agreement covering the election which will state the terms and conditions of the
payments. The payments do not vary with the performance of the separate account.
1. Interest Payments: Payment of interest on the proceeds at such times and
for a period as may be agreed upon between the owner of this policy and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end
of the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
2. Fixed Period Annuity: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
94-18665 Rev. 1-95 Minnesota Mutual 7
<PAGE>
3. Life Annuity: An annuity payable monthly for the lifetime of the annuitant
and ending with the last monthly payment due prior to the annuitant's death.
4. Payments of a Specified Amount: Monthly payments of a specified amount until
the proceeds and interest are fully paid.
Can a beneficiary request a payment under a settlement option?
Yes. A beneficiary may select a settlement option, but only after the insured's
death. However, an owner may provide that the beneficiary will not be permitted
to change the elected settlement option.
Premiums
- --------
When and how often are premiums due?
A premium must be paid to put this policy in force. This initial premium must
be of an amount that, after the deduction of percentage-of-premium charges, will
cover the first month's deductions plus $20. A premium must also be paid at such
time when there is insufficient net cash value to pay the monthly deductions
necessary to keep this policy in force. Premiums paid after the initial premium
may be in any amount of $20 or greater.
Is there a grace period for the payment of premiums?
Yes. This policy has a 61-day grace period. The grace period will start on the
day we mail the owner a notice of lapse. This policy will lapse if the premium
amount specified in the notice is not paid by the end of the grace period and
the net cash value is insufficient to cover the monthly deductions. We will
mail this notice on any policy monthly anniversary date when the net cash value
for the insured under this policy is insufficient to cover the monthly
deductions. This policy of insurance will remain in effect during the 61-day
grace period. If sufficient premium is not paid by the end of the grace period,
the insured's coverage will lapse. The grace period does not apply to the first
premium payment.
What is the amount of the death benefit during the grace period?
The death benefit amount provided under this policy will be paid if death occurs
during the grace period.
Policy Charges
- --------------
What type of charges are there under this policy?
Charges under this policy are those which we assess against the premiums and the
account value under this policy and the separate account assets attributable to
this policy.
What charges are assessed against premiums?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
94-18665 Rev. 1-95 Minnesota Mutual 8
<PAGE>
1. The sales load is for distribution expenses for this class of policies.
This sales load charge shall not exceed 5 percent of each premium paid.
2. The federal tax charge is to compensate us for the corporate federal income
taxes that result from a sale of this policy. The federal tax charge is 1.25
percent of each premium paid if this policy is deemed to be an individual
contract under the Omnibus Budget Reconciliation Act of 1990, as amended,
and 0.25 percent if deemed a group contract under that Act.
3. The state premium tax charge is the average premium tax we pay to state and
local governments for this class of policies. This charge is currently 2
percent. The charge is not guaranteed and may be increased in the future,
but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS POLICY?
Against the net cash value of this policy, we assess as monthly deductions: (1)
the administration charge; (2) the cost of insurance charge; and (3) the charge
for any additional benefits provided by rider. We also will assess against the
net cash value a transaction charge at the end of the day on which the
transaction occurs.
1. The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this policy. The
maximum administration charge is $4 per month. This charge will be assessed
on the policy date and on each succeeding monthly policy anniversary.
2. The cost of insurance charge is for providing the death benefit under this
policy. The charge is calculated by multiplying the net amount at risk under
this policy by a rate which varies with the insured's age and rate class.
The rate is guaranteed not to exceed rates determined on the basis of 125
percent of the 1980 Commissioners Standard Ordinary Mortality Table. The net
amount at risk for this policy is the difference between the death benefit
and the account value. This charge will be assessed on the policy date and
on each succeeding monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
3. The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
4. A transaction charge will be assessed for each partial withdrawal to cover
the administrative costs incurred in processing the partial withdrawal. The
amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between
sub-accounts. The amount charged will not exceed. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this policy. They will
be assessed against the guaranteed account value and the separate account value
in the same proportion that those values bear to each other and, as to the
separate account value, from each sub-account in the proportion that the sub-
account value in each such sub-account bears to the separate account value.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this policy. We also reserve the right to charge or make provision
for income taxes payable by us based on separate account assets.
94-18665 Rev. 1-95 Minnesota Mutual 9
<PAGE>
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with this class of policies. The
mortality and expense risk charge is deducted from the separate account assets
daily at an annual rate not to exceed 0.50 percent of the separate account
assets.
SEPARATE ACCOUNT
- ----------------
HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account in accordance with certain provisions of the
Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of this policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
policy are listed on the specifications page attached to this policy. Net
premiums will be allocated to the various sub-accounts of the separate account
or any other sub-account which we may add in the future, as elected by the owner
of this policy. We reserve the right to add, combine or remove any sub-accounts
of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for the policies of this class, we may substitute
another fund. Substitution may be with respect to both existing policy values
and future premiums. The investment policy of the separate account may not be
changed, however, without the approval of the regulatory authorities of the
State of Minnesota. If required, that approval process will be on file with the
regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this policy, shall then mean the separate account
to which the assets are transferred. A transfer of this kind may require the
advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
94-18665 Rev. 1-95 Minnesota Mutual 10
<PAGE>
1. restrict or eliminate any voting right of owners or other persons who have
voting rights as to the separate account; and
2. combine the separate account with one or more other separate accounts; and
3. to de-register the separate account under the Investment Company Act of
1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the separate
account and its sub-accounts. Initially, the allocation elected is indicated in
the application for this policy. Allocations may be changed for future
premiums. The owner may do this by giving us a written request. A change will
not take effect until it is recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least 10 percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than 50
percent of the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub
accounts. Such a delay will be for a period of 30 days after issuance of this
policy. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this period.
If we exercise this right, net premiums will be allocated to the money market
sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS POLICY?
Yes. Transfers from a sub-account of the separate account may be made in
writing or by telephone. For transfers out of the separate account or among
the sub-accounts of the separate account, we will credit and cancel units based
on the sub-account unit values as of the end of the valuation period during
which the owner's written or telephone request is received at our home office.
For transfers out of the guaranteed account, a dollar amount will be transferred
based on the owner's guaranteed account value at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this policy each month. The amount to
be transferred to or from a sub-account of the separate account or the
guaranteed account must be at least $500. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less than
$250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the account
value in the sub-account from which the transfer is to be made to less than
$250, we reserve the right to include that remaining amount in the sub-account
with the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to 20 percent
(or $250 if greater) of the guaranteed
94-18665 Rev. 1-95 Minnesota Mutual 11
<PAGE>
account value. Transfers to or from the guaranteed account may be limited to one
such transfer per policy year. We may further restrict transfers by requiring
that the request is received by us or postmarked in the 30-day period before or
after the last day of the policy anniversary. Requests for transfers which meet
these conditions would be effective after we approve and record them at our home
office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this policy will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account of this policy will be decreased by deductions
to the sub-account, policy loans and loan interest charged, transfers from that
sub-account and partial surrenders from that sub-account. The number of sub-
account units will decrease to zero on this policy's termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount of
any increase or decrease will depend on the net investment experience of the
sub-accounts of the separate account. The value of a unit for each sub-account
was originally set at $1.00 on the first valuation date. For any subsequent
valuation date, its value is equal to its value on the preceding valuation date
multiplied by the net investment factor for that sub-account for the valuation
period ending on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this policy
which are assessed against separate account assets. The gross investment rate
is equal to:
1. The net asset value per share of a fund share held in the sub-account of the
separate account determined at the end of the current valuation period; plus
2. the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
3. the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
94-18665 Rev. 1-95 Minnesota Mutual 12
<PAGE>
ACCOUNT VALUES
- --------------
WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to this policy's net cash value. The net cash value
is the account value of this policy, less any outstanding policy loans and
accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this policy and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited to
the policy, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to this policy under an owner's
policy will not be affected by changes in the unit value. However, the number
of units will be increased by the allocation of subsequent net premiums, policy
dividends, loan repayments, loan interest credits and transfers to that sub-
account. The number of units credited to a sub-account under an owner's policy
will be decreased by deductions to that sub-account, policy loans and loan
interest charged, transfers from that sub-account and partial surrenders from
that sub-account. The number of sub-account units will decrease to zero on a
policy termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Interest is credited on the guaranteed account value under this policy.
Interest is credited daily at a rate of not less than 4 percent per year,
compounded annually. We guarantee this minimum rate for the life of the
policy.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED ACCOUNT?
Yes. As conditions permit, we may credit additional amounts of interest to the
guaranteed account value.
MAY THIS POLICY BE SURRENDERED?
Yes. The owner of this policy may request the surrender of this policy at any
time while the insured under this policy is living.
WHAT IS THE SURRENDER VALUE OF THIS POLICY?
The surrender value of this policy is the net cash value.
94-18665 Rev. 1-95 Minnesota Mutual 13
<PAGE>
The determination of the surrender value is made as of the end of the valuation
period during which we receive the surrender request at our home office.
IS A PARTIAL SURRENDER PERMITTED?
Yes. The owner may make a partial surrender of the net cash value under this
policy. The amount of a partial surrender must be $500 or more and it cannot
exceed the amount available as a policy loan. A partial surrender will cause a
decrease in the face amount equal to the amount surrendered. We reserve the
right to change the minimum amount or limit the number of times the owner may
make a partial surrender.
MAY THE OWNER DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM THE NET
CASH VALUE?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the guaranteed
account. If the owner does not, partial surrenders will be deducted from the
guaranteed account value and separate account value in the same proportion that
those values bear to each other and, as to the separate account value, from each
sub-account in the proportion that the sub-account value of each such sub-
account bears to the separate account value.
HOW WILL THE OWNER KNOW THE STATUS OF A POLICY?
Each year we will send the owner of this policy a report. This report will show
the status of this policy. It will include the account value, the face amount
as of the date of the report, the premiums paid during the year and their
allocation, policy charges, policy loan activity and the net cash value. The
report will be sent without cost to the owner. The report will be as of a date
within two months of its mailing.
POLICY LOANS
- ------------
CAN THE OWNER BORROW AGAINST THE NET CASH VALUE?
Yes. The owner may borrow an amount of at least $100 and up to the maximum loan
amount. This amount is determined as of the date we receive the request for a
loan. We will require the owner's written or telephone request for a policy
loan. The policy will be the only security required for a loan. We will charge
interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
WHAT IS THE MAXIMUM LOAN AMOUNT AVAILABLE FOR A POLICY LOAN?
The total amount available for a loan under this policy is (a) minus (b), where
(a) is 90 percent of the account value and (b) is any outstanding policy loans
plus accrued policy loan interest charged. The maximum loan amount will be
determined as of the date we receive the owner's written or telephone request
for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
94-18665 Rev. 1-95 Minnesota Mutual 14
<PAGE>
When a loan is taken on this policy, we will reduce the net cash value of this
policy by the amount borrowed. This determination will be made as of the end of
the valuation period during which the loan request is received at our home
office. The amount borrowed continues to be a part of the account value, as the
amount borrowed becomes part of the loan account value where it will accrue loan
interest credits, and will be held in our general account.
HOW DOES A POLICY LOAN REDUCE NET CASH VALUE ON THIS POLICY?
Unless the owner directs us otherwise, the policy loan will be taken from this
policy's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the separate account
value, from each sub-account in the proportion that the sub-account value in
each such sub-account bears to the separate account value. The number of units
to be canceled will be based upon the value of the units as of the end of the
valuation period during which the loan request is received at our home office.
The net cash value of this policy may decrease between premium due dates. The
net cash value will decrease by the same amount of any decrease in account value
or increase in the amount borrowed or in the interest due on the loan of this
policy. If this policy has a policy loan and no net cash value, this policy
will lapse.
WHAT IS THE INTEREST RATE ON POLICY LOANS?
The interest rate charged on a policy loan will be 8 percent per year.
As the interest charged on a policy loan accrues, the net cash value decreases.
Interest is due at the end of the policy month. If the total interest accrued
at the end of the policy month is not paid, this interest will be added to the
loan amount borrowed and charged the same rate of interest as the loan.
WHAT IS THE RATE OF INTEREST CREDITED TO THIS POLICY AS A RESULT OF A LOAN?
Interest credits which accrue on the loan account value shall be at a rate which
is not less than 6 percent per year.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO THIS POLICY'S GUARANTEED
ACCOUNT VALUE?
Interest credits are allocated to the guaranteed account value at the time of a
loan repayment.
WHEN AND IN WHAT AMOUNT SHOULD LOAN REPAYMENTS BE MADE?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the policy is in force. The loan may also be repaid within 60 days after
the date of the insured's death, if we have not paid any of the death benefits
under this policy. Any loan repayment must be at least $100 unless the balance
due is less than $100.
HOW DO LOAN REPAYMENTS AFFECT THE LOAN ACCOUNT VALUES AND THE GUARANTEED ACCOUNT
VALUE?
94-18665 Rev. 1-95 Minnesota Mutual 15
<PAGE>
Loan repayments increase the net cash value of a policy by the amount of the
loan repayment The loan repayment will be applied first to the interest charged
on the principal amount borrowed. Any remaining portion of the repayment will
then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
WHAT HAPPENS IF A LOAN ON THIS POLICY IS NOT REPAID?
If this policy has a policy loan, the policy will remain in force so long as it
has net cash value. If it does not have sufficient net cash value, it will
lapse.
In this event, to keep this policy in force, the owner will have to make a loan
repayment. We will give the owner notice of our intent to terminate this policy
and the loan repayment required to keep it in force. The time for repayment
will be within 61 days after our mailing of the warning notice of lapse.
TERMINATION
- -----------
WHEN DOES THIS POLICY TERMINATE?
The insurance on the life of an insured will terminate on the earliest of:
1 days after we mail a warning notice of lapse on a policy monthly anniversary
in which the net cash value is insufficient to pay for the monthly deductions
and no premium is paid during the grace period;
2 the date an owner surrenders this policy or requests that we terminate the
insurance;
3 the 95th birthday of the insured.
WILL THE OWNER OF THIS POLICY RECEIVE NOTICE PRIOR TO THE TERMINATION OF
INSURANCE?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice of lapse before terminating the insurance.
CAN INSURANCE ON THE LIFE ON AN INSURED BE REINSTATED AFTER TERMINATION?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage-of-premium charges, is large enough to cover all monthly deductions
which have accrued on this policy up to the effective date of reinstatement plus
the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31 days
following lapse, but will be required from the 32nd day to three years from the
date of lapse.
94-18665 Rev. 1-95 Minnesota Mutual 16
<PAGE>
ADDITIONAL INFORMATION
- ----------------------
WILL THIS POLICY RECEIVE DIVIDENDS?
Each year we will determine if this policy and other policies of its class will
share in our divisible surplus.
Dividends, if received, will be added to the account value of this policy or, if
elected by the owner, may be paid in cash. A dividend applied to the account
value will be allocated to the guaranteed account value or the sub-accounts of
the separate account in accordance with the owner's current instructions for the
allocation of net premiums. In the absence of such instructions, dividends will
be allocated to the guaranteed account and the separate account in the same
proportion as those values bear to each other and, as to the separate account
value, to each sub-account in the proportion that the sub-account value in each
such sub-account bears to the separate account value.
