As filed with the Securities and Exchange Commission on
June 11, 1999
Registration No. 333-76359
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Pre-Effective Amendment No. 1
to
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
(EXACT NAME OF REGISTRANT)
----------------
AMERITAS LIFE INSURANCE CORP.
(Depositor)
5900 "O" Street
Lincoln, Nebraska 68510
----------------
DONALD R. STADING
Senior Vice President, Secretary and Corporate General Counsel
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, Nebraska 68510
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Title of Securities Being Registered: Securities of Unit Investment Trust
-----------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Flexible Premium Variable Life Insurance Policies - - Registration of an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Ameritas Life Insurance Corp.; Distribution of the
Policies
5 The Separate Account
6 The Separate Account
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion or Substitution of
Investments; Policy Benefits; Policy Rights;
Payment and Allocation of Premiums; General
Provisions; Voting Rights
11 Summary; The Funds
12 Summary; The Funds
13 Summary; The Funds - Charges and Deductions
14 Summary; Payment and Allocation of Premiums
15 Summary; Payment and Allocation of Premiums
16 Summary; The Funds; Neuberger Berman Advisers
Management Trust; BT Insurance Funds Trust; Rydex
Variable Trust
17 Summary, Policy Rights
18 The Funds; Neuberger Berman Advisers Management
Trust; BT Insurance Funds Trust; Rydex Variable
Trust; Fixed Account
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights; General Provisions
22 Not Applicable
23 Safekeeping of the Separate Account's Assets
24 General Provisions
25 Ameritas Life Insurance Corp.
26 Not Applicable
27 Ameritas Life Insurance Corp.
28 Executive Officers and Directors of Ameritas;
Ameritas Life Insurance Corp.
29 Ameritas Life Insurance Corp.
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Required
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
42 Not Applicable
43 Not Applicable
44 Accumulation Value, Payment and Allocation of
Premiums
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
45 Not Applicable
46 The Funds; Accumulation Value
47 The Funds
48 State Regulation
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment and
Allocation of Premiums;
Charges and Deductions
52 Addition, Deletion or Substitution of Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
<PAGE>
AMERITAS LIFE INSURANCE CORP. LOGO
PROSPECTUS
Policy -- A Survivorship Flexible Premium Variable Universal Life
5900 "O" Street
Insurance Policy issued by Ameritas Life Insurance Corp.
P.O. Box 81889/Lincoln, NE 68501
- --------------------------------------------------------------------------------
This prospectus describes a survivorship flexible premium variable universal
life insurance Policy ("Policy"), issued by Ameritas Life Insurance Corp.
("Ameritas"), that pays a Death Benefit upon the Second Death. Like traditional
life insurance policies, a Policy provides Death Benefits to Beneficiaries and
gives you, the Policy Owner, the opportunity to increase the Policy's value.
Unlike traditional policies, the Policy lets you vary the frequency and amount
of premium payments, rather than follow a fixed premium payment schedule. It
also lets you change the level of Death Benefits as often as once each year.
A Policy is different from traditional life insurance policies in another
important way: you select how Policy premiums will be invested. Although each
Policy Owner is guaranteed a minimum Death Benefit, the value of the Policy, as
well as the actual Death Benefit, will vary with the performance of investments
you select.
The investment options available through the Policy include investment
portfolios from Neuberger Berman Advisers Management Trust ("Neuberger Berman
AMT"), BT Insurance Funds Trust ("Bankers Trust") and Rydex Variable Trust
("Rydex") (collectively the "Funds"). Each of these portfolios has its own
investment objective and policies. These are described in the prospectuses for
each investment portfolio which must accompany this prospectus. You may also
choose to allocate premium payments to the Fixed Account managed by Ameritas.
A Policy will be issued after Ameritas accepts a prospective Policy Owner's
application. Generally, an application must specify a Death Benefit no less than
$100,000. These Policies are available to cover individuals between the ages of
20 and 90 at the time of purchase, although at least one of the individuals must
be no older than 85. A Policy, once purchased, may generally be canceled within
10 days after you receive it.
This prospectus is designed to assist you in understanding the opportunity and
risks associated with the purchase of a Policy. Prospective Policy Owners are
urged to read the prospectus carefully and retain it for future reference.
This prospectus includes a summary of the most important features of the Policy,
information about Ameritas, a list of the investment portfolios to which you may
allocate premium payments, and a detailed description of the Policy. The
appendix to the prospectus includes tables designed to illustrate how values and
Death Benefits may change with the investment experience of the Investment
Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through the Policy.
Although the Policy is designed to provide life insurance, a Policy is
considered to be a security. It is not a deposit with, an obligation of, or
guaranteed or endorsed by any banking institution, nor is it insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. The purchase of a Policy involves investment risk, including the
possible loss of principal. For this reason, this Policy may not be suitable for
all individuals. It may not be advantageous to purchase a Policy as a
replacement for another type of life insurance or as a way to obtain additional
insurance protection if the purchaser already owns another survivorship flexible
premium variable universal life insurance policy.
The Securities and Exchange Commission ("SEC") maintains a web site
(http://www.sec.gov) that contains other information regarding registrants that
file electronically with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
June 11, 1999
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TABLE OF CONTENTS PAGE
DEFINITIONS....................................................................3
SUMMARY........................................................................6
YEAR 2000......................................................................9
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS..................................10
Ameritas Life Insurance Corp.........................................10
The Separate Account.................................................10
Performance Information..............................................10
The Funds............................................................11
Investment Objectives And Policies of The Funds' Portfolios..........12
Addition, Deletion or Substitution of Investments....................13
Fixed Account........................................................14
POLICY BENEFITS...............................................................14
Purposes of the Policy...............................................14
Death Benefit Proceeds...............................................15
Death Benefit Options................................................15
Methods of Affecting Insurance Protection............................16
Duration of Policy...................................................17
Accumulation Value...................................................17
Payment of Policy Benefits...........................................18
POLICY RIGHTS.................................................................18
Loan Benefits........................................................18
Surrenders...........................................................19
Partial Withdrawals..................................................19
Transfers............................................................20
Systematic Programs..................................................20
Free Look Privilege..................................................21
PAYMENT AND ALLOCATION OF PREMIUMS............................................21
Issuance of a Policy.................................................21
Premiums.............................................................21
Allocation of Premiums and Accumulation Value........................22
Policy Lapse and Reinstatement.......................................23
CHARGES AND DEDUCTIONS........................................................23
Deductions From Premium Payments.....................................23
Charges From Accumulation Value......................................23
Daily Charges Against the Separate Account...........................24
Fund Expense Summary.................................................25
GENERAL PROVISIONS............................................................26
DISTRIBUTION OF THE POLICIES..................................................29
FEDERAL TAX MATTERS...........................................................29
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS..................................32
THIRD PARTY SERVICES..........................................................32
VOTING RIGHTS.................................................................32
STATE REGULATION OF AMERITAS..................................................32
EXECUTIVE OFFICERS AND DIRECTORS OF AMERITAS..................................32
LEGAL MATTERS.................................................................35
LEGAL PROCEEDINGS.............................................................35
EXPERTS.......................................................................36
ADDITIONAL INFORMATION........................................................36
FINANCIAL STATEMENTS..........................................................36
AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL........................F-I-1
AMERITAS LIFE INSURANCE CORP. ............................................F-II-1
APPENDIX A ..................................................................A-1
The Policy, certain Funds, and/or certain riders are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
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DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in Separate
Account LLVL, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge, which is part of the Monthly
Deduction, to cover the cost of administering the Policy.
AMERITAS - ("we, us, our") Ameritas Life Insurance Corp., a Nebraska stock life
insurance company. Ameritas' Home Office is located at 5900 "O" Street, P.O. Box
81889, Lincoln, NE 68501.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account LLVL to provide for expenses of ongoing
administrative services to the Policy Owners as a group.
ATTAINED AGE - The Issue Age of the younger Insured plus the number of complete
Policy Years that the Policy has been in force.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the Second Death. (See the sections on Beneficiary and Change of
Beneficiary.)
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection; this charge may also include one or more
Flat Extra Rating Charges. The Cost of Insurance is calculated with reference to
an annual "Cost of Insurance Rate." This rate is based on the Issue Age, sex,
and risk class of each Insured and the Policy duration. The Cost of Insurance is
part of the Monthly Deduction.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
Ameritas of Satisfactory Proof of Death of both Insureds while the Policy is in
force. It is equal to: (l) the Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any Outstanding Policy Debt; (4)
minus any Accrued Expense Charges, including the Monthly Deduction for the month
of the Second Death.
FLAT EXTRA RATING - A rating that will be applicable if an Insured is placed
into a class that involves a higher mortality risk. One-half the amount of any
applicable Flat Extra Rating will be added to the Cost of Insurance Rate and,
thus, will be deducted as part of the Monthly Deduction on each Monthly Activity
Date.
FIXED ACCOUNT - An account that is a part of Ameritas' General Account to which
all or a portion of Net Premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of Ameritas includes all of Ameritas'
assets except those assets segregated into separate accounts such as Separate
Account LLVL.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy Owner's last known address. If the Policy Owner makes the payment
specified in the notification of lapse, the Policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period extends to Attained Age 85 but in no event is less than
10 years, and may be restricted as a result of state law. Not available in
Massachusetts. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
INSUREDS - The two persons whose lives are insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
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ISSUE AGE - The actual age of each Insured on the Policy Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MINIMUM PREMIUM - A specified premium which, if paid in advance on a monthly
prorated basis, will keep the Policy in force during the first sixty Policy
months ("Minimum Benefit" Period) so long as other Policy provisions are met,
even if the Net Cash Surrender Value is zero or less.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except should such Monthly Activity Date fall on a date other than a
Valuation Date, the Monthly Activity Date will be the next Valuation Date.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of Separate Account LLVL to provide for the risk that mortality
and expense costs may be greater than expected.
NET AMOUNT AT RISK - The amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Outstanding
Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE FOR TAXES - The amount deducted from each premium
received to cover certain expenses, expressed as a percentage of the premium.
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policy Owner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Minimum Benefit or the Guaranteed
Death Benefit.
POLICY - The survivorship flexible premium variable universal life insurance
Policy offered by Ameritas and described in this prospectus.
POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - The effective date for all coverage provided in the application.
The Policy Date is used to determine Policy Anniversary Dates, Policy Years and
Monthly Activity Dates. Policy Anniversaries are measured from the Policy Date.
The Policy Date and the Issue Date will be the same unless: (1) an earlier
Policy Date is specifically requested, or (2) unless there are additional
premiums or application amendments at time of delivery. (See the section on
Issuance of a Policy.)
POLICY OWNER - ("you, your") The owner of the Policy, as designated in the
application or as subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Policy Owner. A collateral assignee is not the
Policy Owner.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
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SATISFACTORY PROOF OF DEATH - Satisfactory Proof of Death must be provided to us
at the time of death of each Insured. Satisfactory Proof of Death means all of
the following must be submitted:
(1) A certified copy of both death certificates;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that Ameritas may reasonably require to
establish the validity of the claim.
SECOND DEATH - The later of the dates of death of the Insureds.
SEPARATE ACCOUNT LLVL - This term refers to Separate Account LLVL, a separate
investment account established by Ameritas to receive and invest the Net
Premiums paid under the Policy and allocated by the Policy Owner to Separate
Account LLVL. Separate Account LLVL is segregated from the General Account and
all other assets of Ameritas.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policy Owner.
SUBACCOUNT - A subdivision of Separate Account LLVL. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy for the Net Cash Surrender Value while
at least one Insured is alive.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
Valuation Period - The period between two successive Valuation Dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and
ending at the close of the NYSE on the next succeeding Valuation Date.
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SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
Diagram of Policy
PREMIUM PAYMENTS
You can vary amount and frequency.
DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes - currently 3.00% (maximum 3.0%)
NET PREMIUM
The net premium may be invested in the Fixed Account or in Separate Account
LLVL which offers 15 different Subaccounts. The Subaccounts invest in the
corresponding portfolios of Neuberger Berman AMT, Bankers Trust or Rydex.
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders.
Monthly charge for administrative expenses (maximum charge $9.00/month plus a
charge per month per $1000 of specified amount that varies by the younger
Insured's Issue Age):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Current Plus Current Monthly Charge
Monthly By Issue Age (/1000/month):
Charge
20 - 44 45 - 64 55 - 64 65+
------- ------- ------- ---
Policy Year:
1 - 5 $0.00 $0.10 $.08 $.05 $.00
6 + $0.00 $0.00 $.00 $.00 $.00
Maximum
Monthly Charge: $9.00 Plus $0.10 $.08 $.08 $.05
</TABLE>
Daily charge from the Subaccounts for mortality and expense risks and
administrative expenses, at an annual rate of 0.60% for Policy Years 1-15, and
0.30% thereafter. The maximum charge is .60% in all years. This charge is not
deducted from Fixed Account assets. There is no surrender charge.
Fund expense charges, which ranged from .20% to 2.30% at the most recent fiscal
year end, are also deducted.