MAY THE OWNER ASSIGN ANY INTEREST UNDER THIS POLICY?
Yes. However, we will not be bound by an assignment of this policy or of any
interest in it unless:
1. It is made as a written instrument;
2. The owner files the original instrument or a certified copy with us at our
home office; and
3. We send the owner an acknowledged copy.
We are not responsible for the validity of any assignment. If a claim is based
on an assignment, we may require proof of interest of the claimant. A valid
assignment will take precedence over any claim of a beneficiary.
WHAT IF AN INSURED'S AGE IS MISSTATED?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
1. the monthly cost of insurance charges that were paid, and;
2. the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
WHEN DOES AN INSURED'S INSURANCE BECOME INCONTESTABLE?
After the insurance has been in force during the insured's lifetime for a two
year period from the policy date, we cannot contest the insurance for any loss
that is incurred more than two years after the policy date, unless the net cash
value has dropped below the amount necessary to pay the insured's cost of
insurance on the insured's life. However, if there has been an increase in the
amount of insurance for which we required evidence of insurability, then, to the
extent of the increase, any loss which occurs within two years of the effective
date of the increase will be contestable.
94-18665 Rev. 1-95 Minnesota Mutual 17
<PAGE>
IS THERE A SUICIDE EXCLUSION?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the policy date, our liability will be limited to an amount equal to the
premium paid for that insured. If there has been an increase in the face amount
of insurance for which we required evidence of insurability, and if the insured
dies by suicide within two years of the effective date of the increase, our
liability with respect to that increase will be limited to the cost of insurance
charge attributable to such increase.
ARE INSURANCE AND RELATED RECORDS OF THE PLAN SPONSOR OPEN FOR INSPECTION?
Yes. The plan sponsor's records shall be open to inspection by us, at all
reasonable times, for any purposes relating to the provisions of the policy.
DO YOU HAVE ANY ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account units under this policy you may direct us
with respect to the voting rights of fund shares held by us and attributable to
this policy.
COULD THE PAYMENT OF POLICY PROCEEDS BE POSTPONED?
Normally, we will pay any policy proceeds within seven days after our receipt of
all the documents required for such a payment. Other than the death proceeds,
which are determined as of the date of death of the insured, the amount of
payment will be determined as of the end of the valuation period during which a
request is received at our home office. However, we reserve the right to defer
policy payments, including policy loans, for up to six months from the date of
the owner's request, if such payments are based upon policy values which do not
depend on the investment performance of the separate account. In that case, if
we postpone a payment other than a policy loan payment for more than 31 days, we
will pay the owner interest at the greater of 4 percent per year or the rate
required by law for the period beyond that time that payment is postponed. For
payments based on account values which do depend on the investment performance
of the separate account, we may defer payment only: (a) for any period during
which the New York Stock Exchange is closed for trading (except for normal
holiday closing); or (b) when the Securities and Exchange Commission has
determined that a state of emergency exists which may make such payment
impractical.
WILL THE PROVISIONS OF THIS POLICY CONFORM WITH STATE LAW?
Yes. If any provision in this policy is in conflict with the laws of the state
governing the policy, the provision will be deemed to be amended to conform to
such laws.
COULD ANY PAYMENTS MADE UNDER THIS POLICY BE SUBJECT TO CLAIMS OF CREDITORS?
To the extent permitted by law, neither this policy nor any payment hereunder
will be subject to the claims of creditors or to any legal process.
ARE POLICY CHANGES LIMITED?
94-18665 Rev. 1-95 Minnesota Mutual 18
<PAGE>
Currently, the frequency of policy changes are not limited. However, we reserve
the right to limit the number of policy changes to one per policy year and to
restrict such changes in the first policy year. For this purpose, changes
include increases or decreases in the face amount of insurance.
94-18665 Rev. 1-95 Minnesota Mutual 19
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A SMOKER DISTINCT BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
---- ---- ---- ---- ---- ----
NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18665 Rev. 1-95 Minnesota Mutual 20
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A UNI-SMOKER BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
---- ---- ---- ---- ---- ----
UNI-SMOKERS UNI-SMOKERS UNI-SMOKERS
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18665 Rev. 1-95 Minnesota Mutual 21
<PAGE>
Minnesota Mutual
400 Robert Street North . St. Paul, Minnesota 55101-2098
VARIABLE UNIVERSAL LIFE INSURANCE . LEVEL DEATH BENEFIT
94-18665 Rev. 1-95 Minnesota Mutual 22
<PAGE>
EX99.A5P
================================================================================
MINNESOTA MUTUAL INDIVIDUAL POLICY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
READ YOUR POLICY CAREFULLY
- --------------------------
This is a legal contract between you and us. We promise to pay the benefits
provided by this policy, subject to the provisions of this policy. We make
this promise and issue this policy in consideration of: (1) the application
for this policy; and (2) the payment of the required premiums.
You are a member of The Minnesota Mutual Life Insurance Company. Our annual
meetings are held at our home office on the first Tuesday in March of each
year at three o'clock in the afternoon.
RIGHT TO CANCEL
- ---------------
It is important to us that you are satisfied with this policy after it is
issued. If you are not satisfied with it, you may return the policy to us or
our agent within 10 days after you receive it. You may also cancel this
policy by delivering or mailing a written notice or sending a telegram to The
Minnesota Mutual Life Insurance Company (Minnesota Mutual), 400 Robert Street
North, St. Paul, Minnesota 55101-2098 and returning the policy before midnight
of the tenth day after you received this policy. Notice given by mail and
return of the policy by mail are effective on being postmarked, properly
addressed and postage prepaid. If you return this policy, you will receive,
within 7 days of the date we receive a notice of cancellation, a full refund
of any premiums you have paid. Upon cancellation of this policy, it will be
void from the beginning as if it never had been issued.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota
on the policy date.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
THE INITIAL DEATH BENEFIT FOR THE PERSON INSURED UNDER THIS POLICY WILL EQUAL
THE FACE AMOUNT SHOWN IN THIS POLICY, PLUS THE INITIAL ACCOUNT VALUE, IF ANY.
THE DEATH BENEFIT THEREAFTER MAY INCREASE OR DECREASE DEPENDING UPON SEPARATE
ACCOUNT INVESTMENT EXPERIENCE.
THE ACCOUNT VALUES UNDER THIS POLICY WILL VARY FROM DAY TO DAY. IT MAY
INCREASE OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
THERE IS NO GUARANTEED MINIMUM ACCOUNT VALUE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <S> <C>
DEFINITIONS 2 SEPARATE ACCOUNT 10
GENERAL INFORMATION 4 ACCOUNT VALUES 13
DEATH BENEFIT 5 POLICY LOANS 14
PAYMENT OF PROCEEDS 7 TERMINATION 16
PREMIUMS 8 ADDITIONAL INFORMATION 17
POLICY CHARGES 8
</TABLE>
VARIABLE UNIVERSAL LIFE INSURANCE - VARIABLE DEATH BENEFIT
94-18673 Rev. 1-95 Minnesota Mutual 1
<PAGE>
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
ACCOUNT VALUE
The sum of the values under the separate account, the guaranteed account and
the loan account of this policy. They are identified as the separate account
value, the guaranteed account value, and the loan account value, respectively.
ACTIVELY AT WORK
To be actively at work for the purposes of this policy, you must be currently
working at your employer's normal place of business at least ____ hours a
week. A person is not considered actively at work if not at work due to
illness or injury.
AGE
The insured's age at last birthday.
ELIGIBLE INSURED
A person is eligible for insurance under this policy if the person:
(1) is under age ___; and
(2) was actively at work for each of the ____ weeks immediately prior to the
date your application for coverage under this policy is approved by us, or are
legally married to an eligible insured; and
(3) is identified by the plan sponsor as a person who is eligible to be
insured under the plan sponsor's employee benefit plan.
FACE AMOUNT
The minimum death benefit under this policy so long as the insurance coverage
under this policy remains in force.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and it
sub-accounts.
94-18673 Rev. 1-95 Minnesota Mutual 2
<PAGE>
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate account or in
other separate accounts established by us.
GUARANTEED ACCOUNT VALUE
Assets other than the loan account value that are held in our general account
and attributable to this policy, and others of its class.
INSURED
An eligible insured who becomes insured under this policy.
LAPSE
A lapse of this policy means the insurance coverage under this policy has
terminated due to non-payment of a premium during its grace period in an
amount that, after the deduction of percentage-of-premium charges, is
sufficient to cover the monthly deductions due at the time we provide notice
of lapse.
LOAN ACCOUNT
The portion of the general account which is attributable to loans under this
policy. A loan account value is the sum of all outstanding loans and accrued
loan interest credited under this policy.
MATURITY DATE
The 95th birthday of the insured.
MONTHLY ANNIVERSARY
The same date in each succeeding month as the policy date.
NET CASH VALUE
The account value under this policy, less any outstanding policy loans and
accrued policy loan interest charged and any charges over due. It is the
amount you may obtain through surrender of this policy.
NET PREMIUM
The premium less charges assessed against the premium. The net premium is the
amount or amounts which are allocated to the guaranteed account and/or the
separate account on your behalf.
94-18673 Rev. 1-95 Minnesota Mutual 3
<PAGE>
PLAN SPONSOR
The employer, association, or organization which makes this insurance
available to its eligible insureds.
POLICY ANNIVERSARY
The same day in each succeeding year as the policy date.
POLICY DATE
The date coverage under this policy may become effective. The policy date is
shown on the specifications page attached to this policy.
SEPARATE ACCOUNT
The separate investment account created by us to receive and invest net
premiums received for this policy. The particular Separate Account for this
policy is the Variable Universal Life Account. We established this separate
account for this class of policies under Minnesota Law. The separate account
is composed of several sub-accounts. We own the assets of the separate
account. However, those assets not in excess of separate account liabilities
are not subject to claims arising out of any other business in which we
engage.
SUB-ACCOUNT
One or more sub-accounts constituting the separate account.
SUB-ACCOUNT VALUE
The current number of sub-account units credited to your policy multiplied by
the current sub-account unit value.
UNIT
A measure of your interest in a sub-account of the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
94-18673 Rev. 1-95 Minnesota Mutual 4
<PAGE>
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
YOU, YOUR, POLICYOWNER
The owner of the policy, as shown in the application, unless subsequently
changed as provided for in this policy. The owner may be someone other than
the insured.
GENERAL INFORMATION
- -------------------
WHAT IS YOUR AGREEMENT WITH US?
This policy, your application and any supplemental application(s) contain the
entire contract between you an us. Any statements made in your application or
any supplemental application(s) will, in the absence of fraud, be considered
representations and not warranties. Also, any statement you or an insured
made will not be used to void this policy nor defend against a claim under
this policy unless the statement is contained in the application or any
supplemental application(s).
No change or waiver of any of the provisions of this policy will be valid
unless made in writing by us and signed by our president, a vice president,
our secretary or assistant secretary. No agent or other person has the
authority to change or waive any provision of this policy.
Any additional benefit rider attached to this policy will become a part of
this policy and will be subject to all the terms and conditions of this policy
unless we state otherwise in the rider.
CAN THIS POLICY BE AMENDED?
Yes. This policy may be amended at any time you and we agree to amend it.
Any amendment will be without prejudice to any claim in connection with a loss
sustained prior to the effective date of the amendment.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THE POLICY?
You can exercise all the rights under this policy during an insured's lifetime
by making a written request to us. This includes the right to change the
ownership. If your policy is assigned, we will also require the written
consent of the assignee. If you have designated an irrevocable beneficiary,
the written consent of that beneficiary will also be required.
WHAT IS THE EFFECTIVE DATE OF THIS INSURANCE?
Upon receipt of your application for insurance, the effective date of this
insurance will be the later of:
94-18673 Rev. 1-95 Minnesota Mutual 5
<PAGE>
(1) the date on which we approve your application; and
(2) the date on which the first premium contribution is paid.
This effective date is shown on the specifications page attached to this
policy.
DEATH BENEFIT
- -------------
WHAT IS THE AMOUNT OF THE DEATH BENEFIT?
The amount of the death benefit will be determined as follows:
(1) The face amount of insurance on the insured's date of death while this
policy is in force; plus
(2) the amount of the owner's account value as of the date we receive due
proof of the insured's death satisfactory to us; plus
(3) the amount of the cost of insurance for the portion of the policy month
from the date of death to the end of the policy month; plus
(4) any monthly deductions taken under the policy since the date of death;
less
(5) any outstanding policy loans and accrued policy loan interest charged;
less
(6) any unpaid monthly deductions determined as of the date of the insured's
death.
Payment of the death benefit will extinguish our liability under this policy.
We intend that this policy qualify as a life insurance policy as defined by
Section 7702 of the Internal Revenue Code, as amended. We reserve the right
to either increase the face amount of insurance on the life of the insured,
return any excess net cash value or limit the amount of premium contributions
we will accept under this policy in order to maintain such qualification.
WHAT IS THE FACE AMOUNT OF INSURANCE ON THE LIFE OF THE INSURED?
The face amount of insurance on the life of the insured is as shown on the
specifications page attached to this policy.
MAY THE FACE AMOUNT OF INSURANCE CHANGE?
Yes. The owner may apply for a change through a written request in compliance
within the limitations on the specifications page attached to this policy. If
an increase in the current face amount is applied for, we reserve the right to
require evidence of insurability from the insured.
94-18673 Rev. 1-95 Minnesota Mutual 6
<PAGE>
If a decrease in the current face amount is requested, we will grant the
request. However, the amount of insurance on the insured may not be reduced
to less than the amount shown on the specifications page attached to this
policy. If following a decrease in face amount, this policy would not comply
with the maximum premium limitations required by federal law, the decrease may
be limited or net cash value may be returned to the owner (at the owner's
election), to the extent necessary to meet these requirements.
WHEN WILL CHANGES IN THE FACE AMOUNT OF INSURANCE BECOME EFFECTIVE?
Decreases in the face amount of insurance are effective on the monthly policy
anniversary on or following receipt of the written request by us. However, if
the owner requests that the decrease become effective on a specified future
date we will make the decrease effective on the policy monthly anniversary on
or next following the date requested.
Increases are effective on the monthly anniversary on or following the date we
approve the change, or any other date mutually agreed upon between you and us.
WHEN WILL THE DEATH BENEFIT BE PAID?
We will pay interest on the face amount of insurance from the date of the
insured's death until the date of payment. We will pay interest on any
charges taken under this policy since the date of death from the date the
charge was taken until the date of payment.
Interest will be at an annual rate determined by us, but never less than the
greater of four percent per year compounded annually or the rate required by
law.
Death benefit proceeds will ordinarily be paid within seven days after we
receive all information required for such payment, including due proof of the
insured's death.
PAYMENT OF PROCEEDS
- -------------------
TO WHOM WILL WE PAY THE DEATH BENEFIT?
We will pay the death benefit proceeds to the surviving beneficiary specified
on the application or as subsequently changed.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE INSURED?
If a beneficiary dies before the insured, that beneficiary's interest in this
policy ends with that beneficiary's death. Only those beneficiaries who
survive the insured will be eligible to share in the proceeds. If no
beneficiary survives the insured or if a beneficiary is not named, we will pay
the proceeds according to the following order of priority:
(1) the insured's lawful spouse; if living; otherwise,
94-18673 Rev. 1-95 Minnesota Mutual 7
<PAGE>
(2) the personal representative of the insured's estate.
MAY THE OWNER CHANGE THE BENEFICIARY?
If the owner has reserved the right to change the beneficiary, the owner may
file a written request with us to change the beneficiary. If the owner has
not reserved the right to change the beneficiary, the written consent of the
irrevocable beneficiary will be required. Your written request will not be
effective until it is recorded in our home office records. After it has been
so recorded, it will take effect as of the date the owner signed the request.
However, if the insured dies before the request has been so recorded, the
request will not be effective as to those proceeds we have paid before the
owner's request was so recorded.
CAN DEATH BENEFIT PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. An owner may request that we pay the death benefit proceeds under one of
the following settlement options. We may also use any other method of payment
that is agreeable to the owner and us. A settlement option may be selected
only if the payments are to be made to a natural person in that person's own
right.
WHAT ARE THE SETTLEMENT OPTIONS AVAILABLE?
Each settlement option is paid in fixed amounts as described below. If the
owner of this policy requests a settlement option, he or she will be asked to
sign an agreement covering the election which will state the terms and
conditions of the payments. The payments do not vary with the performance of
the separate account.
(1) INTEREST PAYMENTS: Payment of interest on the proceeds at such times and
for a period as may be agreed upon between the owner of this policy and us.
Withdrawal of proceeds may be made in amounts of at least $500. At the end of
the period, any remaining proceeds will be paid in either a single sum or
under any other method we approve.
(2) FIXED PERIOD ANNUITY: An annuity payable in monthly installments for a
specified number of years, from one to twenty years.
(3) LIFE ANNUITY: An annuity payable monthly for the lifetime of the
annuitant and ending with the last monthly payment due prior to the
annuitant's death.
(4) PAYMENTS OF A SPECIFIED AMOUNT: Monthly payments of a specified amount
until the proceeds and interest are fully paid.
CAN A BENEFICIARY REQUEST A PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option, but only after the
insured's death. However, an owner may provide that the beneficiary will not
be permitted to change the elected settlement option.
94-18673 Rev. 1-95 Minnesota Mutual 8
<PAGE>
PREMIUMS
- --------
WHEN AND HOW OFTEN ARE PREMIUMS DUE?
A premium must be paid to put this policy in force. This initial premium must
be of an amount that, after the deduction of percentage-of-premium charges,
will cover the first month's deductions plus $20. A premium must also be paid
at such time when there is insufficient net cash value to pay the monthly
deductions necessary to keep this policy in force. Premiums paid after the
initial premium may be in any amount of $20 or greater.
IS THERE A GRACE PERIOD FOR THE PAYMENT OF PREMIUMS?
Yes. This policy has a 61 day grace period. The grace period will start on
the day we mail the owner a notice of lapse. This policy will lapse if the
premium amount specified in the notice is not paid by the end of the grace
period and the net cash value is insufficient to cover the monthly deductions.
We will mail this notice on any policy monthly anniversary date when the net
cash value for the insured under this policy is insufficient to cover the
monthly deductions. This policy of insurance will remain in effect during the
61 day grace period. If sufficient premium is not paid by the end of the
grace period, the insured's coverage will lapse. The grace period does not
apply to the first premium payment.
WHAT IS THE AMOUNT OF THE DEATH BENEFIT DURING THE GRACE PERIOD?
The death benefit amount provided under this policy will be paid if death
occurs during the grace period.
POLICY CHARGES
- --------------
WHAT TYPE OF CHARGES ARE THERE UNDER THIS POLICY?
Charges under this policy are those which we assess against the premiums and
the account value under this policy and the separate account assets
attributable to this policy.
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums paid, we will assess: (1) a sales load, (2) a federal tax
charge, and (3) a state premium tax charge as percentage-of-premium charges.
(1) The sales load is for distribution expenses for this class of policies.
This sales load charge shall not exceed five percent of each premium paid.
(2) The federal tax charge is to compensate us for the corporate federal
income taxes that result from a sale of this policy. The federal tax charge
is 1.25 percent of each premium paid if this
94-18673 Rev. 1-95 Minnesota Mutual 9
<PAGE>
policy is deemed to be an individual contract under the Omnibus Budget
Reconciliation Act of 1990, as amended, and 0.25 percent if deemed a group
contract under that Act.
(3) The state premium tax charge is the average premium tax we pay to state
and local governments for this class of policies. This charge is currently
two percent. The charge is not guaranteed and may be increased in the future,
but only as necessary to cover our premium taxes.
WHAT CHARGES ARE ASSESSED AGAINST THE NET CASH VALUE OF THIS POLICY?
Against the net cash value of this policy, we assess as monthly deductions: (1)
the administration charge; (2) the cost of insurance charge; and (3) the charge
for any additional benefits provided by rider. We also will assess against the
net cash value a transaction charge at the end of the day on which the
transaction occurs.
(1) The administration charge is for administrative expenses, including those
attributable to the records we create and maintain for this policy. The
maximum administration charge is $4 per month. This charge will be assessed on
the policy date and on each succeeding monthly policy anniversary.
(2) The cost of insurance charge is for providing the death benefit under this
policy. The charge is calculated by multiplying the net amount at risk under
this policy by a rate which varies with the insured's age and rate class. The
rate is guaranteed not to exceed rates determined on the basis of 125 percent of
the 1980 Commissioners Standard Ordinary Mortality Table. The net amount at risk
for this policy is the difference between the death benefit and the account
value. This charge will be assessed on the policy date and on each succeeding
monthly anniversary.
The policy charges described as Table A attached herein are maximum cost of
insurance charges.
(3) The charge for any additional benefits provided by rider, if any, are
deducted as part of the monthly cost of insurance deduction.
(4) A transaction charge will be assessed for each partial withdrawal to
cover the administrative costs incurred in processing the partial withdrawal.
The amount of the charge is the lesser of $25 or two percent of the amount
withdrawn. We may also assess a charge for any transfer of funds between sub-
accounts. The amount charged will not exceed $10. Any transaction charge
will be assessed at the end of the day on which the transaction occurs.
Charges will be assessed against the net cash value of this policy. They
will be assessed against the guaranteed account value and the separate account
value in the same proportion that those values bear to each other and, as to
the separate account value, from each sub-account in the proportion that the
account value in such sub-account bears to the separate account value in all
of the sub-accounts for this policy.
94-18673 Rev. 1-95 Minnesota Mutual 10
<PAGE>
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against the separate account
assets of this policy. We also reserve the right to charge or make provision
for income taxes payable by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will
be insufficient to cover actual mortality experience and that the other
charges will not cover our expenses in connection with this class of policies.
The mortality and expense risk charge is deducted from the separate account
assets daily at an annual rate not to exceed 0.50 percent of the separate
account assets.
SEPARATE ACCOUNT
- -----------------
HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account in accordance with certain provisions of
the Minnesota insurance law.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
The purpose of the separate account is to hold assets attributable to the
variable portion of this policy and others of its class.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into sub-accounts. Those available to this
policy are listed on the specifications page attached to this policy. Net
premiums will be allocated to the various sub-accounts of the separate account
or any other sub-account which we may add in the future, as elected by the
owner. We reserve the right to add, combine or remove any sub-accounts of the
separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we
determine it becomes inappropriate for the policies of this class, we may
substitute another fund. Substitution may be with respect to both existing
policy values and future premiums. The investment policy of the separate
account may not be changed, however, without the approval of the regulatory
authorities of the State of Minnesota. If required, that approval process
will be on file with the regulatory authorities of the state in which this
policy is delivered.
94-18673 Rev. 1-95 Minnesota Mutual 11
<PAGE>
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If such a transfer is made, the term
"separate account" as used in this policy, shall then mean the separate
account to which the assets are transferred. A transfer of this kind may
require the advance approval of state regulatory authorities.
We reserve the right to, when permitted by law:
(1) restrict or eliminate any voting right of owners or other persons who
have voting rights as to the separate account; and
(2) combine the separate account with one or more other separate accounts;
and
(3) to de-register the separate account under the Investment Company Act of
1940.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed account and/or to the separate
account and its sub-accounts. Initially, the allocation elected is indicated
in the application for this policy. Allocations may be changed for future
premiums. The owner may do this by giving us a written request. A change
will not take effect until it is recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least ten percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than fifty
percent of the net premium may be allocated to the guaranteed account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of this
policy. This right will be exercised by us only when we believe economic
conditions make such a delay necessary to reduce market risk during this
period. If we exercise this right, net premiums will be allocated to the
money market sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the net cash value between the guaranteed
account and the separate account or among the sub-accounts of the separate
account for a given owner.
MAY THE OWNER MAKE TRANSFERS OF AMOUNTS UNDER THIS POLICY?
Yes. Transfers from a sub-account of the separate account may be made in
writing or by telephone. For transfers out of the separate account or among
the sub-accounts of the separate account, we will credit and cancel units
based on the sub-account unit values as of the end of the valuation period
during which the owner's written or telephone request is received at our home
94-18673 Rev. 1-95 Minnesota Mutual 12
<PAGE>
office. For transfers out of the guaranteed account, a dollar amount will be
transferred based on the owner's guaranteed account value at the time of
transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. Only one transfer may be made under this policy each month. The amount
to be transferred to or from a sub-account of the separate account or the
guaranteed account must be at least $250. If the balance in the guaranteed
account or in the sub-account from which the transfer is to be made is less
than $250, the entire account value attributable to that sub-account or the
guaranteed account must be transferred. If a transfer would reduce the
account value in the sub-account from which the transfer is to be made to less
than $250 we reserve the right to include that remaining amount in the sub-
account with the amount transferred.
The maximum amount of net cash value to be transferred out of the guaranteed
account to the sub-accounts of the separate account may be limited to twenty
percent (or $250 if greater) of the guaranteed account value. Transfers to or
from the guaranteed account may be limited to one such transfer per policy
year. We may further restrict transfers by requiring that the request is
received by us or postmarked in the 30-day period before or after the last
day of the policy anniversary. Requests for transfers which meet these
conditions would be effective after we approve and record them at our home
office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to
each sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which the
premium is received at our home office. Once determined, the number of units
will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to this policy will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units credited to a sub-account under this policy will be decreased by
deductions to the sub-account, policy loans and loan interest charged, transfers
from that sub-account and partial surrenders from that sub-account. The number
of sub-account units will decrease to zero on this policy's termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The amount
of any increase or decrease will depend on the net investment experience of
the sub-accounts of the separate account. The value of a unit for each sub-
account was originally set at $1.00 on the first valuation date. For any
subsequent valuation date, its value is equal to its value on the preceding
valuation date multiplied by the net investment factor for that sub-account
for the valuation period ending on the subsequent valuation date.
94-18673 Rev. 1-95 Minnesota Mutual 13
<PAGE>
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account during the valuation period.
The net investment factor for a valuation period is: the gross investment
rate for such valuation period, less a deduction for the charges under this
policy which are assessed against separate account assets. The gross
investment rate is equal to:
(1) The net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(2) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period,
divided by
(3) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
ACCOUNT VALUES
- --------------
WILL THE OWNER HAVE ACCESS TO THE NET CASH VALUE?
Yes. The owner has access to this policy's net cash value. The net cash
value is the account value of this policy, less any outstanding policy loans
and accrued policy loan interest charged and any charges overdue.
HOW IS THE ACCOUNT VALUE DETERMINED?
It is determined separately for this policy and separately for the separate
account value and loan account value. The separate account value will include
all sub-accounts of the separate account.
The separate account value is the sum of units of each sub-account, credited
to the policy, multiplied by the accumulation unit value for that sub-account.
Once determined, the number of units credited to this policy under an owner's
policy will not be affected by changes in the unit value. However, the number
of units will be increased by the allocation of subsequent net premiums,
policy dividends, loan repayments, loan interest credits and transfers to that
sub-account. The number of units credited to a sub-account under an owner's
policy will be decreased by deductions to that sub-account, policy loans and
loan interest charged, transfers from that sub-account and partial surrenders
from that sub-account. The number of sub-account units will decrease to zero
on a policy termination.
IS THE SEPARATE ACCOUNT VALUE GUARANTEED?
The separate account value is not guaranteed.
94-18673 Rev. 1-95 Minnesota Mutual 14
<PAGE>
The guaranteed account value is guaranteed by us. It cannot be reduced by the
investment experience of the guaranteed account.
Is interest credited on the guaranteed account value?
Yes. Interest is credited on the guaranteed account value under this policy.
Interest is credited daily at a rate of not less than four percent per year,
compounded annually. We guarantee this minimum rate for the life of the
policy.
May additional interest be credited on the guaranteed account?
Yes. As conditions permit, we may credit additional amounts of interest to
the guaranteed account value.
May this policy be surrendered?
Yes. The owner of this policy may request the surrender of this policy at any
time while the insured under this policy is living.
What is the surrender value of this policy?
The surrender value of this policy is the net cash value. The determination
of the surrender value is made as of the end of the valuation period during
which we receive the surrender request at our home office.
Is a partial surrender permitted?
Yes. The owner may make a partial surrender of the net cash value under this
policy. The amount of a partial surrender must be $500 or more and it cannot
exceed the amount available as a policy loan. A partial surrender has no
effect on the face amount of this policy. However, since the account value is
reduced by the amount of the partial surrender, the death benefit will be
reduced by this same amount at the time of the partial surrender. We reserve
the right to change the minimum amount or limit the number of times the owner
may make a partial surrender.
May the owner direct us as to how partial surrenders will be taken from the
net cash value?
Yes. The owner may tell us the sub-accounts from which a partial surrender is
to be taken or whether it is to be taken in whole or in part from the
guaranteed account. If the owner does not, partial surrenders will be
deducted from the guaranteed account value and separate account value in the
same proportion that those values bear to each other and, as to the separate
account value, from each sub-account in the sub-account value of each such
sub-account bears to the separate account value.
94-18673 Rev. 1-95 Minnesota Mutual 15
<PAGE>
How will the owner know the status of a policy?
Each year we will send the owner of this policy a report. This report will
show the status of this policy. It will include the account value, the face
amount as of the date of the report, the premiums paid during the year and
their allocation, policy charges, policy loan activity and the net cash
value. The report will be sent without cost to the owner. The report will be
as of a date within two months of its mailing.
POLICY LOANS
- ------------
Can the owner borrow against the net cash value?
Yes. The owner may borrow an amount of at least $100 and up to the maximum
loan amount. This amount is determined as of the date we receive the request
for a loan. We will require the owner's written or telephone request for a
policy loan. The policy will be the only security required for a loan. We
will charge interest on the loan in arrears.
When a loan is to come from the guaranteed account value, we have the right to
postpone a loan for up to six months.
What is the maximum loan amount available for a policy loan?