<TABLE>
<CAPTION>
<S> <C> <C>
LIVING BENEFITS RETIREMENT INCOME DEATH BENEFITS
You may make partial withdrawals, subject to Loans may be available on a Generally, Death
certain restrictions. The Death Benefit will be more favorable interest rate Benefit income is tax
reduced by the amount of the partial withdrawal. basis after the tenth Policy Year. free to the Beneficiary.
Ameritas guarantees up to 15 free transfers Should the Policy lapse while The Beneficiary may be
between the Investment Options each Policy Year. loans are outstanding, the paid a lump sum or may
</TABLE>
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<S> <C> <C>
Under current practice, unlimited free transfers portion of the loan attributable select any of the five
are permitted. to earnings will become taxable payment methods
You may Surrender the Policy at any time for its distributions. (See page 22.) available as retirement
Net Cash Surrender Value. benefits.
Accelerated payment of up to 50% of the lowest You may Surrender the Policy
scheduled Death Benefit is available under certain or make a partial withdrawal and
conditions if the surviving Insured is suffering from take values as payments
terminal illness under one or more of five different
payment options.
</TABLE>
SUMMARY
The following summary is intended to highlight the most important features of
the Policy that you, as a prospective Policy Owner, should consider. You will
find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. Capitalized terms are
defined in the Definitions section that begins on page 3 of this prospectus.
This summary and all other parts of this prospectus are qualified in their
entirety by the terms of the Policy, which is available upon request from
Ameritas.
WHO IS THE ISSUER OF A POLICY?
Ameritas issues the Policy. The Policy is available for individuals and for
corporations and other institutions who wish to provide coverage and benefits
for key employees. A separate account of Ameritas, Separate Account LLVL has
been established to hold the assets supporting the Policy. Separate Account LLVL
has 15 Subaccounts which correspond to, and are invested in, the portfolios of
the Funds discussed herein. (See the section on Ameritas, the Separate Account
and the Funds.) The financial statements for Ameritas can be found beginning on
page F-II-1.
WHY SHOULD I CONSIDER PURCHASING A POLICY?
The primary purpose of a Policy is to provide life insurance protection on the
two Insureds named in the Policy. This means that, so long as the Policy is in
force, it will provide for:
|X| payment of a Death Benefit, which will never be
less than the Specified Amount the Policy Owner selects ( See the section on
Death Benefit Options.)
|X| Policy loan, Surrender and withdrawal features (See
the section on Policy Rights. pages 26-27)
A Policy also includes an investment component. This means that, so long as the
Policy is in force, you will be responsible for selecting the manner in which
Net Premiums will be invested. Thus, the value of a Policy will reflect your
investment choices over the life of the Policy.
HOW DOES THE INVESTMENT COMPONENT OF MY POLICY WORK?
Ameritas has established Separate Account LLVL, which is separate from all other
assets of Ameritas, as a vehicle to receive and invest premiums received from
Policy Owners. Separate Account LLVL is divided into separate Subaccounts. Each
Subaccount invests exclusively in shares of one of the investment portfolios
available through the Policy. You may allocate Net Premiums to one or more
Subaccounts, or to Ameritas' Fixed Account in your initial application. These
allocations may be changed by notifying Ameritas' Home Office. We will only
allow allocations to Rydex according to administrative rules we have set. The
aggregate value of your interests in the Subaccounts and the Fixed Account will
represent the Accumulation Value of your Policy. (See the section on
Accumulation Value.)
You may make transfers among the Investment Options. All transfers are subject
to the limits we set. We will only allow transfers with regard to Rydex
according to administrative rules we have set. The Policy's Accumulation Value
in Separate Account LLVL will reflect the amount and frequency of premium
payments, the investment experience of the chosen Subaccounts and the Fixed
Account, Policy loans, any partial withdrawals, and any charges imposed in
connection with the Policy. The entire investment risk of Separate Account LLVL
is borne by the Policy Owner. Ameritas does not guarantee a minimum Accumulation
Value in Separate Account LLVL. (See the section on Accumulation Value.)
Ameritas does guarantee the Fixed Account.
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE POLICY?
The Investment Options available through the Policy include 15 investment
portfolios, each of which is a separate series of a mutual fund from Neuberger
Berman AMT, Bankers Trust and Rydex. These portfolios are:
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<CAPTION>
<S> <C> <C>
|X| NEUBERGER BERMAN AMT: |X| BANKERS TRUST: BERGER IPT: |X| RYDEX:
Liquid Asset Portfolio Equity 500 Index Fund Nova Fund
Limited Maturity Bond Portfolio Small Cap Index Fund Ursa Fund
Balanced Portfolio EAFE(R)Equity Index Fund OTC Fund
Guardian Portfolio Precious Metals Fund
Mid-Cap Growth Portfolio U.S. Government
Bond Fund
Juno Fund
</TABLE>
Details about the investment objectives and policies of each of the available
investment portfolios and management fees and expenses, appear in the sections
on Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. There is no assurance that these objectives will be met. Participation
in Rydex is subject to administrative rules we have set. The Policy Owner bears
the entire investment risk for amounts allocated to the Subaccounts. In addition
to the listed portfolios, you may also elect to allocate Net Premiums to
Ameritas' Fixed Account. (See the section on Fixed Account.)
HOW DOES THE LIFE INSURANCE COMPONENT OF A POLICY WORK?
A Policy provides for the payment of a minimum Death Benefit upon the Second
Death. The amount of the minimum death benefit -- sometimes referred to as the
Specified Amount of your Policy -- is chosen by you at the time your Policy is
established. However, Death Benefit Proceeds -- the actual amount that will be
paid after Ameritas receives Satisfactory Proof of Death -- may vary over the
life of your Policy, depending on which of the two available coverage options
you select.
If you choose Option A, the Death Benefit payable under your Policy will be the
Specified Amount of your Policy or the applicable percentage of its Accumulation
Value, whichever is greater. If you choose Option B, the Death Benefit payable
under your Policy will be the Specified Amount of your Policy plus the
Accumulation Value of your Policy, or if it is higher, the applicable percentage
of the Accumulation Value on the Second Death. In either case, the applicable
percentage is established based on the Attained Age at the Second Death. (See
the section on Death Benefit Options.)
ARE THERE ANY RISKS INVOLVED IN OWNING A POLICY?
Yes. Over the life of your Policy, the Subaccounts to which you allocate your
premiums will fluctuate with changes in the stock market and overall economic
factors. These fluctuations will be reflected in the Accumulation Value of your
Policy and may result in loss of principal. For this reason, the purchase of a
Policy may not be suitable for all individuals. It may not be advantageous to
purchase a Policy to replace or augment your existing insurance arrangements.
Appendix A includes tables illustrating the impact that hypothetical market
returns would have on Accumulation Values under a Policy (page A-1).
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A POLICY IN FORCE?
Like traditional life insurance policies, a Policy requires the payment of
periodic premiums in order to keep the Policy in force. You will be asked to
establish a payment schedule before your Policy becomes effective.
The distinction between traditional life policies and a Policy is that a Policy
will not lapse simply because premium payments are not made according to that
payment schedule. However, a Policy will lapse, even if scheduled premium
payments are made, if the Net Cash Surrender Value of your Policy falls below
zero or premiums paid do not, in the aggregate, equal the premium necessary to
satisfy the Minimum Benefit or the Guaranteed Death Benefit requirements. (See
the section on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your Policy will be issued after a completed application is accepted, and the
initial premium payment is received, by Ameritas at its Home Office. Ameritas'
Home Office is located at 5900 "O" Street, P.O. Box 81889, Lincoln, NE 68501.
Your initial Net Premium will be allocated to the Liquid Asset Portfolio for
thirteen days after the Issue Date. Then, the Accumulation Value of the Policy
will be allocated among the Subaccounts and/or the Fixed Account according to
the instructions in your application. Where allowed, if you have allocated 100%
to the Fixed Account, the Net Premium of the Policy is allocated to the Fixed
Account on the Issue Date. In this instance, no further allocation will occur.
You have the right to examine your Policy and return it for a refund for a
limited time, even after the Issue Date. (See the section on Issuance of a
Policy.)
You may make subsequent premium payments according to your Planned Periodic
Premium schedule, although you are not required to do so. Ameritas will send
premium payment notices to you according to any schedule you select, except if
you pay by automatic bank draft. When Ameritas receives your premium payment at
its Home Office, we will deduct any applicable Percent of Premium Charge for
Taxes and the Net Premium will be allocated to the Subaccounts and/or the Fixed
Account according to your selections. (See the sections on Premiums and
Allocations of Premiums and Accumulation Value.)
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As already noted, provides you considerable flexibility in determining the
frequency and amount of premium payments. This flexibility is not, however,
unlimited. You should keep certain factors in mind in determining the payment
schedule that is best suited to your needs. These include the amount of the
Minimum Premium, Guaranteed Death Benefit Premium and/or Net Policy Funding
requirement needed to keep your Policy in force, maximum premium limitations
established under the federal tax laws, and the impact that reduced premium
payments may have on the Net Cash Surrender Value of your Policy. (See the
section on Premiums.)
IS THE ACCUMULATION VALUE OF MY POLICY AVAILABLE WITHOUT SURRENDER?
Yes. You may access the value of your Policy in one of two ways. First, you may
obtain a loan, secured by the Accumulation Value of your Policy. The maximum
interest rate on any such loan is 6% annually; the current rate is 5.5%
annually. After the tenth Policy Anniversary, you may borrow against a limited
amount of the Net Cash Surrender Value of your Policy at a maximum annual
interest rate of 4%; the current rate for such loans is 3.5% annually. (See the
section on Loan Benefits.)
You may also access the value of your Policy by making a partial withdrawal. A
partial withdrawal is subject to a maximum charge not to exceed the lesser of
$50 or 2% of the amount withdrawn (currently, the partial withdrawal charge is
the lesser of $25 or 2%). (See the section on Partial Withdrawals.)
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF A POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as the Policy. Ameritas may deduct up to 5% of each premium as a
Percent of Premium Charge for Taxes. Currently, 3% is deducted for this purpose.
Charges are deducted against the Accumulation Value to cover the Cost of
Insurance under the Policy and to compensate Ameritas for administering each
individual Policy. These charges, which are part of the Monthly Deduction, are
calculated and paid on each Monthly Activity Date. The Cost of Insurance is
calculated based on risk factors relating to the Insureds as reflected in
relevant actuarial tables. The Administrative Expense Charges may be based on
your Specified Amount and the Policy duration. However, they may be increased
during the life of your Policy, up to a maximum of $9 per month plus a charge
per month per $1000 of Specified Amount that depends on the younger Insured's
Issue Age. For Issue Ages 20 - 44, the rate is $.10, for Issue Ages 45 - 54, the
rate is $.08, for Issue Ages 55 - 64, the rate is $.05 and for Issue Ages 65 and
over it is $.00. At the current time we anticipate the charge will reduce to
$.00 in year 6. The Administrative Expense Charge may be levied throughout the
life of the Policy and is guaranteed not to increase above $9 per month plus
$.10 per month per $1000 of Specified Amount for Issue Ages 20-44, $.08 for
Issue Ages 45-64 and $.05 for Issue Ages 65 and over. Ameritas does not expect
to make any profit from the Administrative Expense Charge.
For its services in administering Separate Account LLVL and Subaccounts and as
compensation for bearing certain mortality and expense risks, Ameritas is also
entitled to receive fees. These fees are calculated daily during the first 15
years of each Policy, at a combined annual rate of 0.60% of the value of the net
assets of Separate Account LLVL. After the 15th Policy Anniversary Date, the
combined annual rate will decrease to .30% of the daily net assets of Separate
Account LLVL. The charge is guaranteed never to exceed .60%. No Mortality and
Expense Risk Charge will be deducted from the amounts in the Fixed Account. the
section on Daily Charges Against the Separate Account.
Policy Owners who choose to allocate Net Premiums to one or more of the
Subaccounts will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various Subaccounts
invest. No such management fees are assessed against Net Premiums allocated to
the Fixed Account. (See the section on Fund Expense Summary.)
WHEN DOES MY POLICY TERMINATE?
You may terminate your Policy by Surrendering the Policy while at least one
Insured is alive for its Net Cash Surrender Value. As noted above, your Policy
will terminate if you fail to pay required premiums or maintain sufficient Net
Cash Surrender Value to cover Policy charges. (See the sections on Surrenders
and Premiums.)
YEAR 2000
Like other insurance companies and their separate accounts, Ameritas and
Separate Account LLVL could be adversely affected if the computer systems they
rely upon do not properly process date-related information and data involving
the years 2000 and after. This issue arose because both mainframe and PC-based
computer hardware and software have traditionally used two digits to identify
the year. For example, the year 1998 is input, stored and calculated as "98."
Similarly, the year 2000 would be input, stored and calculated as "00." If
computers assume this means 1900, it could cause errors in calculations,
comparisons, and other computing functions.
Like all insurance companies, Ameritas makes extensive use of dates and date
calculations. we began a corporate-wide
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Year 2000 (Y2K) project in mid-1996. Our goal is to ensure that our computer
systems continue to operate smoothly with no service disruptions before, during
or after the year 2000.
As of December 31, 1998, all of our computer application and operating systems
had been updated for the year 2000. Continuous testing and monitoring throughout
1999 will help Ameritas continue to meet our contractual and service obligations
to our customers. In addition to our internal efforts, Ameritas is working
closely with vendors and other business partners to confirm that they too are
addressing Y2K issues on a timely basis. We believe that we are Y2K compliant;
however, in the event we or our service providers, vendors, financial
institutions or others with which we conduct business, fail to be Y2K -
compliant, there would be a materially adverse effect on us. Certain vendors
and/or business partners, due to their exposure to foreign markets, may face
additional Y2K issues. Please see the Funds' prospectuses for information on the
Funds' preparedness for Y2K.
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS
AMERITAS LIFE INSURANCE CORP.
Ameritas Life Insurance Corp. ("Ameritas") is a stock life insurance company
domiciled in Nebraska since 1887. Ameritas and its subsidiaries are currently
licensed to sell life insurance and annuities in 50 states and the District of
Columbia. The Home Office of Ameritas is at 5900 "O" Street, Lincoln, Nebraska
68501.
Ameritas and subsidiaries had total assets at December 31, 1998 of over $4.1
billion. Ameritas enjoys a long standing A+ (Superior) rating for financial
strength and operating performance from A.M. Best, an independent firm that
analyzes insurance carriers. This is the second highest of Best's 15 categories.
Ameritas has been rated A (Excellent) by Weiss Research, Inc., for fiscal
strength. This is the third highest of Weiss' 16 categories. Ameritas also has
an AA (Very Strong) rating from Standard & Poor's for insurer financial
strength. This is the third highest of Standard & Poor's 21 ratings.
Effective January 1, 1998, Ameritas converted from a mutual insurance company
structure to a mutual insurance holding company structure pursuant to the
Nebraska Mutual Insurance Holding Company Act. The conversion was approved by
the Nebraska State Department of Insurance and the policy owners of the mutual
company. As a result of the conversion, Ameritas is wholly owned by Ameritas
Holding Company, which is wholly owned by Ameritas Acacia Mutual Holding
Company. There are no other owners of 5% or more of the outstanding voting
securities of Ameritas.
Ameritas Investment Corp. ("AIC"), the principal underwriter of the Policies,
may publish in advertisements and reports to Policy Owners, the ratings and
other information assigned to Ameritas by one or more independent rating
services. The purpose of the ratings is to reflect the financial strength of
Ameritas. The ratings do not relate to the performance of Separate Account LLVL.
Published material may also include charts and other information concerning
dollar cost averaging, portfolio rebalancing, earnings sweep, tax-deference,
diversification, asset allocation, long term market trends, index performance,
and other investment programs and methods.
THE SEPARATE ACCOUNT
Ameritas Life Insurance Corp. Separate Account LLVL ("Separate Account LLVL")
was established under Nebraska law on August 24, 1994. The assets of Separate
Account LLVL are held by Ameritas and are segregated from all of Ameritas' other
assets. These assets are not chargeable with liabilities arising out of any
other business which Ameritas may conduct, including any income, gains, or
losses of Ameritas. Although the assets maintained in Separate Account LLVL will
not be charged with any liabilities arising out of Ameritas' other business, all
obligations arising under the Policies are liabilities of Ameritas who will
maintain assets in Separate Account LLVL of a total market value at least equal
to the reserve and other contract liabilities of Separate Account LLVL.
Nevertheless, to the extent assets in Separate Account LLVL exceed Ameritas'
liabilities in Separate Account LLVL, the assets are available to cover the
liabilities of Ameritas' General Account. Ameritas may, from time to time,
withdraw assets available to cover the General Account obligations. Separate
Account LLVL is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any SEC
supervision of the management or investment policies or practices of Separate
Account LLVL. For state law purposes, Separate Account LLVL is treated as a
Division of Ameritas.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account LLVL and the
Funds available for investment by Separate Account LLVL may appear in
advertisements, sales literature, or reports to Policy Owners or prospective
purchasers. Ameritas may also provide a hypothetical illustration of
Accumulation Value, Net Cash Surrender Value and Death Benefit based on
historical investment returns of the Funds for a sample Policy based on
assumptions as to age, sex, and risk class of each Insured, and other Policy
specific assumptions.
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Ameritas may also provide individualized hypothetical illustrations of
Accumulation Value, Net Cash Surrender Value and Death Benefit based on
historical investment returns of the Funds. These illustrations will reflect
deductions for Fund expenses and Policy and Separate Account LLVL charges,
including the Monthly Deduction and Percent of Premium Charge for Taxes. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently 15 Subaccounts within Separate Account LLVL available to
Policy Owners for new allocations. Each Subaccount of Separate Account LLVL will
invest only in the shares of a corresponding portfolio of Neuberger Berman AMT,
Bankers Trust or Rydex (collectively the "Funds"). Each Fund is registered with
the SEC under the 1940 Act as an open-end diversified management investment
company.
The assets of each portfolio of the Funds are held separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
Rydex involves strategic or tactical asset allocation, and may involve
aggressive investing strategies. For that reason, we have established
administrative rules under which we will allow allocations, premium payments
and/or transfers to be made to Rydex. (See Rydex Administrative Rules, below.)
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus. These
Prospectuses should be read carefully together with this Prospectus and
retained. All underlying Fund information, including Fund prospectuses, has been
provided to Ameritas by the underlying Funds.
Ameritas has not independently verified this information.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
Each Policy Owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.
Separate Account LLVL will purchase and redeem shares from the Portfolios at the
net asset value. Shares will be redeemed to the extent necessary for Ameritas to
collect charges, pay the surrender values, partial withdrawals, and make Policy
loans or to transfer assets from one Subaccount to another, or to the Fixed
Account, as requested by Policy Owners. Any dividend or capital gain
distribution received is automatically reinvested in the corresponding
Subaccount.
Since Neuberger Berman AMT, Bankers Trust and Rydex are each designed to provide
investment vehicles for variable annuity or variable life insurance contracts of
various insurance companies and will be sold to separate accounts of other
insurance companies as investment vehicles for various types of variable life
insurance policies or variable annuity contracts, there is a possibility that a
material conflict may arise between the interests of Separate Account LLVL and
one or more of the separate accounts of another participating insurance company.
In the event of a material conflict, the affected insurance companies agree to
take any necessary steps, including removing its separate accounts from the
Funds, to resolve the matter. The risks of such mixed and shared funding are
described further in the prospectuses of the Funds.
RYDEX ADMINISTRATIVE RULES
You may access the Rydex Subaccounts through your Policy only if you qualify as
an accredited investor, as defined in Rule 501 of Regulation D under the
Securities Act of 1933, or, in the alternative, you meet all of the following
criteria:
1. You have designated to us in writing that you have an agreement
retaining a Registered Investment Advisor ("RIA") to provide strategic
or tactical asset allocation services relating to your Policy. A RIA is
a person or entity regulated by the SEC or state authorities, as
applicable;
2. You agree that you are solely responsible for selecting, supervising,
and paying any compensation for services to your RIA. We do not have
any responsibility for your RIA or the recommendations or advice
provided;
3. You have executed a Rydex Third Party Authorization, which is a power
of attorney authorizing your RIA to give allocation and transfer
directions to us;
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4. Unless you have specified otherwise in the power of attorney you
provided us, you may make withdrawals from or surrender your Policy at
any time, and may give us your directions to allocate and/or transfer
among all Investment Options other than Rydex. Only your RIA may give
us directions to allocate to or transfer Accumulation Value to or from
Rydex Subaccounts;
5. You agree to provide us with:
A. Written notification of any change in your RIA; and
B. A power of attorney authorizing your new RIA to give allocation
and transfer directions to us;
6. You agree that the transaction cutoff time for receipt by us of
purchase payments for allocation and transfer and/or withdrawal
instructions relating to Rydex Subaccounts is 1:30 p.m. Central time,
or one hour before market close, for days on which the market closes
early.
7. If we receive notification that your RIA is either no longer authorized
by you or no longer able to give allocation and transfer directions to
us, you will be unable to transfer funds among the Rydex Subaccounts,
but you may transfer out of a Rydex Subaccount to other Subaccount
choices. Any further premium allocation to a Rydex Subaccount will be
changed to the Liquid Asset Portfolio of Neuberger Berman.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
NEUBERGER BERMAN AMT
LIQUID ASSET PORTFOLIO seeks the highest available current income consistent
with safety and liquidity. Principal series investments are high-quality Liquid
Asset securities of government and non-government issuers.
LIMITED MATURITY BOND PORTFOLIO seeks the highest current income consistent with
low risk to principal and liquidity; and secondarily, total return. This Fund
invests mainly in investment grade bonds and other debt securities from U.S.
Government and corporate issuers.
BALANCED PORTFOLIO seeks long-term capital growth and reasonable current income
without undue risk to principal. Principal series investments are common stocks
and investment grade bonds and other debt securities from U.S.
Government and corporate issuers.
GUARDIAN PORTFOLIO seeks long-term growth of capital; current income is a
secondary goal. The portfolio invests mainly in common stocks of
large-capitalization companies.
MID-CAP GROWTH PORTFOLIO seeks growth of capital. The portfolio invests mainly
in common stocks of mid- capitalization companies.
BANKERS TRUST
EQUITY 500 INDEX FUND seeks to match, before expenses, the risk and return
characteristics of the Standard and Poor's 500 Composite Stock Price ("S&P 500
Index"). The Fund will invest primarily in common stocks of companies that
comprise the S&P 500 Index, which emphasizes stocks of large U.S. companies. The
Fund may also use stock index futures and options.
SMALL CAP INDEX FUND seeks to match, before expenses, the risk and return
characteristics of the Russell 2000 Small Stock Index ("Russell 2000 Index").
The Fund will invest primarily in common stocks of companies that comprise the
Russell 2000 Index, which emphasizes stocks of small U.S. companies. The Fund
may also use stock index futures and options.
EAFE(R) EQUITY INDEX FUND seeks to match, before expenses, the risk and return
characteristics of the Morgan Stanley Capital International EAFE(R) Index
("EAFE(R) Index"). The Fund will invest primarily in common stocks of companies
that comprise the EAFE(R) Index, which emphasizes stocks of companies in major
markets in Europe, Australia and the Far East. The Fund may also use stock index
futures and options.
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RYDEX
NOVA FUND - seeks to provide investment returns that are 150% of the S&P 500
Index. The Fund invests a significant extent in futures contracts and options
on: securities, futures contracts, and stock indexes. The Fund holds U.S.
Government securities to collateralize these futures and options contracts.
URSA FUND - seeks to provide investment results that will inversely correlate to
the performance of the S&P 500 Index. The Fund invests a significant extent in
futures contracts and options on: securities, futures contracts, and stock
indexes. The Fund holds U.S. Government securities to collateralize these
futures and options contracts.
OTC FUND - seeks to provide investment results that correspond to a benchmark
for over-the-counter securities. The Fund's current benchmark is the NASDAQ 100
Index. The Fund invests principally in securities of companies included in the
NASDAQ 100 index.
PRECIOUS METALS FUND - seeks to provide investment results that correspond to a
benchmark for precious metals securities. The Fund's current benchmark is the
XAU Index. The Fund invests principally in securities of companies included in
the XAU Index.
U.S. GOVERNMENT BOND FUND - seeks to provide investment results that correspond
to a benchmark for U.S. Government securities. The Fund's current benchmark is
120% of the price movement of the Long Treasury Bond. The Fund invests
principally in U.S. Government securities, futures contracts, and options. Some
of the Fund's U.S. Government securities will be used to collateralize these
futures and options contracts.
JUNO FUND - seeks to provide total returns that will inversely correlate to the
price movement of a benchmark for U.S. Treasury debt instruments. The Fund's
current benchmark is the inverse of the price movement of Long Treasury Bond.
The Fund enters into short sales and engages in futures and options
transactions. The Fund holds U.S. Government securities to collateralize these
futures and options contracts.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
Ameritas reserves the right, subject to applicable law, to add, delete, combine,
or substitute investments in Separate Account LLVL if, in our judgment,
marketing needs, tax considerations, or investment conditions warrant. This may
happen due to a change in law or a change in a Fund's objectives or
restrictions, or for some other reason. Ameritas may operate Separate Account
LLVL as a management company under the 1940 Act, it may be deregistered under
that Act if registration is no longer required, or it may be combined with other
Ameritas separate accounts. Ameritas may also transfer the assets of Separate
Account LLVL to another separate account. If necessary, we will notify the SEC
and/or state insurance authorities and will obtain any required approvals before
making these changes.
If any changes are made, Ameritas may, by appropriate endorsement, change the
Policy to reflect the changes. In addition, Ameritas may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account LLVL. Ameritas will determine the
basis for making any new Subaccounts available to existing Policy Owners.
You will be notified of any material change in the investment policy of any Fund
in which you have an interest.