The total amount available for a loan under this policy is (a) minus (b),
where (a) is ninety percent of the account value and (b) is any outstanding
policy loans plus accrued policy loan interest charged. The maximum loan
amount will be determined as of the date we receive the owner's written or
telephone request for a loan at our home office.
What is the effect of a policy loan?
When a loan is taken on this policy, we will reduce the net cash value of this
policy by the amount borrowed. This determination will be made as of the end
of the valuation period during which the loan request is received at our home
office. The amount borrowed becomes part of the loan account value as the
amount borrowed is transferred to the loan account value where it will accrue
loan interest credits and will be held in our general account.
How does a policy loan reduce net cash value on this policy?
Unless the owner directs us otherwise, the policy loan will be taken from this
policy's guaranteed account value and separate account value in the same
proportion that those values bear to each other and, as to the net cash value
in the separate account, from each sub-account in the proportion that the sub-
account value in such sub-account bears to the separate account value. The
number of units to be canceled will be based upon the value of the units as of
the end of the valuation period during which the loan request is received at
our home office.
94-18673 Rev. 1-95 Minnesota Mutual 16
<PAGE>
The net cash value of this policy may decrease between premium due dates.
The net cash value will decrease by the same amount of any decrease in account
value or increase in the amount borrowed or in the interest due on the loan of
this policy. If this policy has a policy loan and no net cash value, this
policy will lapse.
What is the interest rate on policy loans?
The interest rate charged on a policy loan will be eight percent per year.
As the interest charged on a policy loan accrues, the net cash value
decreases. Interest is due at the end of the policy month. If the total
interest accrued at the end of the policy month is not paid, this interest
will be added to the loan amount borrowed and charged the same rate of
interest as the loan.
What is the rate of interest credited to this policy as a result of a loan?
Interest credits which accrue on the loan account value shall be at a rate
which is not less than six percent per year.
When are interest credits on a policy loan allocated to this policy's
guaranteed account value?
Interest credits are allocated to the guaranteed account value at the time of
a loan repayment.
When and in what amount should loan repayments be made?
A policy loan and the interest charged on the loan may be repaid in full or in
part at any time before the insured's death so long as the insurance coverage
under the policy is in force. The loan may also be repaid within 60 days
after the date of the insured's death, if we have not paid any of the death
benefits under this policy. Any loan repayment must be at least $100 unless
the balance due is less than $100.
How do loan repayments affect the loan account values and the guaranteed
account value?
Loan repayments increase the net cash value of a policy by the amount of the
loan repayment The loan repayment will be applied first to the interest
charged on the principal amount borrowed. Any remaining portion of the
repayment will then reduce the original loan principal amount.
When a loan repayment is made, the interest credits in the loan account value
are transferred to the general account value in the same proportion that loan
interest charged has been reduced due to the loan repayment. Also, an amount
equal to the amount of loan principal repaid is transferred from the loan
account value to the general account value.
94-18673 Rev. 1-95 Minnesota Mutual 17
<PAGE>
What happens if a loan on this policy is not repaid?
If this policy has a policy loan, the policy will remain in force so long as
it has net cash value. If it does not have sufficient net cash value, it will
lapse.
In this event, to keep this policy in force, the owner will have to make a
loan repayment. We will give the owner notice of our intent to terminate this
policy and the loan repayment required to keep it in force. The time for
repayment will be within 61 days after our mailing of the warning notice of
lapse.
TERMINATION
- -----------
When does this policy terminate?
The insurance on the life of an insured will terminate on the earliest of:
(1) 61 days after we mail a warning notice of lapse on a policy monthly
anniversary in which the net cash value is insufficient to pay for the monthly
deductions and no premium is paid during the grace period;
(2) the date an owner surrenders this policy or requests that we terminate
the insurance;
(3) the 95th birthday of the insured.
Will the owner of this policy receive notice prior to the termination of
insurance?
If the owner's insurance will be terminated because the net cash value is less
than that required to pay the monthly deductions, we will give the owner at
least 61 days prior written notice of lapse before terminating the insurance.
Can insurance on the life on an insured be reinstated after termination?
Insurance terminated due to the insufficiency of the net cash value to pay for
the monthly deductions may be reinstated. Reinstatement must occur while the
insured is living and any time within three years from the date of lapse.
Reinstatement is made by payment of an amount that, after the deduction of
percentage-of-premium charges, is large enough to cover all monthly deductions
which have accrued on this policy up to the effective date of reinstatement
plus the monthly deductions for the two months following the effective date of
reinstatement. If any policy loans and policy loan interest charged is not
repaid, this indebtedness will be reinstated along with the insurance. No
evidence of the insured's insurability will be required during the first 31
days following lapse, but will be required from the 32nd day to three years
from the date of lapse.
94-18673 Rev. 1-95 Minnesota Mutual 18
<PAGE>
ADDITIONAL INFORMATION
- ----------------------
Will this policy receive dividends?
Each year we will determine if this policy and other policies of its class
will share in our divisible surplus.
Dividends, if received, will be added to the account value of this policy or,
if elected by the owner, may be paid in cash. A dividend applied to the
account value will be allocated to the guaranteed account value or the sub-
accounts of the separate account in accordance with the owner's current
instructions for the allocation of net premiums. In the absence of such
instructions, dividends will be allocated to the guaranteed account and the
separate account in the same proportion as those values bear to each other
and, as to the account value in the separate account, to each sub-account in
the proportion that the account value in such sub-account bears to the account
value in all of the sub-accounts.
May the owner assign any interest under this policy?
Yes. However, we will not be bound by an assignment of this policy or of any
interest in it unless:
(1) It is made as a written instrument;
(2) The owner files the original instrument or a certified copy with us at
our home office; and
(3) We send the owner an acknowledged copy.
We are not responsible for the validity of any assignment. If a claim is
based on an assignment, we may require proof of interest of the claimant. A
valid assignment will take precedence over any claim of a beneficiary.
What if an insured's age is misstated?
If the age of the insured has been misstated, the death benefit and account
value will be adjusted. The adjustment will be the difference between two
amounts accumulated with interest. These two amounts are:
(1) the monthly cost of insurance charges that were paid, and;
(2) the monthly cost of insurance charges that should have been paid based on
the insured's correct age.
The interest rates used are the rates that were used in accumulating the
guaranteed account values.
94-18673 Rev. 1-95 Minnesota Mutual 19
<PAGE>
When does an insured's insurance become incontestable?
After the insurance has been in force during the insured's lifetime for a two
year period from the policy date, we cannot contest the insurance for any loss
that is incurred more than two years after the policy date, unless the net
cash value has dropped below the amount necessary to pay the insured's cost of
insurance on the insured's life. However, if there has been an increase in
the amount of insurance for which we required evidence of insurability, then,
to the extent of the increase, any loss which occurs within two years of the
effective date of the increase will be contestable.
Is there a suicide exclusion?
Yes. If an insured, whether sane or insane, dies by suicide, within two years
of the policy date, our liability will be limited to an amount equal to the
premium paid for that insured. If there has been an increase in the face
amount of insurance for which we required evidence of insurability, and if the
insured dies by suicide within two years of the effective date of the
increase, our liability with respect to that increase will be limited to the
cost of insurance charge attributable to such increase.
Are insurance and related records of the plan sponsor open for inspection?
Yes. The plan sponsor's records shall be open to inspection by us, at all
reasonable times, for any purposes relating to the provisions of the policy.
Do you have any additional voting rights?
Yes. If you have separate account units under this policy you may direct us
with respect to the voting rights of fund shares held by us and attributable
to this policy.
Could the payment of policy proceeds be postponed?
Normally, we will pay any policy proceeds within seven days after our receipt
of all the documents required for such a payment. Other than the death
proceeds, which are determined as of the date of death of the insured, the
amount of payment will be determined as of the end of the valuation period
during which a request is received at our home office. However, we reserve
the right to defer policy payments, including policy loans, for up to six
months from the date of the owner's request, if such payments are based upon
policy values which do not depend on the investment performance of the
separate account. In that case, if we postpone a payment other than a policy
loan payment for more than 31 days, we will pay the owner interest at the
greater of four percent per year or the rate required by law for the period
beyond that time that payment is postponed. For payments based on account
values which do depend on the investment performance of the separate account,
we may defer payment only: (a) for any period during which the New York Stock
Exchange is closed for trading (except for normal holiday closing); or (b)
when the Securities and Exchange Commission has determined that a state of
emergency exists which may make such payment impractical.
94-18673 Rev. 1-95 Minnesota Mutual 20
<PAGE>
Will the provisions of this policy conform with state law?
Yes. If any provision in this policy is in conflict with the laws of the
state governing the policy, the provision will be deemed to be amended to
conform to such laws.
Could any payments made under this policy be subject to claims of creditors?
To the extent permitted by law, neither this policy nor any payment hereunder
will be subject to the claims of creditors or to any legal process.
Are policy changes limited?
Currently, the frequency of policy changes are not limited. However, we
reserve the right to limit the number of policy changes to one per policy year
and to restrict such changes in the first policy year. For this purpose,
changes include increases or decreases in the face amount of insurance.
94-18673 Rev. 1-95 Minnesota Mutual 21
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A SMOKER DISTINCT BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
-------- -------- -------- ------- -------- -----
NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS NON-SMOKERS SMOKERS
------------- ------- ----------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.254 0.254 35 0.174 0.265 70 3.427 5.191
1 0.102 0.102 36 0.184 0.285 71 3.797 5.648
2 0.098 0.098 37 0.197 0.310 72 4.230 6.171
3 0.096 0.096 38 0.210 0.338 73 4.724 6.757
4 0.093 0.093 39 0.225 0.369 74 5.273 7.405
5 0.088 0.088 40 0.243 0.406 75 5.864 8.100
6 0.084 0.084 41 0.261 0.445 76 6.491 8.815
7 0.079 0.079 42 0.281 0.488 77 7.149 9.540
8 0.077 0.077 43 0.302 0.534 78 7.845 10.278
9 0.076 0.076 44 0.324 0.584 79 8.600 11.058
10 0.076 0.076 45 0.350 0.636 80 9.439 11.904
11 0.082 0.082 46 0.377 0.691 81 10.384 12.841
12 0.091 0.091 47 0.407 0.749 82 11.456 13.886
13 0.104 0.104 48 0.439 0.813 83 12.649 15.034
14 0.118 0.118 49 0.474 0.882 84 13.943 16.241
15 0.129 0.163 50 0.514 0.958 85 15.311 17.473
16 0.139 0.179 51 0.559 1.043 86 16.737 18.705
17 0.147 0.192 52 0.611 1.140 87 18.205 19.973
18 0.152 0.202 53 0.671 1.249 88 19.710 21.295
19 0.156 0.208 54 0.736 1.367 89 21.271 22.625
20 0.158 0.212 55 0.808 1.492 90 22.908 24.006
21 0.157 0.212 56 0.885 1.624 91 24.659 25.457
22 0.154 0.210 57 0.967 1.760 92 26.588 27.118
23 0.152 0.208 58 1.056 1.903 93 28.870 29.192
24 0.149 0.204 59 1.156 2.056 94 31.894 32.006
25 0.146 0.199 60 1.268 2.228
26 0.144 0.197 61 1.395 2.424
27 0.143 0.197 62 1.544 2.650
28 0.143 0.198 63 1.714 2.904
29 0.144 0.202 64 1.903 3.184
30 0.146 0.208 65 2.110 3.480
31 0.149 0.215 66 2.332 3.788
32 0.153 0.223 67 2.568 4.104
33 0.159 0.235 68 2.823 4.434
34 0.166 0.249 69 3.105 4.792
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18673 Rev. 1-95 Minnesota Mutual 22
<PAGE>
TABLE A
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATE
ON A UNI-SMOKER BASIS
PER $1,000 NET AMOUNT AT RISK
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE* RATE AGE* RATE AGE* RATE
- ---------- ----------- -------- ----------- -------- -----------
UNI-SMOKERS UNI-SMOKERS UNI-SMOKERS
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
0 0.254 35 0.214 70 3.835
1 0.102 36 0.229 71 4.214
2 0.098 37 0.246 72 4.654
3 0.096 38 0.265 73 5.157
4 0.093 39 0.287 74 5.712
5 0.088 40 0.312 75 6.310
6 0.084 41 0.339 76 6.941
7 0.079 42 0.368 77 7.599
8 0.077 43 0.398 78 8.289
9 0.076 44 0.431 79 9.033
10 0.076 45 0.465 80 9.857
11 0.082 46 0.502 81 10.784
12 0.091 47 0.541 82 11.835
13 0.104 48 0.583 83 13.006
14 0.118 49 0.629 84 14.270
15 0.134 50 0.681 85 15.605
16 0.148 51 0.739 86 16.991
17 0.159 52 0.805 87 18.421
18 0.168 53 0.879 88 19.895
19 0.174 54 0.960 89 21.422
20 0.176 55 1.047 90 23.024
21 0.177 56 1.138 91 24.740
22 0.176 57 1.234 92 26.640
23 0.173 58 1.334 93 28.901
24 0.171 59 1.444 94 31.905
25 0.167 60 1.568
26 0.166 61 1.709
27 0.166 62 1.871
28 0.166 63 2.055
29 0.169 64 2.259
30 0.172 65 2.478
31 0.178 66 2.711
32 0.184 67 2.956
33 0.193 68 3.217
34 0.202 69 3.507
</TABLE>
*This is the insured employee's attained age as of the last certificate
anniversary.
94-18673 Rev. 1-95 Minnesota Mutual 23
<PAGE>
Minnesota Mutual
400 Robert Street North -- St. Paul, Minnesota 55101-2098
VARIABLE UNIVERSAL LIFE INSURANCE -- VARIABLE DEATH BENEFIT
94-18673 Rev. 1-95 Minnesota Mutual 24
<PAGE>
================================================================================
EX99.A5Q
MINNESOTA MUTUAL INDIVIDUAL POLICY RIDER
ACCELERATED BENEFITS AGREEMENT
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company.400 Robert Street North.St. Paul,
Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This rider amends the policy to which it is attached and is subject to all its
terms and conditions.
WHAT DOES THIS POLICY RIDER PROVIDE?
This policy rider provides for the accelerated payment of the death benefits
provided under the policy to which it is attached.
If the insured has a terminal condition, as defined in this agreement, the
insured may request an accelerated benefit. If we agree to pay an accelerated
benefit, your cash values, loan values and the death benefit under your policy
will be reduced.
DEFINITIONS
- -----------
When we use the following words, this is what we mean:
DEATH BENEFIT
The face amount of the insured's policy less any existing loans or indebtedness
under the policy and less any term insurance provided by an additional benefit
agreement.
ACCELERATED BENEFIT
The amount of the death benefit we will pay if you are eligible under this
policy rider. We will calculate the accelerated benefit amount by multiplying
the death benefit by the accelerated benefit factor.
PHYSICIAN
An individual who is licensed to practice medicine or treat illness in the state
in which treatment is received. This does not include you, the insured, or a
member of your or the insured's immediate family.
IMMEDIATE FAMILY
The insured's or your spouse, child, parent, grandparent, grandchild, brothers
and sisters and their spouses.