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FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between Separate Account LLVL
and the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from Separate Account
LLVL to the Fixed Account are placed in Ameritas' General Account. The General
Account includes all of Ameritas' assets, except those assets segregated in
Ameritas' separate accounts. Ameritas has the sole discretion to invest the
assets of the General Account, subject to applicable law. Ameritas bears an
investment risk for all amounts allocated or transferred to the Fixed Account,
plus interest credited thereto, less any deduction for charges and expenses. The
Policy Owner bears the investment risk that the declared rate, described below,
will fall to a lower rate after the expiration of a declared rate period.
Because of exemptions and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 (the "1933
Act"), nor is the General Account registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the General Account nor any
interest in it is generally subject to the provisions of the 1933 or 1940 Act.
We understand that the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the Fixed Account portion of the Policy; however, these
disclosures may be subject to generally applicable provisions of the Federal
Securities Laws regarding the accuracy and completeness of statements made in
prospectuses.
Ameritas guarantees that it will credit interest at a declared rate of at least
3.5%. Ameritas may, at its discretion, set a higher declared rate(s). Each month
Ameritas will establish the declared rate for the Policies with a Policy Date or
Policy Anniversary Date in that month. Each month is assumed to have 30 days,
and each year to have 360 days for purposes of crediting interest on the Fixed
Account. The Policy Owner will earn interest on the amounts transferred or
allocated to the Fixed Account at the declared rate effective for the month in
which the Policy was issued, which rate is guaranteed for the remainder of the
first Policy Year. During later Policy Years, all amounts in the Fixed Account
will earn interest at the declared rate in effect in the month of the last
Policy Anniversary. Declared interest rates may increase or decrease from
previous periods, but will not fall below 3.5%. Ameritas reserves the right to
change the declaration practice, and the period for which a declared rate will
apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from Ameritas.
Purposes of the Policy
The Policy is designed to provide the Policy Owner with both lifetime insurance
protection and flexibility in the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may adjust the level of Death Benefits payable under
the Policy without having to purchase a new Policy by increasing (with evidence
of insurability) or decreasing the Specified Amount. An increase in the
Specified Amount will increase both the Minimum Premium and the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Minimum Premium and Guaranteed Death Benefit Premium will not decrease. Thus, as
insurance needs or financial conditions change, you have the flexibility to
adjust life insurance benefits and vary premium payments.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account LLVL. Thus the Policy
Owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy
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continues in force may depend in part upon the investment experience of the
chosen Subaccounts. The failure to pay a Planned Periodic Premium will not
necessarily cause the Policy to lapse, but the Policy could lapse even if
Planned Periodic Premiums have been paid, depending upon the investment
experience of Separate Account LLVL. If the Minimum Premium or Guaranteed Death
Benefit Premium is satisfied by Net Policy Funding, Ameritas will keep the
Policy in force during the appropriate period and provide a Death Benefit. In
certain instances, this Net Policy Funding will not, after the payment of
Monthly Deductions, generate positive Net Cash Surrender Values.
Death Benefit Proceeds
As long as the Policy remains in force, Ameritas will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Second Death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Second Death occurs. The Death Benefit Proceeds may be paid in
a lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.)
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or as subsequently changed. If
you do not choose a Beneficiary, the proceeds will be paid to you, as the
Policyowner, or to your estate.
Death Benefit Options
The Policy provides two Death Benefit options. The Policy Oowner selects one of
the options in the application. The Death Benefit under either option will never
be less than the current Specified Amount of the Policy as long as the Policy
remains in force. (See the section on Policy Lapse and Reinstatement.) The
minimum initial Specified Amount is $100,000. The Net Amount at Risk for Option
A will generally be less than the Net Amount at Risk for Option B. If you choose
Option A, your Cost of Insurance deduction will generally be lower than if you
choose Option B. (See the section on Charges and Deductions.) The following
graphs illustrate the differences in the two Death Benefit options.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
OPTION A.
Death Benefit Option A. Pays a Death Benefit equal to the Specified Amount
or the Accumulation Value multiplied by the Death Benefit percentage
(as illustrated at Point A) whichever is greater.
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Accumulation Value at the Second
Death. The applicable percentage is 250% for Attained Ages 40 or younger on the
Policy Anniversary Date prior to the Second Death. For Attained Ages over 40 on
that Policy Anniversary Date, the percentage declines. For example, the
percentage at Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained
Age 60 is 130%, at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at
Attained Age 90 is 105%. The applicable percentage will never be less than 101%.
Accordingly, under Option A the Death Benefit will remain level at the Specified
Amount unless the applicable percentage of Accumulation Value exceeds the
current Specified Amount, in which case the amount of the Death Benefit will
vary as the Accumulation Value varies. Policy Owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
OPTION B.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
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Death Benefit Option B. Pays a Death Benefit equal to the Specified Amount
plus the Policy's Accumulation Value or the Accumulation Value multiplied
by the Death Benefit percentage, whichever is greater.
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Accumulation Value of the Policy or, if greater, the applicable percentage
of the Accumulation Value at the Second Death. The applicable percentage is the
same as under Option A: 250% for Attained Ages 40 or younger on the Policy
Anniversary Date prior to the Second Death. For Attained Ages over 40 on that
Policy Anniversary Date the percentage declines. Accordingly, under Option B the
amount of the Death Benefit will always vary as the Accumulation Value varies
(but will never be less than the Specified Amount). Policy Owners who prefer to
have favorable investment performance, if any, reflected in increased insurance
coverage, rather than higher Accumulation Values, generally should select Option
B.
CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per
year after the first Policy Year by sending Ameritas a written request. The
effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by Ameritas. A change may have federal
tax consequences.
If the Death Benefit option is changed from Option A to Option B, the Specified
Amount after the change will equal the Specified Amount before the change less
the Accumulation Value as of the date of the change. If the Death Benefit option
is changed from Option B to Option A, the Specified Amount under Option A after
the change will equal the Death Benefit under Option B on the effective date of
change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Accumulation Value. However, a change in the Death Benefit option may
affect the Cost of Insurance because this charge varies depending on the Net
Amount at Risk. Changing from Option B to Option A generally will decrease the
Net Amount at Risk in the future, and will therefore decrease the Cost of
Insurance. Changing from Option A to Option B generally will result in an
increase in the Cost of Insurance over time because the Cost of Insurance rate
will increase with the ages of the Insureds, even though the Net Amount at Risk
will generally remain level. (See the sections on Charges and Deductions and
Federal Tax Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, a Policy Owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount affects the Net Amount at Risk, which
affects the Cost of Insurance and may have federal tax consequences. (See the
sections on Charges and Deductions and Federal Tax Matters.)
Any increase or decrease in the Specified Amount will become effective on the
Monthly Activity Date on or following the date a written request is approved by
Ameritas. The Specified Amount of a Policy may be changed only once per year and
Ameritas may limit the size of a change in a Policy Year. The Specified Amount
remaining in force after any requested decrease may not be less than $100,000.
In addition, if a decrease in the Specified Amount makes the Policy not comply
with the maximum premium limits required by federal tax law, the decrease may be
limited or the Accumulation Value may be returned to you, at your election, to
the extent necessary to meet the requirements. (See the section on Premiums.)
Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. Ameritas may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to put the
requested increase in effect. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $50,000, and an
increase cannot be made if either Insured was over age 85 on the previous Policy
Anniversary Date. An increase in the Specified Amount during the time either the
Minimum Benefit or the Guaranteed Death Benefit provision is in effect will
increase the respective premium requirements. (See the section on Charges and
Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by a Policy
- - the difference between the Death Benefit and the Accumulation Value - in
several ways as your insurance needs change. These ways include increasing or
decreasing the Specified Amount of insurance, changing the level of premium
payments, and making a partial withdrawal of the Policy's Accumulation Value.
Certain of these changes may have federal tax consequences. The consequences of
each of these methods will depend upon the individual circumstances.
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DURATION OF THE POLICY
The duration of the Policy generally depends upon the Accumulation Value. The
Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Minimum Benefit or Guaranteed
Death Benefit provision is in effect. (See the section on Charges from
Accumulation Value.) However, when the Net Cash Surrender Value is insufficient
to pay the Monthly Deduction and the Grace Period expires without an adequate
payment by the Policy Owner, the Policy will lapse and terminate without value.
(See the section on Policy Lapse and Reinstatement.)
ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. A Policy Owner may Surrender the
Policy at any time and receive the Policy's Net Cash Surrender Value. (See the
section on Surrenders.) There is no guaranteed minimum Accumulation Value.
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of Premiums
and Accumulation Value.) Thereafter, on each Valuation Date, the Accumulation
Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the
Subaccounts on the Valuation Date, determined by multiplying each
Subaccount's unit value by the number of Subaccount units you
have allocated to the Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in
the General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation
Date; less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Accumulation
Value.
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on a number of variables, a
Policy's Accumulation Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount is calculated
by:
(1) Multiplying the net asset value per share of each Fund portfolio
on the Valuation Date times the number of shares held by that
Subaccount, before the purchase or redemption of any shares on
that Valuation Date; minus
(2) A charge for mortality and expense risk at an annual rate of .40%
in Policy Years 1-15, decreasing to .10% thereafter; minus
(3) A charge for administrative service expenses at an annual rate of
.20%; and
(4) Dividing the result by the total number of units held in the
Subaccount on the Valuation Date, before the purchase or
redemption of any units on that Valuation Date.
(See the section on Daily Charges Against the Separate Account.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The net asset value for
each Fund portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. The transaction cut-off time for receipt by us of
Premium Payments and all transactions with respect to Rydex is 1:30 p.m. Central
time, or one hour before market close, for days on which the market closes
early. A Valuation Period is the period between two successive Valuation Dates,
commencing at the close of the NYSE on each Valuation Date and ending at the
close of the NYSE on the next succeeding Valuation Date.
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PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after Ameritas receives Satisfactory Proof of Death. Payments may be postponed
in certain circumstances. (See the section on Postponement of Payments.) The
Policy Owner may decide the form in which Death Benefit Proceeds will be paid.
While at least one Insured is alive, the Policy Owner may arrange for the Death
Benefit Proceeds to be paid in a lump sum or under one or more of the optional
methods of payment described below. Changes must be in writing and will revoke
all prior elections. If no election is made, Ameritas will pay Death Benefit
Proceeds or Accumulation Value Benefits in a lump sum. When Death Benefit
Proceeds are payable in a lump sum and no election for an optional method of
payment is in force at the Second Death the Beneficiary may select one or more
of the optional methods of payment. Further, if the Policy is assigned, any
amounts due to the assignee will first be paid in one sum. The balance, if any,
may be applied under any payment option. Once payments have begun, the payment
option may not be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS. The minimum amount of each payment
is $100. If a payment would be less than $100, Ameritas has the right to make
payments less often so that the amount of each payment is at least $100. Once a
payment option is in effect, Death Benefit Proceeds will be transferred to
Ameritas' General Account. Ameritas may make other payment options available in
the future. For additional information concerning these options, see the Policy
itself. The following payment options are currently available:
OPTION AI--INTEREST PAYMENT OPTION. Ameritas will hold any amount applied
under this option. Interest on the unpaid balance will be paid or credited
each month at a rate determined by Ameritas.
OPTION AII--FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed
fixed amount. Payments continue until the amount Ameritas holds runs out.
OPTION B--FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any
period selected up to 20 years.
OPTION C--LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
life of a named person. Payments will continue for the lifetime of that
person. Variations provide for guaranteed payments for a period of time.
OPTION D--JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based
on the lives of two named persons. While both are living, one payment will
be made each month. When one dies, the same payment will continue for the
lifetime of the other.
As an alternative to the above payment options, Death Benefits Proceeds may be
paid in any other manner approved by Ameritas. Further, one of Ameritas'
affiliates may make payments under the above payment options. If an affiliate
makes the payment, it will do so according to the request of the Policy Owner,
using the rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. The Policy Owner may borrow an amount up to the current Net
Cash Surrender Value less twelve times the most recent Monthly Deduction, at
regular or reduced loan rates (described below). Loans usually are funded within
seven days after receipt of a written request. The loan may be repaid at any
time while at least one Insured is living. Policy Owners in certain states may
borrow 100% of the Net Cash Surrender Value after deducting Monthly Deductions
and any interest on policy loans that will be due for the remainder of the
Policy Year. Loans may have tax consequences. (See the section on Federal Tax
Matters.)
LOAN INTEREST. Ameritas charges interest to Policy Owners at regular and reduced
rates. Regular loans will accrue interest on a daily basis at a rate of up to 6%
per year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policy Owner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is (1) the Accumulation Value, minus (2) total premiums paid minus any partial
withdrawals previously taken, and minus (3) any Outstanding Policy Debt held at
a reduced loan rate. However, this amount may not exceed the maximum loan amount
described above. (See the section on Loan Privileges.) If unpaid when due,
interest will be added to the amount of the loan and bear interest at the same
rate. The Policy Owner earns 3.5% interest on the Accumulation Values held in
the General Account securing the loans.
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EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the
amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. The minimum amount which can remain in a
Subaccount or the Fixed Account as a result of a loan is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options. In any Policy Year that
loan interest is not paid when due, Ameritas will add the interest due to the
principal amount of the Policy loan on the next Policy Anniversary. This loan
interest due will be transferred from the Investment Options as set out above.
No charge will be made for these transfers. A Policy loan will permanently
affect the Accumulation Value and may permanently affect the amount of the Death
Benefits, even if the loan is repaid. Policy loans will also affect Net Policy
Funding for determining whether the Minimum Benefit and Guaranteed Death Benefit
provisions are met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Accrued Expense Charges, the Policy
Owner must pay the excess. Ameritas will send a notice of the amount which must
be paid. If you do not make the required payment within the 61 days after
Ameritas sends the notice, the Policy will terminate without value ("lapse").
Should the Policy lapse while Policy loans are outstanding, the portion of the
loans attributable to earnings will become taxable. You may lower the risk of a
Policy lapsing while loans are outstanding as a result of a reduction in the
market value of investments in the Subaccounts by investing in a diversified
group of lower risk investment portfolios and/or transferring the funds to the
Fixed Account and receiving a guaranteed rate of return. Should you experience a
substantial reduction, you may need to lower anticipated withdrawals and loans,
repay loans, make additional premium payments, or take other action to avoid
Policy lapse. A lapsed Policy may later be reinstated. (See the section on
Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policy Owner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan will be allocated among the Subaccounts and the Fixed Account in the
same proportion that Net Premiums are being allocated at the time of repayment.
SURRENDERS
At any time while at least one Insured is alive, the Policy Owner may withdraw a
portion of the Accumulation Value or Surrender the Policy by sending a written
request to Ameritas. The amount available for Surrender is the Net Cash
Surrender Value at the end of the Valuation Period when the Surrender request is
received at Ameritas' Home Office. There are no surrender charges. Surrenders
will generally be paid within seven days of receipt of the written request. (See
the section on Postponement of Payments.) Surrenders may have tax consequences.
Once a Policy is Surrendered, it may not be reinstated. (See the section on Tax
Treatment of Policy Proceeds.)
If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to Ameritas along with the request. Ameritas will pay the Net Cash
Surrender Value. Coverage under the Policy will terminate as of the date of a
total Surrender. A Policy Owner may elect to have the amount paid in a lump sum
or under a payment option. (See the section on Payment Options.)
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be at least $1,000 or an amount sufficient to maintain the Policy in force for
the remainder of the Policy Year.
The amount paid will be deducted from the Investment Options according to your
instructions when you request the withdrawal. However, the minimum amount
remaining in a Subaccount as a result of the allocation is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance is calculated and the amount of pure
insurance protection under the Policy. (See the sections on Monthly Deduction -
Cost of Insurance and Death Benefit Options - Methods of Affecting Insurance
Protection.) If Death Benefit option B is in effect, the Specified Amount will
not change, but the Accumulation Value will be reduced.
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A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from the Accumulation Value. Currently, the charge is the lesser of $25
or 2% of the amount withdrawn. (See the section on Partial Withdrawal Charge.)
Partial withdrawals will also affect Net Policy Funding for determining whether
the Minimum Benefit and Guaranteed Death Benefit provisions are met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of Separate Account
LLVL and to the Fixed Account as often as desired. However, you may make only
one transfer out of the Fixed Account per Policy Year. We may limit the transfer
period to the 30 days following the Policy Anniversary Date. The transfers may
be ordered in person, by mail or by telephone. The total amount transferred each
time must be at least $250, or the balance of the Subaccount, if less. The
minimum amount that may remain in a Subaccount or the Fixed Account after a
transfer is $100. The first 15 transfers per Policy Year will be permitted free
of charge. After that, a transfer charge of $10 may be imposed each additional
time amounts are transferred. Currently, no charge is imposed for additional
transfers. This charge will be deducted pro rata from each Subaccount (and, if
applicable, the Fixed Account) in which the Policy Owner is invested. (See the
section on Transfer Charge.) Additional restrictions on transfers may be imposed
at the fund level. Transfers resulting from Policy loans or exercise of the
exchange privilege will not be subject to a transfer charge and will not be
counted towards the guaranteed 15 free transfers per Policy Year. Ameritas may
at any time revoke or modify the transfer privilege, including the minimum
amount transferable.
We will only allow transfers with regard to Rydex according to administrative
rules we have set.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, are limited to one per Policy Year.
Transfers out of the Fixed Account are limited to the greater of (1) 25% of the
Fixed Account attributable to the Policy; (2) the largest transfer made by the
Policy Owner out of the Fixed Account during the last 13 months; or (3) $1,000.
This provision is not available while dollar cost averaging from the Fixed
Account.
The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. Ameritas will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and if it does
not, Ameritas may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures Ameritas follows for transactions initiated by
telephone include, but are not limited to, requiring the Policy Owner to provide
the Policy number at the time of giving transfer instructions; Ameritas' tape
recording of all telephone transfer instructions; and Ameritas providing written
confirmation of telephone transactions.
SYSTEMATIC PROGRAMS
Ameritas may offer systematic programs as discussed below. These programs will
be subject to administrative guidelines Ameritas may establish from time to
time. Transfers of Accumulation Value made pursuant to these programs will be
counted in determining whether any transfer fee may apply. Lower minimum amounts
may be allowed to transfer as part of a systematic program. No other separate
fee is assessed when one of these options is chosen. All other normal transfer
restrictions, as described above, also apply.
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. Ameritas reserves the right to
modify, suspend or terminate such programs at any time. Use of systematic
programs may not be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
Ameritas to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis according to your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
Ameritas to automatically transfer, on a systematic basis, a predetermined
amount or specified percentage from the Fixed Account or the Liquid Asset
Subaccount to any other Subaccount(s). Dollar cost averaging is permitted from
the Fixed Account if each monthly transfer is no more than 1/36th of the value
of the Fixed Account at the time dollar cost averaging is established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
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FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after Ameritas delivers a notice of your right of cancellation, or within 45
days of completing Part I of the application, whichever is later. When allowed
by state law, the amount of the refund is the net premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from premiums paid. Otherwise, the amount of the refund will
equal the gross premiums paid. To cancel the Policy, you should mail or deliver
it to the selling agent, or to Ameritas at the Home Office. A refund of premiums
paid by check may be delayed until the check has cleared your bank. (See the
section on Postponement of Payments.)
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to Ameritas' Home Office (5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals between the ages
of 20 and 90 at the time of purchase, although at least one of the individuals
must be no older than 85, and both of whom supply satisfactory evidence of
insurability to Ameritas. Acceptance is subject to Ameritas' underwriting rules,
and Ameritas reserves the right to reject an application for any reason.
The Policy Date is the effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
When all required premiums and application amendments have been received by
Ameritas in its Home Office, the Issue Date will be the date the Policy is
mailed to you or sent to the agent for delivery to you. When application
amendments or additional premiums need to be obtained upon delivery of the
Policy, the Issue Date will be when the Policy receipt and federal funds (monies
of member banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received and available to Ameritas, and the
application amendments are received and reviewed in Ameritas' Home Office. Your
initial Net Premium will be allocated to the Liquid Asset Portfolio for thirteen
days after the Issue Date, unless, where available, you have allocated 100% to
the Fixed Account. Then, thirteen days after the Issue Date, the Accumulation
Value of the Policy will be allocated among the Subaccounts and/or Fixed Account
according to the instructions in your application.
Where allowed, if you have allocated 100% to the Fixed Account, the Net Premium
of the Policy is allocated to the Fixed Account on the Issue Date. In this
instance, no further allocation will occur.
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if a lower Issue Age for either Insured results in lower Cost of
Insurance Rates. If a Policy is backdated, the minimum initial premium required
will include sufficient premium to cover the backdating period. Monthly
deductions will be made for the period the Policy Date is backdated.
Interim conditional insurance coverage may be issued prior to the Policy Date,
provided that certain conditions are met, upon the completion of an application
and the payment of the required premium at the time of the application. The
amount of the interim coverage is limited to $100,000. Premium will not be
accepted with applications for coverage in amounts of $1,000,000 or more.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
Ameritas in federal funds. The initial premium payment must be at least equal to
the monthly Minimum Premium times one more than the number of months between the
Policy Date and the Issue Date. Subsequent premiums are payable at Ameritas'
Home Office. A Policy Owner has flexibility in determining the frequency and
amount of premiums. However, unless you have paid sufficient premiums to pay the
Monthly Deduction and Percent of Premium Charge for Taxes, the Policy may have a
zero Net Cash Surrender Value and lapse. Net Policy Funding, if adequate, may
satisfy Minimum Premium and/or Guaranteed Death Benefit Premium requirements.
(See the section on Policy Benefits, Purposes of the Policy.)
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PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. You may want to consider setting the Planned
Periodic Premium no lower than the Guaranteed Death Benefit Premium to assure
proper funding of the Guaranteed Death Benefit. You are not required to pay
premiums according to this schedule. You have considerable flexibility to alter
the amount and frequency of premiums paid. Ameritas reserves the right to limit
the number and amount of additional or unscheduled premium payments.
You may also change the frequency and amount of Planned Periodic Premiums by
sending a written request to the Home Office, although Ameritas reserves the
right to limit any increase. Premium payment notices will be sent annually,
semi-annually or quarterly, depending upon the frequency of the Planned Periodic
Premiums. Payment of the Planned Periodic Premiums does not guarantee that the
Policy remains in force unless the Minimum Benefit or Guaranteed Death Benefit
provision is in effect. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. (See the section on Duration of the Policy.)
Unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect,
even if Planned Periodic Premiums are paid, the Policy will lapse any time the
Net Cash Surrender Value is insufficient to pay the Monthly Deduction, and the
Grace Period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITS. Ameritas'current minimum premium limit is $45, $15 if paid by
automatic bank draft. Ameritas currently has no maximum premium limit, other
than the current maximum premium limits established by federal tax laws.
Ameritas reserves the right to change any premium limit. In no event may the
total of all premiums paid, both planned and unscheduled, exceed the current
maximum premium limits established by federal tax laws. (See the section on Tax
Status of the Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, Ameritas will only accept that portion of
the premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limits allowed by law. Ameritas may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
Net Amount at Risk on the date the premium is received.
PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation
Value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policy Owner, an
additional premium payment may be required. Ameritas will notify you of any
premium required to fund the increase, which premium must be made in a single
payment. The Accumulation Value of the Policy will be immediately increased by
the amount of the payment, less the applicable Percent of Premium Charge for
Taxes.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy Owner
allocates Net Premiums to one or more Subaccounts and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of future Net Premiums may be changed without charge by providing proper
notification to the Home Office in writing or by telephone. If there is any
Outstanding Policy Debt at the time of a payment, Ameritas will treat the
payment as a premium payment unless you instruct otherwise by proper written
notice.
On the Issue Date, the initial Net Premium will be allocated to the Investment
Options you selected. When state or other applicable law or regulation requires
return of at least your premium payments if you return the Policy under the
free-look privilege, the initial Net Premium will be allocated to the Liquid
Asset Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. Premium payments received by
Ameritas prior to the Issue Date are held in the General Account until the Issue
Date and are credited with interest at a rate determined by Ameritas for the
period from the date the payment has been converted into federal funds and is
available to Ameritas. In no event will interest be credited prior to the Policy
Date.
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policy Owner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
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POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect.
The Grace Period is 61 days from the date Ameritas mails a notice that the Grace
Period has begun.Ameritas will notify you at the beginning of the Grace Period
by mail addressed to your last known address on file with Ameritas.
The notice will specify the premium required to keep the Policy in force. The
required premium will equal the lesser of (1) Monthly Deductions plus Percent of
Premium charges for the three Policy Months after commencement of the Grace
Period, plus projected loan interest that would accrue over that period, or (2)
the premium required under the Minimum Benefit or Guaranteed Death Benefit
provisions, if applicable, to keep the Policy in effect for three months from
the commencement of the Grace Period. Failure to pay the required premium within
the Grace Period will result in lapse of the Policy. If the Second Death occurs
during the Grace Period, any overdue Monthly Deductions and Outstanding Policy
Debt will be deducted from the Death Benefit Proceeds. (See the section on
Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period provided both
Insureds are living. We will reinstate your Policy based on the rating classes
of the Insureds at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of both Insureds satisfactory to Ameritas
(including evidence of insurability of any person covered by a rider to
reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated
with interest due and accrued;
(3) The Policy cannot be reinstated if it has been Surrendered for its full
Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as of
the date of reinstatement to equal to or greater than zero; or
(b) three times the current Monthly Deduction.
The amount of Accumulation Value on the date of reinstatement will equal:
(1) The amount of the Net Cash Surrender Value on the date of lapse,
increased by
(2) The premium paid at reinstatement, less
(3) The Percent of Premium Charge.
If any Outstanding Policy Debt is reinstated, that debt will be held in
Ameritas' General Account. Accumulation Value calculations will then proceed as
described under the section on Accumulation Value.
The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by Ameritas of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate Ameritas
for: (1) providing the insurance benefits set forth in the Policy and any
optional insurance benefits added by rider; (2) administering the Policy and
payment of applicable taxes; (3) assuming certain risks in connection with the
Policy; and (4) incurring expenses in distributing the Policy. The nature and
amount of these charges are described more fully below.