TERMINAL CONDITION
- ------------------
94-18686 Minnesota Mutual 1
<PAGE>
What is a terminal condition?
A condition caused by sickness or accident which directly results in a life
expectancy of twelve months or less.
What evidence do we require of the insured's terminal condition?
A condition caused by sickness or accident which directly results in a life
expectancy of twelve months or less.
What evidence do we require of the insured's terminal condition?
We must be given evidence that satisfies us that the insured's life expectancy,
because of sickness or accident, is twelve months or less. That evidence must
include certification by a licensed physician. We reserve the right to ask for
independent medical verification of a terminal condition.
Payment of Accelerated Benefit
- ------------------------------
How do we calculate the accelerated benefit factor?
When we calculate this factor, we will consider the insured's age and sex, and
the option applied for. We will also base our calculation on certain
assumptions, which we may change from time to time, including but not limited to
assumptions about:
1. expected future premiums;
2. future dividends at the scale in effect when we make our calculation;
3. the insured's life expectancy.
How do we calculate the accelerated benefit?
We will multiply the death benefit by the accelerated benefit factor to
determine the accelerated benefit available.
Is there a processing charge?
Yes. We will subtract a processing charge of up to $150 from the accelerated
benefit before we pay that benefit to you.
What are the conditions for the payment of an accelerated benefit?
We will consider the payment of an accelerated benefit, subject to all of the
following conditions:
1. Your policy must be in force other than as extended term insurance and all
premiums due must be fully paid.
2. You must make application in writing and in a form which is satisfactory to
us. We will tell you what form is required.
3. The policy must not be assigned.
4. The policy must not have an irrevocable beneficiary.
94-18686 Minnesota Mutual 2
<PAGE>
Is the request for an accelerated benefit voluntary?
Yes. An accelerated benefit under this policy rider is not intended to cause you
to involuntarily reduce the death proceeds ultimately payable to the named
beneficiary. An accelerated benefit will be made available on a voluntary basis
only. Therefore:
1. If you are required by law to use this option to meet the claims of
creditors, whether in bankruptcy or otherwise, you are not eligible for this
benefit.
2. If you are required by a government agency to use this option in order to
apply for, obtain, or keep a government benefit or entitlement, you are not
eligible for this benefit.
How will we pay the accelerated benefit?
We will pay the accelerated benefit in one lump sum or in any other mutually
agreeable manner.
Is there a minimum or maximum death benefit for an accelerated benefit?
Yes. We reserve the right to set a minimum death benefit to be eligible for an
accelerated benefit under policy rider. If we do so, it will be at least
$10,000.
The maximum death benefit to be eligible for an accelerated benefit is
$1,000,000.
What is the effect on your policy of the receipt of an accelerated benefit?
If an insured elects to receive accelerated benefits which total the entire
accelerated benefit available under this policy rider, your policy and all other
benefits under your policy based on the insured's life will end. Any insurance
under your policy on the life of someone other than the insured will stay in
effect; we will waive all future premiums for that insurance, subject to the
provisions of your policy nd of any riders thereto.
Do you have to take the entire accelerated benefit?
No. You may choose to receive a partial accelerated benefit. If you do so, you
policy will stay in force.
You may reapply for the payment of the remaining accelerated benefit at any
time. However, we may ask for further satisfactory evidence that the insured
meets all requirements of the accelerated benefit. WE reserve the right to
charge an additional processing charge.
If you choose a partial accelerated benefit, your policy will remain in force
and premiums will be reduced. The face amount, cash values and outstanding loans
of your policy will be reduced in the same proportion as the reduction in the
death benefit resulting from your receipt of accelerated benefits.
94-18686 Minnesota Mutual 3
<PAGE>
If you elect to receive only a part of the accelerated benefit amount available
to you under this policy rider, the remaining death benefit under your policy
must be at least $25,000.
To whom will we pay accelerated benefits?
All accelerated benefits will be paid to you unless you validly assign them
otherwise. If the insured dies before all payments have been made, we will pay
the remainder to the beneficiary under the policy in one lump sum. The one sum
we pay will be the present value of the payments that remain, using the interest
rate we use to determine the payments.
Do we have the right to obtain independent medical verification?
Yes. We retain the right to have the insured medically examined at our own
expense to verify the insured's medical condition. We may do this as often as
reasonably required while accelerated benefits are being considered or paid.
Termination Of Agreement
- ------------------------
When does this agreement terminate?
This agreement will end at the earliest of:
1. the date any premium due for your policy remains unpaid at the end of the
grace period; or
2. the date we receive written request to cancel this policy rider; or
3. the date your policy matures, is surrendered, terminated or continued in
force as extended term or reduce paid-up insurance; or
4. the date of the insured's death.
This policy rider is effective as of the effective date on the specifications
page attached to your policy.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18686 Minnesota Mutual 4
<PAGE>
================================================================================
EX99.A5R
MINNESOTA MUTUAL INDIVIDUAL POLICY RIDER
(ACCIDENTAL DEATH AND DISMEMBERMENT BENEFIT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
General Information
- -------------------
This rider is issued in consideration for your application for accidental death
and dismemberment coverage and for the payment of the additional monthly charge.
The provisions summarized in this rider are subject to every term, condition,
exclusion, limitation and provision of the policy as amended, unless otherwise
expressly provided for herein,.
What does this rider provide?
This rider provides an accidental death and dismemberment benefit which is
subject to all of the provisions of the policy nd this rider.
"You" as used in this rider, means the insured person named on the
specifications page attached to your policy who applied for accidental death and
dismemberment insurance.
Accidental Death and Dismemberment Benefit
- ------------------------------------------
When will the accidental death and dismemberment benefit be payable?
We will pay the accidental death and dismemberment benefit upon receipt of
written proof satisfactory to us that you died or suffered dismemberment as a
result of an accidental injury. All payments by us are payable at our home
office. Proof of any claim under this rider must be submitted in writing to our
home office.
The proceeds will be paid in a single sum. We will pay interest on the proceeds
from the date of your death or dismemberment until the date of payment. Interest
will be at an annual rate determined by us.
What does death or dismemberment by accidental injury mean?
Death or dismemberment by accidental injury as used in this rider means that
your death or dismemberment results, directly and independently of all other
causes, from an accidental drowning or from an accidental injury which was
unintended, unexpected, and unforeseen. The injury must occur while your
coverage under this rider is in force. Your death or dismemberment must occur
within 180 days after the date of the injury. In no event will we pay the
accidental death or dismemberment benefit where your death or dismemberment
results from or is caused, directly or indirectly, by any of the following:
1. suicide whether sane or insane;
2. your commission of a felony;
3. bodily or mental infirmity, illness or disease;
94-18687 Minnesota Mutual 1
<PAGE>
4. drugs, poisons, gases or fumes, voluntarily taken, administered, absorbed,
inhaled, ingested or injected, unless administered on the advice of a
physician;
5. bacterial infection, other than infection occurring simultaneously with, and
as a result of, the accidental injury;
6. travel or flight in or on, or descent from or with, any kind of military
aircraft;
7. war or any act of war whether declared or undeclared.
What is the amount of the accidental death and dismemberment benefit?
The amount of your benefit is as listed below.
FOR LOSS OF
Life....................................................Face Amount of Insurance
Both Hands or Both Feet or Sight of Both Eyes...........Face Amount of Insurance
One Hand and One Foot...................................Face Amount of Insurance
One Foot and Sight of One Eye...........................Face Amount of Insurance
One Hand and Sight of One Eye...........................Face Amount of Insurance
Sight of One Eye............................One-half of Face Amount of Insurance
One Hand or One Foot........................One-half of Face Amount of Insurance
Your Face Amount of Insurance is shown on the specifications page attached to
your policy. Loss of hands or feet means complete severance at or above the
wrists or ankle joints. Loss of sight means the entire and irrecoverable loss of
sight. Your dismemberment must result from a single accident. Benefits are not
cumulative over successive accidents.
To whom will we pay the proceeds?
We will pay death proceeds to the beneficiary or beneficiaries who are named in
your application unless you subsequently change the beneficiary. In that event,
we will pay death proceeds to the beneficiary named in your last change of
beneficiary request. Proceeds for other losses shall be paid to you.
Additional Information
- ----------------------
When does insurance under this rider become effective?
Insurance under this rider becomes effective when your completed application for
accidental death and dismemberment coverage is approved by us and the first
premium is paid; however, in no event will insurance provided by this rider be
effective before your policy effective date as shown on the specifications page
attached to your policy.
What is the monthly cost to you for insurance under this rider?
The monthly cost to you for insurance under this rider is shown on the
specifications page attached to your policy.
94-18687 Minnesota Mutual 2
<PAGE>
WHEN WILL YOUR ACCOUNT BE CHARGED?
On the first day of each policy month, the monthly cost for insurance under this
rider will be charged to your account.
WHEN DOES INSURANCE UNDER THIS RIDER TERMINATE?
Insurance under this rider will automatically end on the earliest of the
following dates:
1. when any premium remains unpaid after the end of the grace period; or
2. when the policy is surrendered, matures or ends; or
3. on the last day for which premiums have been paid following your notice of
termination of coverage provided by this rider; or
4. on your 70th birthday; or
5. when we pay a claim to you under this rider.
WHEN IS THE BENEFIT UNDER THIS RIDER INCONTESTABLE?
Coverage provided by this rider is subject to the incontestability provision of
the policy.
WILL ACCOUNT VALUES ACCUMULATE UNDER THIS RIDER?
No. Your insurance under this rider will not accumulate account values.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18687 Minnesota Mutual 3
<PAGE>
================================================================================
EX99.A5S
MINNESOTA MUTUAL INDIVIDUAL POLICY RIDER (WAIVER AGREEMENT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . 400 Robert Street North . St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This is issued in consideration of your application and the timely payment of
the additional required premium. The provisions summarized in this rider are
subject in every respect to the policy and amendments thereto.
WHAT DOES THE WAIVER OF DEDUCTION BENEFIT PROVIDE?
If you become totally and permanently disabled, as hereinafter defined, while
under age 60, upon receipt of due proof of such disability, your insurance
(including all applicable riders) under the policy will be continued in force,
subject to the following provisions and without payment of premiums for you
during the uninterrupted continuance of such total and permanent disability.
WHAT IS "TOTAL" DISABILITY?
Total disability is a disability which occurs while your insurance in force and
results from an accidental injury or a disease that continuously prevents you
from engaging in an occupation. You must be under the care of a licensed
physician other than yourself. During the first 24 months of total disability,
"occupation" means your regular occupation. After 24 months, it means any
occupation for which you are reasonably fitted by education, training or
experience.
Your total and irrevocable loss of the following shall be considered total
disability even if you engage in any occupation:
1. the sight of both eyes; or
2. the use of both hands; or
3. the use of both feet; or
4. the use of one hand one foot.
WHAT IS "PERMANENT" DISABILITY?
Total disability will be considered permanent only after it has existed
continuously for at least six months.
HOW LONG WILL INSURANCE BE CONTINUED?
If you become totally and permanently only after it has existed continuously for
at least six months.
HOW LONG WILL INSURANCE BE CONTINUED?
If you become totally and permanently disabled, insurance will be continued:
94-18688 Minnesota Mutual 1
<PAGE>
1. until your 95th birthday; or
2. until the date you are no longer totally and permanently disabled; or
3. until the date you terminate or surrender your insurance;
whichever occurs first.
WHAT WILL BE CONSIDERED DUE PROOF OF DISABILITY?
You must furnish evidence satisfactory to us that your total disability:
1. commenced while insurance n your life under the policy was in force; and
2. commenced before your 60th birthday; and
3. was continuous for six months or more.
We will, from time to time, also require additional proof satisfactory to us
that you continue to be totally and permanently disabled. We may also require
you to submit to one or more medical examinations at our expense. However, we
will not require a medical examination of you more frequently than once a year
if the total disability has continued for two years.
ARE THERE ANY LIMITATIONS?
This benefit will not be effective if your total disability results directly
from intentionally self-inflicted injuries or from an act of war while you are
serving in the military, naval or air forces of any country at war, declared or
undeclared.
WHEN MUST WE BE NOTIFIED?
We must receive written notice of your total disability at our home office:
1. while you are living and totally disabled; and
2. not later than one year after the termination of your insurance under the
policy; and
3. within one year of the date you request as the date for the commencement of
this benefit.
However, the failure to give this notice within the time provided will not
invalidate the claim if it is shown that notice was given as soon as reasonably
possible.
WHAT IS YOUR COST FOR THIS BENEFIT?
Your cost for this benefit is shown on the specifications page attached to your
policy.
WHAT IF YOUR INSURANCE UNDER THE POLICY LAPSES?
If your insurance lapses before notice of your total and permanent disability is
received at our home office, your insurance will be continued only if the notice
is received within one year after your insurance lapses. Also, the total
disability must have commenced prior to the date the net cash value became zero
or during the grace period allowed.
94-18688 Minnesota Mutual 2
<PAGE>
WHEN IS THE BENEFIT UNDER THIS AGREEMENT INCONTESTABLE?
This agreement is subject to the incontestability provision of the policy for
each insured.
CAN INSURANCE THAT WAS CONTINUED UNDER THIS AGREEMENT BE CONVERTED?
Yes. Insurance under the policy may be converted as set for in your policy
during the insrued's lifetime and within 31 days after the insured ceases to be
totally and permanently disabled.
IS THIS BENEFIT RETROACTIVE?
Yes. The cost of insurance, cost of riders, and administration fees falling due
before we approve the insured's total disability claim will be deducted from
your account value. If the claim is approved, those charges which were deducted
after the insured became totally and permanently disabled will be credited to
your account value.
WILL YOUR ACCOUNT BE CREDIT WITH PREMIUM CONTRIBUTIONS AS A RESULT OF THIS
BENEFIT?
No. Except for interest which accrues on the account value, the account value
will not increase while insurance is being continued under this agreement.
Nothing contained herein will prohibit you from paying premiums.
This agreement is effective as of the policy date.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
94-18688 Minnesota Mutual 3
<PAGE>
================================================================================
MINNESOTA MUTUAL INDIVIDUAL POLICY RIDER (CHILDREN'S BENEFIT)
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - 400 Robert Street North - St.
Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------
This rider is issued in consideration for your application for children's
coverage and for the payment of the additional monthly charge. The provisions
summarized in this rider are subject to every term, condition, exclusion,
limitation and provision of the policy as amended, unless otherwise expressly
provided for herein.
WHAT DOES THIS RIDER PROVIDE?
This rider provides life insurance on the lives of your eligible children.
WHAT MEMBERS OF YOUR FAMILY ARE ELIGIBLE FOR CHILDREN'S COVERAGE?
The following members of your family are eligible for insurance under this
rider:
Your unmarried child or children, including stepchildren living in your
household and children legally adopted, who
(i) are between the ages of 14 days and 23 years; and
(ii) are dependent upon you for financial support.
Any child who, subsequent to your policy effective date, meets the requirements
of this provision will become insured on the date he or she so qualifies.
DEATH BENEFIT
- -------------
WHAT IS THE AMOUNT OF LIFE INSURANCE ON EACH INSURED CHILD?