DEDUCTIONS FROM PREMIUM PAYMENTS
PERCENT OF PREMIUM CHARGE FOR TAXES. A deduction of up to 3% of the premium is
made from each premium payment; currently the charge is 3%. The deduction is
intended to partially offset the premium taxes imposed by the states and their
subdivisions, and to help defray the tax cost due to capitalizing certain policy
acquisition expenses as required under applicable federal tax laws. (See the
section on Federal Tax Matters .) Ameritas does not expect to derive a profit
from the Percent of Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTIONS. Charges will be deducted as of the Policy Date and on each
Monthly Activity Date thereafter from the Accumulation Value of the Policy to
compensate Ameritas for administrative expenses and insurance provided. These
charges will be allocated from the Investment Options in accordance with your
instructions. If no instructions
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are given the charges will be allocated pro rata among the Investment Options.
Each of these charges is described in more detail below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate Ameritas for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction may include a level per policy charge. In addition, for all
Specified Amounts there may be a charge of up to $.10 per month per $1000 of
Specified amount, depending on the younger Insured's Issue Age. For Issue Ages
20 - 44, the rate is $.10, for Issue Ages 45 - 54, the rate is $.08, for Issue
Ages 55 - 64, the rate is $.05, and for Issue Ages 65 and over it is $.00. At
the current time we anticipate that the charge will reduce to $.00 in year 6.
The Administrative Expense Charge may be levied throughout the life of the
Policy and is guaranteed not to increase above $9 per month plus a charge per
month per $1000 of Specified Amount of $.10 for Issue Ages 20-44, $.08 for Issue
Ages 45-64 and $.05 for Issue Ages 65 and over. Ameritas does not expect to make
any profit from the Administrative Expense Charge.
COST OF INSURANCE. Because the Cost of Insurance depends upon several variables,
the cost for each Policy Month can vary from month to month. Ameritas will
determine the monthly Cost of Insurance by multiplying the applicable Cost of
Insurance Rate by the Net Amount at Risk for each Policy Month.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rates are based on the
Issue Age, sex and risk class of each Insured and the Policy duration. The rates
will vary depending upon tobacco use and other risk factors. The rates will be
based on Ameritas' expectations of future experience with regard to mortality,
interest, persistency, and expenses, but will not exceed the Schedule of
Guaranteed Annual Cost of Insurance Rates shown in the Policy. The guaranteed
rates for standard rating classes are calculated from the 1980 Commissioners
Standard Ordinary Smoker and NonSmoker, Male and Female Mortality Tables. The
guaranteed rates for the table-rated substandard Insureds are based on a
multiple (shown in the schedule pages of the Policy) of the above rates.
One-half the amount of any Flat Extra Rating Charge is added to the Cost of
Insurance Rate and thus will be deducted as part of the Monthly Deduction on
each Monthly Activity Date. Any change in the Cost of Insurance Rates will apply
to all Insureds of the same age, sex, risk class and whose Policies have been in
effect for the same length of time.
The Cost of Insurance Rates and payment options for Policies issued in Montana,
and perhaps other states or in connection with certain employee benefit
arrangements, are issued on a sex-neutral (unisex) basis. The unisex rates will
be higher than those applicable to females and lower than those applicable to
males. The actual charges made during the Policy year will be shown in the
annual report delivered to Policy Owners.
RATING CLASS. The rating class of each Insured will affect the Cost of Insurance
Rate. Ameritas currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, Insureds in the standard rating class will have a lower Cost
of Insurance Rate than when either or both Insureds are in a rating class with
higher mortality risks.
TRANSFER CHARGE. Currently there is no charge for transfers among the investment
options in excess of 15 per Policy Year. A charge of $10 (guaranteed not to
increase) for each transfer in excess of 15 may be imposed to compensate
Ameritas for the costs of processing the transfer. Since the charge reimburses
Ameritas only for the cost of processing the transfer, Ameritas does not expect
to make any profit from the transfer charge. This charge will be deducted pro
rata from each Subaccount (and, if applicable, the Fixed Account) in which the
Policy Owner is invested. The transfer charge will not be imposed on transfers
that occur as a result of Policy loans or the exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal.
This charge will compensate Ameritas for the administrative costs of processing
the requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is currently the lesser of $25 or 2% of the amount withdrawn (guaranteed
not to be greater than the lesser of $50 or 2% of the amount withdrawn). No
partial withdrawal charge is assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account LLVL to compensate Ameritas for mortality and
expense risks assumed in connection with the Policy. This daily charge from
Separate Account LLVL is at the rate of 0.001093% (equivalent to an annual rate
of .40%) for Policy Years 1-15 and 0.000273% (equivalent to an annual rate of
.10%) thereafter. The daily charge will be deducted from the net asset value of
Separate Account LLVL, and therefore the Subaccounts, on each Valuation Date.
Where the previous day or days was not a Valuation Date, the deduction on the
Valuation Date will be the applicable daily rate multiplied by the number of
days since the last Valuation Date. No Mortality and Expense Risk Charges will
be deducted from the amounts in the Fixed Account.
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Ameritas believes that this level of charge is within the range of industry
practice for comparable survivorship flexible premium variable universal life
policies. The mortality risk assumed by Ameritas is that Insureds may live for a
shorter time than calculated, and that the aggregate amount of Death Benefits
paid will be greater than initially estimated. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
administrative charges provided in the Policies.
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of Separate Account LLVL on a daily basis. This charge
is applied at a rate of 0.000546% (equivalent to .20% annually). No Asset- Based
Administrative Expense Charge will be deducted from the amounts in the Fixed
Account.
There are no Surrender charges.
FUND EXPENSE SUMMARY
Fee information relating to the underlying funds was provided to Ameritas by the
underlying funds. Ameritas has not independently verified the information
received from the underlying funds.
Neuberger Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investable
assets in a corresponding series ("Series") of the Trust. The figures reported
under "Investment Advisory & Management" include the aggregate of the
administration fees paid by the Portfolio and the management fees paid by its
corresponding Series. Similarly, "Other Expenses" includes all other expenses of
the Portfolio and its corresponding Series.
Neuberger Berman Management, Inc. ("NBMI") provides investment management
services to each Series that include, among other things, making and
implementing investment decisions and providing facilities and personnel
necessary to operate the Series. NBMI provides administrative services to each
Portfolio that include furnishing similar facilities and personnel to the
Portfolio. With the Portfolio's consent, NBMI is authorized to subcontract some
of its responsibilities under its administration agreement with the Portfolio to
third parties.
Each Portfolio bears all expenses of its operations other than those borne by
NBMI as administrator of the Portfolio and as distributor of its shares. Each
Series bears all expenses of its operations other than those borne by NBMI as
investment manager of the Series. These expenses include, but are not limited
to, for the Portfolios and the Series, legal and accounting fees and
compensation for trustees who are not affiliated with NBMI; for the Portfolios,
transfer agent fees and the cost of printing and sending reports and proxy
materials to shareholders; and for the Series, custodial fees for securities.
Any expenses which are not directly attributable to a specific Series are
allocated on the basis of the net assets of the respective Series.
NBMI has undertaken to reimburse certain operating expenses, including the
compensation of NBMI and excluding taxes, interest, extraordinary expenses,
brokerage commissions and transaction costs, that exceed, in the aggregate, 1%
of the Liquid Asset, Guardian, and Mid-Cap Growth Portfolios' average daily net
asset values. These expense reimbursement agreements are subject to termination
upon 60 days written notice.
The effect of any expense limitation by NBMI is to reduce operating expenses of
a portfolio and its corresponding Series and thereby increase total return.
As investment adviser to the Bankers Trust Funds, Bankers Trust Company makes
the Funds' investment decisions and assumes responsibility for the securities
the Funds own. It buys and sells securities for the Funds and conducts research
that leads to the purchase and sale decisions. For its services, Bankers Trust
Company receives a fee that is a percentage of each Fund's average daily net
assets. The investment adviser has entered into agreements to waive and/or
reimburse operating expenses, including its fees, that exceed certain
percentages of the Funds' aggregate average daily net asset values.
PADCO Advisors II, Inc., investment advisor of the Rydex Variable Trust, and
PADCO Service Company, Inc., servicer to the Rydex Variable Trust, have
voluntarily agreed to waive fees and/or reimburse expenses to ensure that
expenses do not exceed the following totals: Nova Fund - 2.20%; Ursa Fund -
2.30%; OTC Fund - 2.20%; Precious Metals Fund - 2.20%; U.S. Government Bond Fund
- - 1.80%; Juno Fund - 2.30%.
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The amount of expenses, including the advisory fees referred to above, borne by
each portfolio for the fiscal year ended December 31, 1998, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY
PORTFOLIO & MANAGEMENT OTHER EXPENSES TOTAL TOTAL
(Reflecting
waivers and/or
reimbursements,
if any)
NEUBERGER BERMAN
Liquid Asset .65% .49% 1.14% 1.00%
Limited Maturity Bond .65% .11% .76% .76%
Balanced .85% .18% 1.03% 1.03%
Guardian .85% .29% 1.14% 1.00%
Mid-Cap Growth .85% .58% 1.43% 1.00%
BANKERS TRUST
Equity 500 Index .20% .99% 1.19% .30%
Small Cap Index .35% 1.23% 1.58% .45%
EAFE(R)Equity Index .45% 1.21% 1.66% .65%
Rydex
Nova Fund .74% 1.47% 2.21% 2.18%
Ursa Fund .90% 1.57% 2.47% 2.30%
OTC Fund .72% 1.24% 1.96% 1.96%
Precious Metals Fund .75% 1.61% 2.36% 2.20%
U.S. Government Bond Fund .50% 1.30% 1.80% 1.80%
Juno Fund .90% 3.59% 4.49% 2.30%
</TABLE>
None of the Fund management fees will be assessed against amounts in the Fixed
Account.
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.
- -----------------
Ameritas may receive administrative fees from the investment advisers of certain
Funds. Ameritas currently does not assess a separate charge against Separate
Account LLVL or the Fixed Account for any federal, state or local income taxes.
Ameritas may, however, make such a charge in the future if income or gains
within Separate Account LLVL will incur any federal, or any significant state or
local income tax liability, or if the federal, state or local tax treatment of
Ameritas changes.
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<PAGE>
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by Ameritas. 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. The rights and benefits under
the Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from Ameritas.
CONTROL OF POLICY. The Policy Owner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record, all rights, options, and privileges belong to the Policy
Owner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last Policy Owner to die.
BENEFICIARY. Policy Owners may name both primary and contingent Beneficiaries in
the application. Payments will be shared equally among Beneficiaries of the same
class unless otherwise stated. If a Beneficiary dies before the Second Death,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiary(ies) of the next class; otherwise to the Policy
Owner; otherwise to the estate of the Policy Owner.
CHANGE OF BENEFICIARY. The Policy Owner may change the Beneficiary by written
request at any time while at least one Insured is alive unless otherwise
provided in the previous designation of Beneficiary. The change will take effect
as of the date the change is recorded at the Home Office. Ameritas will not be
liable for any payment made or action taken before the change is recorded.
CHANGE OF POLICY OWNER OR ASSIGNMENT. In order to change the Policy Owner of the
Policy or assign Policy rights, an assignment of the Policy must be made in
writing and filed with Ameritas at its Home Office. Any such assignment is
subject to Outstanding Policy Debt. The change will take effect as of the date
the change is recorded at the Home Office, and Ameritas will not be liable for
any payment made or action taken before the change is recorded. Payment of Death
Benefit Proceeds is subject to the rights of any assignee of record. A
collateral assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt to
Ameritas and then to the interest of any assignee of record. The balance of any
Death Benefit Proceeds shall be paid in one sum to the designated beneficiary
unless an Optional Method of Payment is selected. If no Beneficiary survives at
the time of the Second Death, the Death Benefit Proceeds shall be paid in one
sum to the Policy Owner, if living; otherwise to any successor-owner, if living;
otherwise to the Policy Owner's estate. Any proceeds payable upon Surrender
shall be paid in one sum unless an Optional Method of Payment is elected.
INCONTESTABILITY. Ameritas cannot contest the Policy or reinstated Policy while
at least one Insured is alive after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, Ameritas
cannot contest an increase in the Specified Amount or addition of a rider while
at least one Insured is alive, after such increase or addition has been in force
for two years from its effective date. However, this two year provision shall
not apply to riders with their own contestability provision. We may require
proof prior to the end of the appropriate contestability period that both
Insureds are living.