The amount of life insurance on each insured child is shown on the
specifications page attached to your policy.
WHEN WILL THE DEATH BENEFIT BE PAYABLE?
We will pay the death benefit upon receipt of written proof satisfactory to us
that a child insured under this rider died. All payments by us are payable at
our home office. Proof of any claim under this rider must be submitted in
writing to our home office.
TO WHOM WILL WE PAY THE PROCEEDS?
All proceeds payable under this rider will be paid to you.
ADDITIONAL INFORMATION
- ----------------------
94-18689 Minnesota Mutual 1
<PAGE>
WHEN DOES INSURANCE ON YOUR ELIGIBLE CHILDREN BECOME EFFECTIVE?
Insurance on your eligible children becomes effective when your completed
application for children's coverage is approved by us; however, in no event will
insurance on your eligible children be effective before your insurance under the
policy is effective.
WHAT IS THE MONTHLY COST TO YOU FOR INSURANCE UNDER THIS RIDER?
The monthly cost to you for insurance under this rider is shown on the
specifications page attached to your policy.
WHEN WILL YOUR ACCOUNT BE CHARGED?
On the first day of each policy month, the monthly cost for insurance under this
rider will be charged to your account.
WHEN DOES INSURANCE ON AN INSURED CHILD TERMINATE?
Insurance on the life of a child insured under this rider will terminate on the
earliest of:
1. the date you request that insurance on your eligible children be
terminated;
2. the date the child is no longer eligible for insurance under this rider;
3. the date you are no longer insured under the policy.
WILL ACCOUNT VALUES ACCUMULATE FOR AN INSURED CHILD?
No. The insurance on an insured child will not accumulate account values.
/s/Dennis E. Prohofsky /s/Robert L. Senkler
Secretary President
94-18689 Minnesota Mutual 2
<PAGE>
RE-INCORPORATION
of
"THE BANKERS LIFE ASSOCIATION OF MINNESOTA"
and
Change of Name to
"THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY"
"Resolved, that THE BANKERS LIFE ASSOCIATION OF MINNESOTA,
hereby authorizes and declares its Re-incorporation, and does hereby Re-
incorporate under and by virtue of Chapter One Hundred and Seventy-five (175),
as amended, of the General Laws of the State of Minnesota for the year Eighteen
Hundred and Ninety-five entitled 'An Act to Revise and Codify the Insurance Laws
of the State'; and to that end does hereby adopt the following Articles of
Incorporation, in lieu of, and as a substitute for, any and all Articles of
Incorporation, heretofore existing, viz:
ARTICLE I.
The future corporate name of this corporation is THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY.
ARTICLE II.
The location and Home Office of the Company is and shall be in the City of
Saint Paul, State of Minnesota.
ARTICLE III.
This Company is re-incorporated for the purpose of transacting and it
proposes, upon the Mutual Plan, to transact, the business of, and to make,
insurance upon the lives of individuals, and every insurance appertaining
thereto or connected therewith; to grant, purchase or dispose of annuities and
endowments of any kind whatsoever; and to take risks, and insure, against
accident to or sickness of persons.
It is proposed and intended that the duration and continuance of this
corporation and its corporate powers shall be perpetual, and that it shall have
perpetual succession.
ARTICLE IV.
By-laws not in conflict herewith or with the law, may be adopted, and from
time to time amended, repealed or abrogated in whole or in part, by the Board of
Trustees.
<PAGE>
ARTICLE V.
Except as herein otherwise expressly provided, all of the corporate powers
of the company shall be exercised and the amount of compensation of Officers and
Trustees shall be regulated by a Board of Trustees, and authority is vested in
the Board of Trustees to appoint, and delegate power and authority to, such
Officers, Servants and Agents as said Board shall by resolution or by-law
determine.
ARTICLE VI.
The Board of Trustees shall consist of at least five persons, and may
consist of a greater number, if the by-laws shall at any time so provide.
All of the members of the Board of Trustees shall be residents and citizens
of the State of Minnesota, until such time as the By-laws otherwise provide.
The names of the members of the present Board of Trustees are CHARLES H.
BIGELOW, MAURICE AUERBACH, JOHN B. SANBORN, CRAWFORD LIVINGSTON and J.F.R. Foss.
ARTICLE VII.
The first meeting of members hereafter shall be held at three o'clock in
the afternoon on the first Tuesday in March, A.D. Nineteen Hundred and Two at
the Home Office of the Company; provided, that a special meeting, or special
meetings of members may be held prior to said date upon due notice.
ARTICLE VIII.
The regular annual meeting of members shall be held at three o'clock in the
afternoon of the first Tuesday in March of each year, at the Home Office, for
the election of Trustees, whenever any are to be elected, and for the
transaction of such other business as may properly come before it.
ARTICLE IX.
Article ten of these Articles relates solely to a Guaranty Trust Fund
heretofore created by the deposits of members who became such under the
assessment plan.
ARTICLE X.
All amounts pledged to this Company to secure payment of assessments
occasioned by death of its members shall be used only for that purpose, and
meanwhile the same shall be and remain invested in United States Registered
Bonds, and shall constitute and be known as "The Guaranty Trust Fund". Such
bonds shall be made payable to this company, and shall be
<PAGE>
transferable or convertible only upon resolution of its Board of Trustees, and
such board shall have the exclusive charge and control thereof.
All interest realized from such bonds shall meanwhile be used to defray the
Company's operating expenses.
This article shall never be amended or in any way at all changed without
the consent of every member of this Company, to be given in writing, signed by
him and filed with the Company's Secretary, and reciting in full the proposed
amendment or change.
ARTICLE XI.
These Articles may be amended at any time to any extent, not in violation
of law, by resolution adopted by a two-thirds vote of all the votes cast by the
members at any special meeting lawfully called for that purpose, or by such two-
thirds vote at any regular meeting of the members."
<PAGE>
EXHIBIT 99.A.6.B
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
As Amended by Resolution of the Board of
Trustees
July 22, 1994
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. MEMBERS
Section 1. Regular Annual Meetings. . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . 1
Section 3. Number of Votes. . . . . . . . . . . . 2
Section 4. Proxies. . . . . . . . . . . . . . . . 2
Section 5. Quorum . . . . . . . . . . . . . . . . 2
Section 6. Presiding Officer and Recording
of Minutes . . . . . . . . . . . . . . 3
ARTICLE II. BOARD OF TRUSTEES
Section 1. Composition of the Board of Trustees . 3
(a) Number of Trustees . . . . . . . . . . . 3
(b) Qualifications . . . . . . . . . . . . . 4
(c) Election . . . . . . . . . . . . . . . . 4
(d) Term of Office of Elected Trustee. . . . 4
(e) Appointment by the Board . . . . . . . . 5
Section 2. Meetings of the Board. . . . . . . . . 5
(a) Place of Meetings. . . . . . . . . . . . 5
(b) Regular Meetings . . . . . . . . . . . . 5
(c) Special Meetings . . . . . . . . . . . . 6
(d) Notice . . . . . . . . . . . . . . . . . 6
(e) Quorum . . . . . . . . . . . . . . . . . 7
(f) Action without Meeting. . . . . . . . . . 7
Section 3. Removal . . . . . . . . . . . . . . . . . . 7
Section 4. Chair of the Board. . . . . . . . . . . . . 8
Section 5. Compensation. . . . . . . . . . . . . . . . 8
ARTICLE III. COMMITTEES OF THE BOARD
Section 1. Standing and Other Committees
of the Board . . . . . . . . . . . . . 9
(a) Creation of Committees . . . . . . . . . 9
(b) Appointments . . . . . . . . . . . . . . 9
(c) Qualifications . . . . . . . . . . . . 9
(d) Committee Chairs . . . . . . . . . . . . 10
(e) Meetings . . . . . . . . . . . . . . . . 10
(f) Quorum . . . . . . . . . . . . . . . . . 10
(g) Vacancies. . . . . . . . . . . . . . . . 11
(h) Minutes and Reports . . . . . . . . . . 11
Section 2. Audit Committee. . . . . . . . . . . . 11
Section 3. Corporate Governance and Public
Affairs Committee. . . . . . . . . . . 12
Section 4. Executive Committee. . . . . . . . . . 14
Section 5. Investment Committee . . . . . . . . . 14
Section 6. Personnel and Compensation Committee . 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV. OFFICERS
Section 1. Number. . . . . . . . . . . . . . . . 17
Section 2. Election. . . . . . . . . . . . . . . 17
Section 3. Term of Office. . . . . . . . . . . . 17
Section 4. Removal . . . . . . . . . . . . . . . 18
Section 5. Vacancies . . . . . . . . . . . . . . 18
Section 6. Duties of Officers. . . . . . . . . . 18
(a) Chief Executive Officer. . . . . . . . . 18
(b) President . . . . . . . . . . . . . . . 18
(c) Vice Presidents. . . . . . . . . . . . . 19
(d) Secretary. . . . . . . . . . . . . . . . 19
(e) Treasurer . . .. . . . . . . . . . . . . 20
(f) Controller. . . .. . . . . . . . . . . . 20
(g) Actuary. . . . . . . . . . . . . . . . . 20
(h) Other Officers . . . . . . . . . . . . . 20
Section 7. Absence or Disability . . . . . . . . 21
ARTICLE V. DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. Fund and Investments. . . . . . . . . 21
Section 2. Deposits. . . . . . . . . . . . . . . 21
ARTICLE VI. INDEMNIFICATION
Section 1. Trustees and Officers . . . . . . . . 22
Section 2. Employees and Agents. . . . . . . . . 23
Section 3. Insurance . . . . . . . . . . . . . . 24
Section 4. Other Indemnification Permitted . . . 24
ARTICLE VII. CORPORATE SEAL . . . . . . . . . . . . . 24
ARTICLE VIII. AMENDMENTS. . . . . . . . . . . . . . . 25
</TABLE>
<PAGE>
BY-LAWS
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
AS AMENDED BY RESOLUTION
OF THE BOARD OF TRUSTEES
JULY 22, 1994
ARTICLE I
MEMBERS
Section 1. Regular Annual Meetings. The regular annual meeting of members
-----------------------
shall be held at three o'clock in the afternoon of the first Tuesday in March of
each year, at the Home Office of the Company, as required by Article VIII of the
Articles of Re-incorporation. Notice of the meeting shall be as prescribed in
Section 61A.32 of Minnesota Statutes, as amended from time to time.
Section 2. Special Meetings. A special meeting of the members may be
----------------
called at any time by the Board of Trustees or by the joint action of either the
Chair of the Board or the Chief Executive Officer and not less than three other
Trustees. The Secretary shall give notice of the special meeting by causing to
be mailed to each member, at the member's address then appearing on the books of
the Company, a notice of the time, place and purpose of the meeting at least
thirty days before the date set for the meeting.
-1-
<PAGE>
Section 3. Number of Votes. At each meeting of the members, every person
---------------
insured by this Company will be a member entitled to one vote, and one
additional vote for each one thousand dollars of insurance in excess of the
first one thousand dollars, subject to a maximum of one hundred votes; provided,
however, that, in the case of group insurance, voting rights shall be determined
by Section 61A.32 of Minnesota Statutes, as amended from time to time. The
Company has no cumulative voting.
Section 4. Proxies. Any member may vote by proxy at any meeting of
-------
members. To be valid, the proxy appointment must be in writing and must be
filed with, and received by, the Secretary at the Home Office of the Company at
least five days before the meeting at which it is to be used, exclusive of the
day of the meeting, but inclusive of the day of receipt and filing of the proxy.
A proxy appointment may be for a specified period of time or may provide that it
will be in effect until revoked. A proxy may be revoked by a member at any time
by written notice to the Secretary, or by executing a new proxy appointment and
filing it as required herein, or by personally appearing and exercising his or
her rights as a member at any meeting of the members.
Section 5. Quorum. Insurance of an amount not less than One Hundred
------
Million Dollars, represented in person or by proxy, or partly in person and
partly by proxy, shall constitute a quorum at any regular or special meeting of
members. In the
-2-
<PAGE>
absence of a quorum, those members present may adjourn the meeting from time to
time until a quorum shall be present. If a quorum is present when a duly called
or held meeting is convened, the members present may continue to transact
business until adjournment, even though member(s) may have left the meeting so
that less than a quorum is present at the meeting.
Section 6. Presiding Officer and Recording of Minutes. Meetings of the
------------------------------------------
members shall be presided over by the Chair of the Board, if present, otherwise
by the Chief Executive Officer, if present, otherwise by the President, if
present, otherwise by a Vice President; provided that if none of those
designated are present, then by a chair to be chosen by a majority of the
members who are present in person or by proxy. The Secretary, if present,
otherwise an Assistant Secretary, shall record the minutes of every meeting;
provided that if none of those designated are present, then a person to record
the minutes of that meeting shall be chosen by a majority of the members who are
present in person or by proxy.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Composition of the Board of Trustees. The composition of the
------------------------------------
Board of Trustees shall be as follows:
(a) Number of Trustees. The property, affairs and business of the Company
------------------
shall be managed by a Board of Trustees which shall consist of not fewer than
five (as required by
-3-
<PAGE>
Article VI of the Articles of Re-incorporation) or more than sixteen persons,
the number of which for each year shall be determined by the members at their
regular annual meeting. The person or persons who hold the offices of Chief
Executive Officer and President shall, without the necessity of election, be
Trustees by virtue of the office.
(b) Qualifications. Trustees need not be members of the Company, nor
--------------
residents or citizens of Minnesota. Additional qualifications for initial or
continued Board membership may be prescribed from time to time by the Board.
(c) Election. Except as otherwise provided in these By-Laws, Trustees
--------
shall be elected at regular annual meetings of the members. Nominations for the
office of Trustee shall be made before voting for that office commences. Votes
for persons not so nominated shall be disregarded. The election of each Trustee
shall be by a plurality of the votes cast for the office. In the event the
members fail to elect nominees to fill all of the offices to be elected, then
the Board of Trustees shall have the authority to choose qualified persons to
fill such office or offices by appointment as provided in Section 1(e) of this
Article II.
(d) Term of Office of Elected Trustee. The term of office of each elected
---------------------------------
Trustee shall be to such of the next three regular annual meetings of the
members as is stated in his or her nomination, or, if none is stated, to the
third such meeting following the date of his or her election, or until his
-4-
<PAGE>
or her earlier death, resignation or removal. No Trustee shall be elected to the
Board for a term of office which extends beyond the annual meeting of members
which coincides with or next follows his or her seventieth birthday.
(e) Appointment by the Board. If the office of any Trustee is not filled
------------------------
by the members at a regular annual meeting of members, a majority of the
Trustees may choose a person to fill that office. If the office of any Trustee
becomes vacant for any reason, a majority of the remaining Trustees may choose a
successor. Each Trustee so chosen shall hold office until the next regular
annual meeting of the members. Not more than one-third of the maximum number of
Trustees may be so chosen by the Board between regular annual meetings of the
members.
Section 2. Meetings of the Board. Meetings of the Board of Trustees shall
---------------------
be as follows:
(a) Place of Meetings. Meetings of the Board may be held either within or
-----------------
without the State of Minnesota.
(b) Regular Meetings. Regular meetings of the Board shall be held at such
----------------
times and places as are fixed from time to time by resolution of the Board.
Notice need not be given of those regular meetings of the Board held at the
times and places fixed by resolution, nor need notice be given of adjourned
meetings. If either or both the time or place of a regular meeting are other
than that fixed by resolution, a telephonic or written notice shall be given to
each Trustee not
-5-
<PAGE>
less than twenty-four hours prior to the time of that regular meeting.
(c) Special Meetings. Special meetings of the Board may be held at any
----------------
time upon call either of the Chair of the Board, or of the Chief Executive
Officer, or upon written request of any three or more Trustees. Except as
otherwise provided, notice of a special meeting shall be given to each Trustee
either in writing or by telephone. Notice of at least seventy-two hours prior
to the meeting time is required if written notice is deposited in the United
States mail in the City of Saint Paul. Notice of at least twenty-four hours
prior to the meeting time is required if written notice is left at either the
place of business or residence of each Trustee. Notice of at least six hours
prior to the meeting time is required if all Trustees are personally either
served with a written notice or contacted by telephone. Notice need not be
given to the Trustees of adjourned special meetings. Also, special meetings may
be held at any time without notice if all of the Trustees are present, or if,
before the meeting, those not present waive such notice in writing. Notice of a
special meeting shall state the purpose of the meeting.
(d) Notice. All notices of meetings of the Board required to be given
------
under these By-Laws shall be given either by the person or persons who called
the meeting, or by the Secretary, or, in his or her absence, by an Assistant
Secretary.
-6-
<PAGE>
(e) Quorum. A majority of the Trustees shall constitute a quorum for the
------
transaction of business at any meeting of the Board. In the absence of a
quorum, those Trustees present may adjourn the meeting from time to time until a
quorum shall be present. Except as otherwise provided in these By-Laws, the
acts of a majority of the Trustees present at any meeting at which a quorum is
present shall be the acts of the Board. The Trustees present at a duly called
or held meeting at which a quorum is present, may continue to transact business
until adjournment, even though Trustee(s) may have left the meeting so that less
than a quorum is present at the meeting.
(f) Action without Meeting. Any action which may be taken at a meeting of
----------------------
the Board may be taken without a meeting if a consent in writing, setting forth
the actions to be taken, shall be signed by all of the Trustees. The action so
taken shall be effective on the date on which the last signature is placed on
the writing or writings, or on such earlier effective date as is stated in the
writing.
Section 3. Removal. A member of the Board of Trustees who fails to meet
-------
the standards set by the Board for Board members, or who is deemed by the
remaining members of the Board to be untrustworthy, or incapable by reason of
total and permanent disability of fulfilling the duties of his or her office,
may be removed from office by the unanimous vote of the remaining Trustees then
in office.
-7-
<PAGE>
Section 4. Chair of the Board. The Board of Trustees shall elect annually
------------------
from among its members a Chair of the Board. The Chair of the Board shall
continue to serve at the will and pleasure of the Board, for the term of his or
her election or until his or her prior death, resignation, or removal from the
Board. The Chair of the Board shall preside at meetings of the members, of the
Board and of the Executive Committee. In addition, the Chair shall have such
other powers, duties and responsibilities as may be determined and assigned by
the Board or these By-Laws.
Section 5. Compensation. Except as provided in this Section, Trustees
------------
shall be entitled to reasonable compensation for their services, and to
reimbursement for reasonable expenses incurred, as Trustees and as members of
committees of the Board. The amount of compensation shall be set from time to
time by resolution of the Board of Trustees. Except as otherwise expressly
provided by the Board, no such compensation or reimbursement shall be paid to an
officer of the Company who also serves as a Trustee. Any Trustee receiving
compensation under this Section shall not be barred from serving the Company in
a non-officer capacity and receiving reasonable compensation for such other
services.
-8-
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Standing and Other Committees of the Board. The Board of
------------------------------------------
Trustees shall have the following committees:
(a) Creation of Committees. The following designated standing committees
----------------------
of the Board are hereby authorized and created: Audit, Corporate Governance and
Public Affairs, Executive, Investment, and Personnel and Compensation. In
addition, the Board is authorized to create any other committee or committees of
the Board as the Board from time to time deems necessary. The name, duration
and duties of each other committee and the number of members thereof shall be as
prescribed in the action creating the committee.
(b) Appointments. Except as provided in Section 4 of this Article III,
------------
the members of each standing Board committee shall consist of those Trustees
appointed by the Board of Trustees. Each Trustee appointed to a Board committee
shall continue to serve on that committee at the will and pleasure of the Board
for the period specified in his or her appointment or until his or her earlier
death, resignation or removal.
(c) Qualifications. Each Trustee is qualified to be appointed and
--------------
successively reappointed to one or more committees, except that a Trustee who
also acts as an officer or employee of the Company shall not serve as a member
of the Audit Committee.
-9-
<PAGE>
(d) Committee Chairs. The Board shall appoint one of the members of each
----------------
of the Board committees, except the Executive Committee, to chair that committee
and, in its discretion, may also appoint one of the members of each of the
committees to serve as a vice chair of that committee. If neither the committee
chair nor the committee vice chair is present at a meeting of a committee, the
committee members present at that committee meeting shall elect another
committee member to chair that meeting.
(e) Meetings. Each committee shall meet at such times as the chair of
--------
that committee may designate or as a majority of that committee may determine,
subject to a minimum of not less than two meetings per calendar year, except
that the Executive Committee is not subject to a minimum number of meetings
requirement.
(f) Quorum. A majority of each Board committee shall constitute a quorum
------
at each meeting of that committee. At any meeting of a committee at which a
quorum is present, the committee may continue to transact business until
adjournment, even though committee member(s) may have left the meeting so that
less than a quorum is present at the meeting. If a quorum is not present for a
committee meeting, the chair of that committee may request the Board to appoint
a sufficient number of other Trustees to serve as members of the committee only
for that meeting, so as to obtain a quorum. If the Board makes the
-10-
<PAGE>
requested appointments, any action so taken at the committee meeting shall be
valid and binding.
(g) Vacancies. In the case of the death, resignation or removal of a
---------
member of a committee, the Board may appoint another Trustee to fill the vacancy
so created on that committee for the balance of the unexpired appointment. The
appointment shall be subject to the qualifications set forth for that committee.
(h) Minutes and Reports. Each committee shall keep a written record of
-------------------
its acts and proceedings and shall submit that record to the Board of Trustees
at a regular meeting of the Board and at such other times as requested by the
Board or when a majority of the committee deems it desirable to do so. Failure
to submit a record will not, however, invalidate any action taken by the
committee prior to the time the record of the action was, or should have been
submitted to the Board. The minutes of the Corporate Governance and Public
Affairs, Executive, and Personnel and Compensation Committees shall be recorded
by the Secretary. The minutes of each of the other committees shall be recorded
by the person designated by the chair of that committee.
Section 2. Audit Committee. The Audit Committee shall consist of not
---------------
fewer than four non-management Trustees and shall have the following powers and
duties:
-11-
<PAGE>
(a) Annually recommend to the Board a firm of independent certified public
accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's internal
auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the Company
conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and disaster
recovery.
(h) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 3. Corporate Governance and Public Affairs Committee. The
-------------------------------------------------
Corporate Governance and Public Affairs Committee shall consist of not fewer
than four Trustees and shall have the following powers and duties:
-12-
<PAGE>
(a) Annually review the size and composition of the Board.
(b) Periodically develop and recommend to the Board the standards to be
met by persons selected for nomination to the Board.
(c) Prior to the annual meeting of members each year, recommend to the
Board a slate of persons to be nominated to serve on the Board for whom the
Company should solicit proxies.
(d) On the recommendation of the Chair of the Board or the Chief Executive
Officer, review the ongoing affiliation with the Board of any member who fails
to meet the standards set by the Board for Board members, or who is deemed by
the remaining members of the Board to be untrustworthy, or incapable by reason
of total and permanent disability of fulfilling the duties of his or her office.
(e) Periodically, review the powers and duties of Board committees.
(f) Annually review and approve the methods and levels of compensation for
members of the Board, including but not limited to benefit plans and
compensation deferral plans; and review and make changes in the method and
timing of benefits for individuals covered under any such plans in accordance
with the terms of such plans.
(g) Annually review and approve the contributions policy.
(h) Annually review Company contributions to be made to the foundation.
-13-
<PAGE>
(i) Review Company's code of ethics and conflict of interest disclosures.
(j) Review Company policy on major issues in areas of social
responsibility and public affairs, including such matters as voting and
solicitation of proxies, "social purpose" investments, and other like matters as
may properly come before it.
(k) Periodically review Company by-laws.
(l) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 4. Executive Committee. The Executive Committee shall consist of
-------------------
the Chairs of the other standing Board committees and the Chair of the Board
and, in the interim between meetings of the Board, shall have and exercise all
of the powers and authority of the Board (including the determination of whether
a person is entitled to indemnification under Article VI of these By-Laws as
required by Section 300.083, Subdivision 6(b) of Minnesota Statutes, as amended
from time to time), except the Committee shall not:
(a) alter or amend the By-Laws;
(b) make appointments to the Board of Trustees;
(c) elect, appoint or terminate the Chairman of the Board, Chief Executive
Officer, President, any Vice President, Secretary, or Treasurer.
Section 5. Investment Committee. The Investment Committee shall consist
--------------------
of not fewer than four Trustees and
-14-
<PAGE>
shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for Company investments, the
procedures for the valuation of real estate owned by the Company and commercial
loans held by the Company, recommend changes thereto, and submit to the Board
for its approval and adoption the policy and procedures for the ensuing twelve
months.
(b) Review all investments, except policy loans, of Company funds,
including their acquisition and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
Section 6. Personnel and Compensation Committee. The Personnel and
------------------------------------
Compensation Committee shall consist of not fewer than four Trustees and shall
have the following powers and duties:
(a) For senior management, annually review performance and total
compensation, including salary, bonus plans, employee benefits and perquisites.
Senior management is defined as Chief Executive Officer, Chief Operating
Officer, President and all vice presidents. Approve and report to the Board for
ratification total compensation for the Chief Executive
-15-
<PAGE>
Officer, President and Chief Operating Officer. Approve total compensation for
the vice presidents.
(b) Review qualifications of candidates for election as officers of the
Company. Recommend to the Board for approval officer candidates for the
positions of Chief Executive Officer, Chief Operating Officer, President, all
vice presidents, controller, secretary, treasurer, assistant secretary and
assistant treasurer.
(c) Periodically review succession plans for Chief Executive Officer,
Chief Operating Officer and senior vice presidents.
(d) Review and report to the Board organization changes that have
significant Company and business impact.
(e) Review and approve special employment or compensation contracts for
active, retired or terminated employees.
(f) Annually review and approve salary policies for Company employees.
(g) Annually review and recommend to the Board a PSP distribution to
covered employees.
(h) Periodically review and approve changes to compensation deferral plans
for officers and employees, including the designation of plan trustees and plan
administrators. Review and make changes in the method of timing of benefits for
individuals covered under any of said plans in accordance with the terms of said
plans. Annually determine and approve the interest crediting rates for amounts
-16-
<PAGE>
held under deferred compensation plans for officers, employees and Trustees and
make any other determination necessary or advisable in the administration of
those plans.
(i) Periodically review and approve major changes to benefit plans.
(j) Annually review programs and progress made for developing diversity at
all levels of the Company and submit findings to the Board.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Company shall be a Chief Executive
------
Officer, a President, one or more Vice Presidents, a Treasurer, an Actuary, a
Controller, a Secretary, and one or more Assistant Secretaries. In addition,
there may be such other officers as the Board of Trustees from time to time may
deem necessary. One individual may hold two or more offices, except that of
President and Secretary.
Section 2. Election. Officers shall be elected or appointed by the Board
--------
of Trustees.
Section 3. Term of Office. Each officer shall serve for the term stated
--------------
in his or her election or appointment or until his or her earlier death,
resignation or removal.
-17-
<PAGE>
Section 4. Removal. Any officer may be removed from office, with or
-------
without cause, at any time by the affirmative vote of the majority of the Board
of Trustees then in office.
Section 5. Vacancies. Any vacancy in any office from any cause may be
---------
filled by the Board of Trustees at its next meeting.
Section 6. Duties of Officers. The duties of the officers shall be as
------------------
follows:
(a) Chief Executive Officer. The Chief Executive Officer shall have
-----------------------
general active management of the business of the Company and, in the absence of
the Chair of the Board, shall preside at all meetings of the members and the
Board of Trustees, and shall see that all orders and resolutions of the Board
are carried into effect. Except where, by law, the signature of the President
is required, the Chief Executive Officer shall possess the same power as the
President to sign and execute all authorized certificates, contracts, bonds, and
other obligations of the Company.
(b) President. The President, in the absence of the Chair of the Board
---------
and the Chief Executive Officer, shall preside at all meetings of the members
and the Board of Trustees. The President shall be the chief administrative
officer of the Company and shall have the power to sign and execute all
authorized certificates, contracts, bonds, and other obligations of the Company.
The President also shall perform such other duties as are incident to the office
or are
-18-
<PAGE>
properly required of him or her by the Board or the Chief Executive Officer.
(c) Vice Presidents. Each Vice President will perform those duties as
---------------
from time to time may be assigned by the Chief Executive Officer. In the
absence of the President, a Vice President designated by the Board of Trustees
shall perform the duties of the President. A Vice President shall have the
power to sign and execute all authorized certificates, contracts, bonds and
other obligations of the Company. One or more of the Vice Presidents may be
entitled Executive Vice President, Senior Vice President, Vice President, Second
Vice President, Group Vice President, Assistant Vice President, or such other
variation thereof as may be designated by the Board.
(d) Secretary. The Secretary shall give notice and keep the minutes of
---------
all meetings of the members, the Board of Trustees, the Corporate Governance and
Public Affairs Committee, the Executive Committee and the Personnel and
Compensation Committees and shall give and serve all notices of the Company.
The Secretary or an Assistant Secretary shall have the power to sign with the
Chief Executive Officer, President, or any Vice President in the name of the
Company all authorized certificates, contracts, bonds, or other obligations of
the company and may affix the Company Seal thereto. The Secretary shall have
charge and custody of the books and papers of the Company and in general shall
perform all duties incident to the office of Secretary, except as otherwise
specifically
-19-
<PAGE>
provided in these By-Laws, and such other duties as from time to time may be
assigned by the Chief Executive Officer. If Assistant Secretaries are elected or
appointed, they shall have those powers and perform those duties as from time to
time may be assigned to them by the Chief Executive Officer and, in the absence
of the Secretary, one of them shall perform the duties of the Secretary.
(e) Treasurer. The Treasurer shall have those powers and shall perform
---------
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Treasurer, one of
them shall perform the duties of the Treasurer.
(f) Controller. The Controller shall have those powers and shall perform
----------
those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) Actuary. The Actuary shall have those powers and shall perform those
-------
duties as from time to time may be assigned by the Chief Executive Officer.