MISSTATEMENT OF AGE AND SEX. If the age or sex of either Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
correct age and sex of the Insureds. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If either Insured, while
sane or insane, commits suicide within two years after the Policy Date, Ameritas
will pay only the premiums received less any partial withdrawals, the cost for
riders and any outstanding Policy debt. If either Insured, while sane or insane,
commits suicide within two years after the effective date of any increase in the
Specified Amount, Ameritas' liability with respect to such increase will only be
its total cost of insurance applicable to the increase. The laws of Missouri
provide that death by suicide at any time is covered by the Policy, and further
that suicide by an insane person may be considered an accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at the Second Death, and transfers
may be postponed whenever: (1) the New York Stock Exchange ("NYSE") is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policy Owners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable
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<PAGE>
to determine the value of Separate Account LLVL's net assets; or (4) Surrenders,
loans or partial withdrawals from the Fixed Account may be deferred for up to 6
months from the date of written request. Payments under the Policy of any
amounts derived from premiums paid by check may be delayed until such time as
the check has cleared the Policy Owner's bank.
REPORTS AND RECORDS. Ameritas will maintain all records relating to Separate
Account LLVL and will mail to the Policy Owner, at the last known address of
record, within 30 days after each Policy Anniversary, an annual report which
shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit,
premiums paid, Outstanding Policy Debt and other information. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Policy Owner may receive confirmation of such transactions in
their quarterly statements. The Policy Owner should review the information in
these statements carefully. All errors or corrections must be reported to
Ameritas immediately to assure proper crediting to the Policy. Ameritas will
assume all transactions are accurately reported on quarterly statements unless
Ameritas is notified otherwise within 30 days after receipt of the statement.
The Policy Owner will also be sent a periodic report for the Funds and a list of
the portfolio securities held in each portfolio of the Funds.
ADDITIONAL INSURANCE BENEFITS (RIDERS). Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the Monthly Deduction.
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER).
Upon Satisfactory Proof of Death of one Insured, and satisfactory proof
of terminal illness of the surviving Insured after the two-year
contestable period (no waiting period in certain states), Ameritas will
accelerate the payment of up to 50% of the lowest scheduled Death Benefit
as provided by eligible coverages, less an amount up to two guideline
level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts less
than $4,000 or more than $250,000 on all policies issued by Ameritas or
its affiliates that provide coverage on the surviving Insured. Ameritas
may charge the lesser of 2% of the benefit or $50 as an expense charge to
cover the costs of administration.
Satisfactory proof of terminal illness of the last surviving Insured must
include a written statement from a licensed physician who is not related
to the Insured or the Policy Owner stating that the Insured has a
non-correctable medical condition that, with a reasonable degree of
medical certainty, will result in the death of the Insured in less than
12 months (6 months in certain states) from the date of the physician's
statement. Further, the condition must first be diagnosed while the
Policy is in force.
The accelerated benefit first will be used to repay any Outstanding
Policy Debt, and will also affect future loans, partial withdrawals, and
Surrenders. The accelerated benefit will be treated as a lien against the
Policy Death Benefit and will thus reduce the Death Benefit Proceeds.
Interest on the lien will be charged at the Policy loan interest rate.
There is no extra premium for this rider.
ESTATE PROTECTION RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death
of both Insureds during the first four Policy Years.
FIRST-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death
of either of the two Insureds.
SECOND-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death
of both Insureds.
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death
of the rider Insured, as identified. The rider may be purchased on either
Insured or on an individual other than the Insureds.
TOTAL DISABILITY RIDER. This rider provides for the payment by Ameritas
of a disability benefit in the form of premiums while the Insured is
disabled. The benefit amount may be chosen by the Policy Owner at the
issue of the rider. In addition, while the Insured is totally disabled,
the Cost of Insurance for the rider will not be deducted from
Accumulation Value. The rider may be purchased on either or both
Insureds.
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<PAGE>
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. (AIC), a wholly owned subsidiary of AMAL Corporation,
will act as the principal underwriter of the Policies, pursuant to an
Underwriting Agreement between itself and Ameritas. AIC was organized under the
laws of the State of Nebraska on December 29, 1983 and is a registered
broker-dealer pursuant to the Securities Exchange Act of 1934 and a member of
the National Association of Securities Dealers. In 1998, AIC received gross
variable universal life compensation of $298,182, and retained $37,512 in
underwriting fees, and $10 in brokerage commissions on Ameritas' variable
universal life policies.
AIC offers its clients a wide variety of financial products and services and has
the ability to execute stock and bond transactions on a number of national
exchanges. AIC also serves as principal underwriter for Ameritas' variable
annuity, and for Ameritas Variable Life Insurance Company's variable life and
variable annuities. Ameritas Variable Life Insurance Company is an affiliate of
Ameritas. It also has executed selling agreements with a variety of mutual
funds, unit investment trusts and direct participation programs.
There is no premium load to cover sales and distribution expenses. To the extent
that sales and distribution expenses are paid, if at all, Ameritas will pay them
from its other assets or surplus in its General Account, which include amounts
derived from mortality and expense risk charges and other charges made under the
Policy.
Policies can be purchased directly from Ameritas through its direct consumer
services, with salaried employees who are registered representatives of AIC and
who will not receive compensation related to the purchase.
Policies can be purchased from field representatives who are registered
representatives of AIC, or from registered representatives of other registered
broker-dealers authorized to sell the policies subject to applicable law. In
these situations, AIC or the other broker-dealer may receive compensation in an
amount no greater than 15% of the target first year premium paid plus the first
year cost of any riders, and 2% of excess first year premium. AIC or the other
broker-dealer may pass a portion of this compensation on to the registered
representative or the manager of the registered representative.
Upon any subsequent increase in Specified Amount or any subsequent increase in
riders, marketing allowances will also be paid based on the amount of the
increase in Specified Amount or increase in rider.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws except premium taxes. (See discussion in the section on Deductions from
Premium Payments - Percent of Premium Charge for Taxes.) This discussion is
based upon Ameritas' understanding of the relevant laws at the time of filing.
Counsel and other competent tax advisors should be consulted for more complete
information before a Policy is purchased. Ameritas makes no representation as to
the likelihood of the continuation of present federal income tax laws nor of the
interpretations by the Internal Revenue Service. Federal tax laws are subject to
change and thus tax consequences to the Insureds,Policy Owner or Beneficiary may
be altered.
(1) Taxation of Ameritas. Ameritas is taxed as a life insurance company under
Part I of Subchapter L of the Internal Revenue Code of 1986, (the "Code").
At this time, since Separate Account LLVL is not a separate entity from
Ameritas, and its operations form a part of Ameritas, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the
Code. Net investment income and realized net capital gains on the assets of
Separate Account LLVL are reinvested and automatically retained as a part
of the reserves of the Policy and are taken into account in determining the
Death Benefit and Accumulation Value of the Policy. Ameritas believes that
Separate Account LLVL net investment income and realized net capital gains
will not be taxable to the extent that such income and gains are retained
as reserves under the Policy.
Ameritas does not currently expect to incur any federal income tax
liability attributable to Separate Account LLVL with respect to the sale of
the Policies. Accordingly, no charge is being made currently to Separate
Account LLVL for federal income taxes. If, however, Ameritas determines
that it may incur such taxes attributable to Separate Account LLVL, it may
assess a charge for such taxes against Separate Account LLVL.
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<PAGE>
Ameritas may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made). At present, they
are not charges against Separate Account LLVL. If there is a material
change in state or local tax laws, charges for such taxes attributable to
Separate Account LLVL, if any, may be assessed against Separate Account
LLVL.
(2) Tax Status of the Policy. The Code (Section 7702) includes a definition of
a life insurance contract for federal tax purposes which places limitations
on the amount of premiums that may be paid for the Policy and the
relationship of the Accumulation Value to the Death Benefit. While Ameritas
believes that the Policy meets the statutory definition of a life insurance
contract under Internal Revenue Code Section 7702 and should receive
federal income tax treatment consistent with that of a fixed-benefit life
insurance policy, the area of tax law relating to the definition of life
insurance does not explicitly address all relevant issues (including, for
example, certain tax requirements relating to survivorship variable
universal life policies). Ameritas reserves the right to make changes to
the Policy if deemed appropriate by Ameritas to attempt to assure
qualification of the Policy as a life insurance contract. If the Policy
were determined not to qualify as life insurance under Code Section 7702,
the Policy would not provide the tax advantages normally provided by life
insurance. If the Death Benefit of a Policy is changed, the applicable
defined limits may change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a
modified endowment contract, distributions from it (including loans) are
taxed as ordinary income to the extent of any gain. This Policy will become
a "modified endowment contract" if the premiums paid into the Policy fail
to meet a 7-pay premium test as outlined in Section 7702A of the Code.
Certain benefits the Policy Owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are
not limited to, changes in Death Benefits and changes in the Specified
Amount. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits.
Should you deposit excessive premiums during a Policy Year, that portion
that is returned by Ameritas within 60 days after the Policy Anniversary
Date will reduce the premiums paid to prevent the Policy from becoming a
modified endowment contract. All modified endowment policies issued by
Ameritas to the same Policy Owner in any 12 month period are treated as one
modified endowment contract for purposes of determining taxable gain under
Section 72(e) of the Internal Revenue Code. Any life insurance policy
received in exchange for a modified endowment contract will also be treated
as a modified endowment contract. You should contact a competent tax
professional before paying additional premiums or making other changes to
the Policy to determine whether such payments or changes would cause the
Policy to become a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury
(the "Treasury") to set standards by regulation or otherwise for the
investments of Separate Account LLVL to be "adequately diversified" in
order for the Policy to be treated as a life insurance contract for federal
tax purposes. Separate Account LLVL, through the Funds, intends to comply
with the diversification requirements prescribed by the Treasury in
regulations published in the Federal Register on March 2, 1989, which
affect how the Fund's assets may be invested.
Ameritas does not have control over the Funds or their investments.
However, Ameritas believes that the Funds will be operated in compliance
with the diversification requirements of the Internal Revenue Code. Thus,
Ameritas believes that the Policy will be treated as a life insurance
contract for federal tax purposes.
In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations
do not provide guidance concerning the extent to which policy owners may
direct their investments to particular divisions of a separate account.
Regulations in this regard may be issued in the future. It is not clear
what these regulations will provide nor whether they will be prospective
only. It is possible that when regulations are issued, the Policy may need
to be modified to comply with such regulations. For these reasons, Ameritas
reserves the right to modify the Policy as necessary to prevent the Policy
Owner from being considered the owner of the assets of Separate Account
LLVL or otherwise to qualify the Policy for favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
(3) Tax Treatment of Policy Proceeds. Ameritas believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, Ameritas believes that the Death
Benefit will generally be excludable from the gross income of the
Beneficiary under Section 101(a)(1) of the Code and the Policy Owner will
not be deemed to be in constructive receipt of the Accumulation Value under
the Policy until its actual Surrender.
LLSVUL
30
<PAGE>
Distributions From Policies That Are Not "Modified Endowment Contracts."
---------------------------------------------------------------------------
Distributions (while one or both Insureds are still alive) from a Policy
that is not a modified endowment contract are generally treated as first a
recovery of the investment in the Policy and then only after the return of
all such investment, as disbursing taxable income. However, in the case of
a decrease in the Death Benefit, a partial withdrawal, a change in Death
Benefit option, or any other such change that reduces future benefits under
the Policy during the first 15 years after a Policy is issued and that
results in a cash distribution to the Policy Owner in order for the Policy
to continue complying with the Section 7702 defined limits on premiums and
Accumulation Values, such distributions will be taxable as ordinary income
to the Policy Owner (to the extent of any gain in the Policy) as prescribed
in Section 7702. In addition, upon a complete surrender or lapse of a
Policy that is not a "modified endowment contract," if the amount received
plus the amount of any outstanding Policy debt exceeds the total investment
in the Policy, the excess will generally be treated as ordinary income for
tax purposes. Investment in the Policy means (1) the total amount of any
premiums paid for the Policy plus the amount of any loan received under the
Policy to the extent the loan is included in gross income of the Policy
owner minus (2) the total amount received under the Policy by the Policy
Owner that was excludable from gross income, excluding any non-taxable loan
received under the Policy.
Ameritas also believes that loans received under a Policy that is not a
"modified endowment contract" will be treated as debt of the Policy Owner
and that no part of any loan under a Policy will constitute income to the
Policy Owner so long as the Policy remains in force. Should the Policy
lapse while Policy loans are outstanding the portion of the loans
attributable to earnings will become taxable. Generally, interest paid on
any loan under a Policy owned by an individual will not be tax-deductible.
Except for Policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps, the Health Insurance Portability and
Accountability Act of 1996 (the "Health Insurance Act") generally repeals
the deduction for interest paid or accrued after October 13, 1995 on loans
from corporate owned life insurance pPolicies on the lives of officers,
employees or persons financially interested in the taxpayer's trade or
business. Certain transitional rules for existing debt are included in the
Health Insurance Act. The transitional rules include a phase-out of the
deduction for debt incurred (1) before January 1, 1996, or (2) before
January 1, 1997, for policies entered into in 1994 or 1995. The phase-out
of the interest expense deduction occurs over a transition period between
October 13, 1995 and January 1, 1999. There is also a special rule for
pre-June 21, 1986 policies. The Taxpayer Relief Act of 1997 ("TRA '97"),
further expanded the interest deduction disallowance for businesses by
providing, with respect to policies issued after June 8, 1997, that no
deduction is allowed for interest paid or accrued on any debt with respect
to life insurance covering the life of any individual (except as noted
above under pre-'97 law with respect to key persons and pre- June 21, 1986
policies). TRA '97 also provides that no deduction is permissible for
premiums paid on a life insurance policy if the taxpayer is directly or
indirectly a beneficiary under the policy. Also under TRA '97 and subject
to certain exceptions, for policies issued after June 8, 1997, no deduction
is allowed for that portion of a taxpayer's interest expense that is
allocable to unborrowed Policy cash values. This disallowance generally
does not apply to policies owned by natural persons. Policy Owners should
consult a competent tax advisor concerning the tax implications of these
changes for their Policies.