(h) Other Officers. Other officers elected or appointed by the Board of
--------------
Trustees shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
-20-
<PAGE>
Section 7. Absence or Disability. In the case of the absence or
---------------------
disability of any officer of the Company or of any person authorized to act in
his or her place during such period of absence or disability, the Board of
Trustees from time to time may delegate the powers and duties of such officer to
any other officer, or any Trustee, or any other person whom they may select.
ARTICLE V
DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. Funds and Investments. All funds and investments of the
---------------------
Company shall be held in the name of "The Minnesota Mutual Life Insurance
Company" or its nominee or as otherwise provided in accordance with applicable
Minnesota Statutes, as amended from time to time. In no event shall any funds
or investments be held in the name of any individual who is an officer or
employee of the Company.
Section 2. Deposits. The Board of Trustees shall designate those banks
--------
and financial institutions in which Company funds shall be deposited. The Board
by separate resolution also shall designate the persons authorized to withdraw
or transfer funds held in those accounts. No funds shall be withdrawn or
transferred from those accounts except upon the authorization of the person or
persons so authorized.
-21-
<PAGE>
ARTICLE VI
INDEMNIFICATION
Section 1. Trustees and Officers. To the fullest extent permitted by
---------------------
applicable Minnesota Statutes, as amended from time to time, the Company shall
indemnify each person (and the legal representatives of the person) who has
been, or is, a Trustee or officer of the Company. This indemnification shall
extend to all judgments, penalties, and fines, including, without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been a Trustee or officer of the Company or who,
while a Trustee or officer of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee, or agent of another organization
or of an employee benefit plan. However, indemnification for appeals from any
determination in a proceeding shall be subject to prior approval of the Board by
Trustees.
-22-
<PAGE>
Section 2. Employees and Agents. Subject to the provisions of applicable
--------------------
Minnesota Statutes, as amended from time to time, the Board of Trustees may, but
need not, decide to indemnify a person (and the legal representatives of the
person), other than a Trustee or officer, who has been or is an employee or
agent of the Company. The indemnification, if any, shall extend to all
judgments, penalties, and fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been an employee or agent of the Company or who,
while an employee or agent of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee or agent of another organization
or of an employee benefit plan. Also, indemnification for appeals from any
determination in a proceeding, where indemnification was previously granted by
the Board, shall be subject to prior approval by the Board.
-23-
<PAGE>
Section 3. Insurance. The Board of Trustees may authorize the purchase
---------
and maintenance of such form or forms of insurance as the Board may deem
necessary or prudent to indemnify the Company and/or those persons who have
been, are or may be Trustees, officers, employees, or agents of the Company, or
who, while a Trustee, officer, employee or agent of the Company, is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee, or agent of another organization or of an employee benefit plan
against any liability asserted against and incurred by the person in or arising
from that capacity, whether or not the Company would have been required to
indemnify the person against the liability under the provisions of this Article
VI or under applicable Minnesota Statutes, as amended from time to time.
Section 4. Other Indemnification Permitted. Nothing contained in this
-------------------------------
Article shall affect the rights to indemnification to which Company personnel
other than Trustees and officers may be entitled by contract or otherwise under
law.
ARTICLE VII
CORPORATE SEAL
The corporate seal of this Company shall be the words "Corporate Seal"
encircled with the words "The Minnesota Mutual Life Insurance Company".
-24-
<PAGE>
ARTICLE VIII
AMENDMENTS
By the affirmative vote of a majority of the Board of Trustees, these By-
Laws, or any part thereof, may be amended, repealed, or abrogated.
-25-
<PAGE>
================================================================================
EX99.A10A
MINNESOTA MUTUAL EVIDENCE OF INSURABILITY
- --------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company . Group Insurance . 400 Robert
Street North . St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
PLAN SPONSOR/POLICYHOLDER POLICY NUMBER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME DATE OF BIRTH SOCIAL SECURITY NUMBER GENDER
- ----------------------------------------------------------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE DAYTIME TELEPHONE NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
FOR HOME TELEPHONE NUMBER OCCUPATION DATE OF EMPLOYMENT SALARY HEIGHT WEIGHT INSURANCE AMOUNT APPLIED
<S> <C> <C>
Yes No
[_] [_] 1. During the past three years, have you for any reason consulted a physician or other health care
provider, or been hospitalized?
[_] [_] 2. Have you ever been treated for or advised that you had any of the following: heart, lung, nervous,
kidney, or liver disorder; high blood pressure; drug abuse including alcohol; cancer or tumor;
diabetes?
[_] [_] 3. Have you ever been treated for or advised that you had any of the following: heart, lung, nervous,
kidney, or liver disorder; high blood pressure; drug abuse including alcohol; cancer or tumor;
diabetes?
</TABLE>
If the answer is "Yes", give particulars on the reverse side. Please include
dates, name and address of physicians or hospitals, the reason for the visit or
consultation and, in your own words, the diagnosis that was made.
The information contained in this application is true and complete to the best
of my knowledge and belief. To determine my insurability or for claim purposes,
I authorize any person(s), medical practitioner, institution, insurance company
or the Medical Information Bureau to give any medical or non-medical information
about me including alcohol or drug abuse, to The Minnesota Mutual Life Insurance
Company ("Company"), St. Paul, Minnesota 55101-2098 and its reinsurers. I
authorize all said sources, except the Medical Information Bureau, to give such
information to any agency employed by The Minnesota Mutual Life Insurance
Company to collect and transmit such information. I understand in determining
eligibility for insurance or benefits, this information may be made available to
underwriting, claims, medical and support staff to The Minnesota Mutual Life
Insurance Company.
This information shall be valid for 26 months from the date this application is
signed. A photocopy shall be as valid as the original. I have read this
authorization and the Consumer Privacy Notice on the back, and understand I may
receive copies. The guaranteed amount of insurance will be effective only if
this application is dated prior to the end of the enrollment period. The Company
shall incur no liability until this application is approved by the Company and
the first premium paid while my health and other conditions affecting my
insurability are as described on this application.
- --------------------------------------------------------------------------------
SIGNATURE DATE
X
- --------------------------------------------------------------------------------
94-18669
<PAGE>
ADDITIONAL HEALTH INFORMATION:
<TABLE>
<CAPTION>
Name and
Address of
Doctor, Diagnosis
Question Clinic, Reason for and
Name Number Hospital Consultation Treatment
<S> <C> <C> <C> <C>
</TABLE>
IMPORTANT NOTICE
The information you provide will be treated as confidential except that The
Minnesota Mutual Life Insurance Company or its reinsurers may make a brief
report thereon to the Medical Information Bureau, a non-profit membership
organization of life insurance companies which operates an information exchange
on behalf of its members. Upon request by another member insurance company to
which you have applied for life or health insurance coverage or to which a claim
is submitted, the Medical Information Bureau will supply such company with the
information it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. If you question the accuracy of
information in the Bureau's File, you may contact the Bureau and seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the Bureau's information office is Post
Office Box 105, Essex Station, Boston, MA 02112; Telephone (617)426-3660.
The Minnesota Mutual Life Insurance Company may also release the information in
its file to other life insurance companies to whom you apply for life or health
insurance or to whom a claim for benefits may be submitted. Personal information
may be obtained in connection with this application from you or others in
certain circumstances without your authorization. You have a right to know about
and correct any personal information about you in our files. If you would like a
more detailed explanation of our information practices, please contact: Group
Underwriting Department, The Minnesota Mutual Life Insurance Company, 400 Robert
Street North, St. Paul, Minnesota 55101-2098.
MINNESOTA MUTUAL
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
FOR HOME OFFICE USE ONLY
<TABLE>
<CAPTION>
EMPLOYEE SPOUSE CHILD
<S> <C> <C> <C> <C> <C>
[_] Approved [_] Approved [_] Approved
[_] Declined [_] Declined [_] Declined
[_] Declined as Incomplete [_] Declined as Incomplete [_] Declined as Incomplete
- ------------------------------------------------------------------------------------------------------------------------------------
By: Date: By: Date: By: Date:
Currently in force Currently Applied for Currently in force Currently Applied for Currently in force Currently
Applied for
GI: $______ GI: $______ GI: $______ GI: $_______ GI: $______ GI: $_______
U/W: $______ U/W: $______ U/W: $______ U/W: $_______ U/W: $______ U/W: $_______
</TABLE>
<PAGE>
[The Minnesota Mutual Life Insurance Company Letterhead]
Exhibit 99.2C
[Logo for
Minnesota Mutual]
February 17, 1997
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Variable Universal Life Account
400 Robert Street North
St. Paul, MN 55101-2098
RE: MINNESOTA MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT
FILE NUMBER 33-85496
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company ("the
Company"), I reviewed certain legal matters relating to Minnesota Mutual
Variable Universal Life Account ("the Account") in connection with the Post-
Effective Amendment No. 2 to be filed by it and by the Company on Form S-6 with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to certain group and individual Variable Universal Life
Insurance Policies ("the Policies") to be issued by the Separate Account.
Based upon my review, I am of the following opinion:
1. The Separate Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Minnesota;
2. The issuance and sale of the Policies have been duly authorized by the
Company and such Policies, when issued with and as described in the
current Prospectus contained in the Registration Statement, as
amended, and upon compliance with local and federal laws, will be
legal and binding obligations of the Company in accordance with the
terms of those Policies; and
3. The assets held in the Separate Account not in excess of Contract
liabilities and reserves are not chargeable with liabilities arising
out of any other business the Company may conduct.
<PAGE>
The Minnesota Mutual Life Insurance Company
February 17, 1997
Page 2
In arriving at the foregoing opinion, I have made such examination of law and
examined such records or other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an Exhibit to the Registration
Statement.
Sincerely,
Donald F. Gruber
Senior Counsel
DFG/jh
<PAGE>
Exhibit 99.2D
KPMG Peat Marwick LLP Letterhead
Independent Auditors' Consent
-----------------------------
The Board of Trustees of
The Minnesota Mutual Life Insurance Company and The Board of Directors and
Policy Owners of Minnesota Mutual Variable Universal Life Account:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "EXPERTS" in Part I of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 28, 1997
<PAGE>
[The Minnesota Mutual Life Insurance Company Letterhead]
Exhibit 99.2E
[Logo for
Minnesota Mutual]
February 17, 1997
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Re: Variable Universal Life Insurance Policies
Form S-6; File Number 33-85496
Dear Sir or Madam:
This opinion is furnished in connection with the filing of Post-Effective
Amendment Number 2 to the Registration Statement on Form S-6 ("Registration
Statement"), File Number 33-85496, which covers premiums expected to be received
under group and individual Variable Universal Life Insurance Policies
("Policies") on the form referenced above and offered by The Minnesota Mutual
Life Insurance Company ("Minnesota Mutual"). The prospectus included in the
Registration Statement describes Policies offered by Minnesota Mutual in each
state where the Policies have been approved by appropriate state insurance
authorities. The policy form was prepared under my direction, and I am familiar
with the Registration Statement and Exhibits thereto. In my opinion:
1. The descriptions of death benefits and account values for the
Policies, described under the headings "Death Benefit" and "Account
Values" and fully illustrated in Appendix I of the prospectus entitled
"Illustrations of Account Values and Death Benefits" and in Appendix
II of the prospectus entitled "Policy Loan Example" are consistent
with the provisions of the Policies and the administrative procedures
of Minnesota Mutual. This rate structure of the Policies has not been
designed and the assumptions for the illustrations have not been
selected so as to make the relationship between premiums and benefits,
as shown in the illustrations, appear to be disproportionately more
favorable to a prospective purchaser of a Policy for persons of the
age and death benefit option illustrated than for any other
prospective purchasers of Policies at other ages.
2. The illustrations include those for commonly used classifications and
for premium amounts and ages appropriate to the markets in which the
Policies will be sold.
<PAGE>
The Minnesota Mutual Life Insurance Company
February 17, 1997
Page 2
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
Robert M. Olafson, F.S.A.
Second Vice President and Actuary
RMO:pjh
<PAGE>
Exhibit 99.2F
Jones & Blouch L.L.P. Letterhead
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
February 27, 1997
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Matters" in the prospectus contained in Post-Effective Amendment No. 2 to
the registration statement on Form S-6 of Minnesota Mutual Variable Universal
Life Account, File No. 33-85496, to be filed with the Securities and Exchange
Commission.
Very truly yours,
Jones & Blouch L.L.P.
<PAGE>
Exhibit 99.2H
The Minnesota Mutual Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, The Minnesota Mutual Life Insurance Company ("Minnesota Mutual")
has established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Minnesota Mutual Variable Fund D ("Fund D") is a separate account
of Minnesota Mutual registered as a unit investment trust under the Investment
Company Act of 1940 offering variable annuity contracts registered under the
Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Annuity Account ("Variable Annuity
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
annuity contracts registered under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Life Account ("Variable Life Account") is
a separate account of Minnesota Mutual registered as a unit investment trust
under the Investment Company Act of 1940 offering variable adjustable life
insurance policies registered under the Securities Act of 1933,
WHEREAS, Minnesota Mutual Group Variable Annuity Account ("Group Variable
Annuity Account") is a separate account of Minnesota Mutual which has been
established for the purpose of issuing group annuity contracts on a variable
basis and which is to be registered as a unit investment trust under the
Investment Company Act of 1940 offering group variable annuity contracts and
certificates to be registered under the Securities Act of 1933;
WHEREAS, Minnesota Mutual Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Mutual which has
been established for the purpose of issuing group and individual variable
universal life insurance policies on a variable basis and which is to be
registered as a unit investment trust under the Investment Company Act of 1940
offering group and individual variable universal life insurance policies to be
registered under the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Trustees of Minnesota Mutual, do hereby
appoint Dennis E. Prohofsky and Garold M. Felland, and each of them
individually, as attorney in fact for the purpose of signing in their names and
on their behalf as Trustees of Minnesota Mutual and filing with the Securities
and Exchange Commission Registration Statements, or any amendment thereto, for
the purpose of: a) registering contracts and policies of Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account for sale by those entities and Minnesota
Mutual under the Securities Act of 1933; and b) registering Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account as unit investment trusts under the
Investment Company Act of 1940.
Signature Title Date
--------- ----- ----
Chairman of the Board, February 12, 1996
- ---------------------- President and Chief
Robert L. Senkler Executive Officer
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Trustee February 12, 1996
------------------------------
Giulio Agostini
Trustee February 12, 1996
------------------------------
Anthony L. Andersen
Trustee February 12, 1996
------------------------------
John F. Grundhofer
Trustee February 12, 1996
------------------------------
Harold V. Haverty
Trustee
------------------------------
Lloyd P. Johnson
Trustee February 12, 1996
- ------------------------------
David S. Kidwell, Ph.D.
Trustee February 12, 1996
- ------------------------------
Reatha C. King, Ph.D.
Trustee February 12, 1996
- ------------------------------
Thomas E. Rohricht
Trustee February 12, 1996
- ------------------------------
Terry N. Saario, Ph.D.
Trustee February 12, 1996
- ------------------------------
Michael E. Shannon
Trustee February 12, 1996
- ------------------------------
Frederick T. Weyerhaeuser
</TABLE>