Distributions From Policies That Are "Modified Endowment Contracts." Should
--------------------------------------------------------------------
the Policy become a "modified endowment contract" partial withdrawals, full
Surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of any gain under
the Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer's age 59 1/2. The 10% penalty tax
does not apply if the distribution is made because the taxpayer is disabled
as defined under the Code or if the distribution is paid out in the form of
a life annuity on the life of the taxpayer or the joint lives of the
taxpayer and Beneficiary.
The right to exchange the Policy for a survivorship flexible premium
adjustable life insurance policy (See the section on Exchange Privilege.),
the right to change Policy Owners (See the section on General Provisions.),
and the provision for partial withdrawals (See the section on Surrenders.)
may have tax consequences depending on the circumstances of such exchange,
change, or withdrawal. Upon complete Surrender, if the amount received plus
any Outstanding Policy Debt exceeds the total premiums paid (the "basis"),
that are not treated as previously withdrawn by the Policy Owner, the
excess generally will be taxed as ordinary income.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit Proceeds depend on
applicable law and the circumstances of each Policy Owner or Beneficiary.
In addition, if the Policy is used in connection with tax-qualified
retirement plans, certain limitations prescribed by the Internal Revenue
Service on, and rules with respect to the taxation of, life insurance
protection provided through such plans may apply. The advice of competent
tax counsel should be sought in connection with use of life insurance in a
qualified plan.
LLSVUL
31
<PAGE>
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
Ameritas holds the assets of Separate Account LLVL. The assets are kept
physically segregated and held separately and apart from the General Account
assets, except for the Fixed Account. Ameritas maintains records of all
purchases and redemptions of Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
Ameritas is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. Ameritas does not engage any such third parties to offer such services
of any type. In certain cases, Ameritas has agreed to honor transfer
instructions from such services where it has received powers of attorney, in a
form acceptable to it, from the Policy Owners participating in the service.
Firms or persons offering such services do so independently from any agency
relationship they may have with Ameritas for the sale of Policies. Ameritas
takes no responsibility for the investment allocations and transfers transacted
on a Policy Owner's behalf by such third parties or any investment allocation
recommendations made by such parties. Policy Owners should be aware that fees
paid for such services are separate and in addition to fees paid under the
Policies.
VOTING RIGHTS
Ameritas is the legal holder of the shares held in the Subaccounts of Separate
Account LLVL and as such has the right to vote the shares, to elect Directors of
the Funds, and to vote on matters that are required by the Investment Company
Act of 1940 and upon any other matter that may be voted upon at a shareholder
meeting. To the extent required by law, Ameritas will vote all shares of each of
the Funds held in Separate Account LLVL at regular and special shareholder
meetings of the Funds according to instructions received from Policy Owners
based on the number of shares held as of the record date for such meeting.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy Owner is determined by dividing the Accumulation Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy Owners are received and Fund shares
held in each Subaccount which do not support Policy Owner interests will be
voted by Ameritas in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, Ameritas may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. Ameritas may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, Ameritas itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Funds, if Ameritas
reasonably disapproves those changes in accordance with applicable federal
regulations. If Ameritas does disregard voting instructions, it will advise
Policy Owners of that action and its reasons for the action in the next annual
report or proxy statement to Policy Owners.
STATE REGULATION OF AMERITAS
Ameritas, a stock life insurance company organized under the laws of Nebraska,
is subject to regulation by the Nebraska Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of Ameritas and Separate Account LLVL as of
December 31 of the preceding year must be filed with the Nebraska Department of
Insurance. Periodically, the Nebraska Department of Insurance examines the
liabilities and reserves of Ameritas and Separate Account LLVL.
In addition, Ameritas is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
Policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS OF AMERITAS
This list shows name and position(s) with Ameritas followed by the principal
occupations for the last five years. Where an individual has held more than one
position with an organization during the last 5-year period, the last position
held has been given.
LLSVUL
32
<PAGE>
LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER*
Director, Chairman of the Board, Chief Executive Officer: Ameritas Variable Life
Insurance Company; also serves as officer and/or director of other subsidiaries
and/or affiliates of Ameritas Life Insurance Corp.
KENNETH C. LOUIS, DIRECTOR, PRESIDENT AND CHIEF OPERATING OFFICER*
Director, Executive Vice President: Ameritas Variable Life Insurance Company;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life Insurance Corp.
NORMAN M. KRIVOSHA, EXECUTIVE VICE PRESIDENT-LEGAL AND GOVERNMENT AFFAIRS*
Formerly, Secretary and General Counsel: Ameritas Variable Life Insurance
Company; also served as officer and/or director of other subsidiaries and/or
affiliates of Ameritas Life Insurance Corp.
JAMES P. ABEL, DIRECTOR**
President: NEBCO, Inc.
DUANE W. ACKLIE, DIRECTOR**
Chairman: Crete Carrier Corporation; Director: AMAL Corporation.
HALUK ARITURK, EXECUTIVE VICE PRESIDENT-AMERITAS ACACIA SHARED SERVICES CENTER*
Senior Vice President, Operations and Chief Actuary: Acacia Life Insurance
Company; also serves as officer and/or director of subsidiaries and/or
affiliates of Acacia Life Insurance Company.
ROBERT C. BARTH, VICE PRESIDENT AND CONTROLLER*
EDWARD M. BELLER, VICE PRESIDENT-INDIVIDUAL ADMINISTRATION AND CHIEF
UNDERWRITER*
Vice President and Chief Underwriter: Acacia Life Insurance Company; Vice
President and Chief Underwriter: HGI, Inc.
ELDON BOHMONT, VICE PRESIDENT-INDIVIDUAL CLIENT SERVICES*
ROXANN BRENNFOERDER, VICE PRESIDENT GROUP ADMINISTRATION, UNDERWRITING AND
COMPLIANCE*
JAN M. CONNOLLY, SENIOR VICE PRESIDENT-OPERATIONS, PLANNING AND QUALITY*
WILLIAM W. COOK, JR., DIRECTOR**
Chairman, Chief Executive Officer: The Beatrice National Bank and Trust Co.
GERALD B. DIMON, VICE PRESIDENT-HUMAN RESOURCES*
BERT A. GETZ, DIRECTOR**
Chairman and President: Globe Corporation; Director: Security Pacific Bank
Arizona, Security Pacific Bancorp Southwest, Bancwest Mortgage Corp., Security
Pacific Corporation, Security Pacific National Bank, Ellsworth Financial Corp.,
Iliff, Thorn & Co., CalMat Co., Dean Foods Company, Continental Bank,
Continental Bank Corp.; Advisory Director: Myers Craig Vallone Co.; Trustee:
Mayo Foundation.
WILLIAM R. GIOVANNI, SENIOR VICE PRESIDENT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER-AIC*
Also serves as officer and director of an affiliate of Ameritas Life Insurance
Corp.; President: FirsTier Securities.
LORI S. GOHDE, VICE PRESIDENT-GROUP BUSINESS DEVELOPMENT AND PLANNING*
Vice President-Group: Woodmen Accident & Life Co.
B. DOUGLAS GRITTON, VICE PRESIDENT-INDIVIDUAL AGENCY DISTRIBUTION*
Territorial Trainer: Metropolitan Life Insurance Company.
LLSVUL
36
<PAGE>
ARNOLD D. HENKEL, VICE PRESIDENT-PENSIONS*
Capital Analysis/Henkel & Anderson Financial; Senior Vice President: Ministers
Life.
THOMAS D. HIGLEY, VICE PRESIDENT AND FINANCIAL ACTUARY*
Also serves as and officer of a subsidiary of Ameritas Life Insurance Corp.
LESLIE D. INMAN, VICE PRESIDENT - GROUP MARKETING AND PLANNING*
National Sales Director, VP and National Marketing Manager: American Bankers
Insurance.
MIKE JASKOLKA, VICE PRESIDENT - INFORMATION SERVICES*
MARTY L. JOHNSON, SECOND VICE PRESIDENT - INDIVIDUAL UNDERWRITING*
KENNETH R. JONES, VICE PRESIDENT - CORPORATE COMPLIANCE AND ASSISTANT SECRETARY*
Vice President-Corporate Compliance and Assistant Secretary: Ameritas Variable
Life Insurance Company, also serves as officer of other subsidiaries and/or
affiliates of Ameritas Life Insurance Corp.
JAMES R. KNAPP, DIRECTOR**
Chairman: The Brookhollow Group; General Partner: Windsor Associates.
ROBERT F. KROHN, DIRECTOR**
Chairman and Chief Executive Officer: PSI Group, Inc.; President: Krohn
Corporation; Chairman of the Board: Commercial Federal Corporation.
ROBERT G. LANGE, VICE PRESIDENT AND GENERAL COUNSEL-INSURANCE AND ASSISTANT
SECRETARY*
Director: Nebraska Department of Insurance.
WILLIAM W. LESTER, SENIOR VICE PRESIDENT-INVESTMENTS AND TREASURER*
Treasurer: Ameritas Variable Life Insurance Company; also serves as officer of
other subsidiaries of Ameritas Life Insurance Corp.
WILFRED J. MADDUX, DIRECTOR**
President, Manager: Maddux Cattle Company.
JOANN M. MARTIN, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER*
Director, Controller: Ameritas Variable Life Insurance Company; also serves as
an officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life Insurance Corp.
DAVID C. MOORE, PRESIDENT - GROUP DIVISION*
Also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life Insurance Corp.
WILLIAM W. NELSON, VICE PRESIDENT - GROUPCLAIMS AND CONSULTANT REVIEW*
Also serves as an officer of other subsidiaries of Ameritas Life Insurance Corp.
DALE K. NIEBUHR, SECOND VICE PRESIDENT - AUDIT SERVICES*
DONALD W. PARKER, SECOND VICE PRESIDENT- ACCOUNTING AND ASSISTANT CONTROLLER*
GARY R. RAYMOND, VICE PRESIDENT - GROUP ACTUARY*
TODD W. REIMERS, VICE PRESIDENT-GROUP FIELD SALES*
Vice President-Sales: Woodmen Accident and Life Company.
BARRY C. RITTER, SENIOR VICE PRESIDENT - INFORMATION SERVICES*
MARY H. RUTFORD, SECOND VICE PRESIDENT-ACCOUNTING*
LLSVUL
34
<PAGE>
PAUL C. SCHORR, III, DIRECTOR**
President and CEO: ComCor Holding, Inc.; Chairman: Ebco/Commonwealth, Inc.;
President, Chief Executive Officer: Fishbach Corp., Commonwealth Companies, Inc.
William C. Smith, Director**
Director: AMAL Corporation; President: William C. Smith & Co.; President,
Chairman, Chief Executive Officer: FirsTier Bank, N.A.; President, Chief
Operating Officer, Chairman, Chief Executive Officer: FirsTier Financial, Inc.
DONALD R. STADING, SENIOR VICE PRESIDENT, SECRETARY AND CORPORATE GENERAL
COUNSEL*
Secretary and General Counsel: Ameritas Variable Life Insurance Company; also
serves as officer and/or director of other subsidiaries and/or affiliates of
Ameritas Life Insurance Corp.
NEAL E. TYNER, DIRECTOR, CHAIRMAN EMERITUS**
NET Consultants, Formerly Chairman of the Board and CEO of Ameritas Life
Insurance Corp.
KENNETH L. VANCLEAVE, VICE PRESIDENT - GROUP MANAGED CARE AND PARTNERING*
Also serves as officer and director of an affiliate of Ameritas Life Insurance
Corp.
RICHARD W. VAUTRAVERS, SENIOR VICE PRESIDENT AND CORPORATE ACTUARY*
WINSTON J. WADE, DIRECTOR**
Vice President-Network Infrastructure: U.S. West Communications; Vice
President-Technical Services: U.S. West Communication, Inc.
JON B. WEINBERG, VICE PRESIDENT-MORTGAGE LOANS AND REAL ESTATE*
Also serves as an officer of a subsidiary of Ameritas Life Insurance Corp.
STEVEN L. WELTON, VICE PRESIDENT-INDIVIDUAL MARKETING*
Assistant Vice President-Marketing Services: Northwestern National Life
Insurance Co.
RUSSELL J. WILTGEN, VICE PRESIDENT-INDIVIDUAL PRODUCT MANAGEMENT*
Senior Vice President-Product Management: Ameritas Variable Life Insurance
Company; Vice President and Chief Product Actuary- Risk Life: Mutual of Omaha
Companies.
* Principal business address: Ameritas Life Insurance Corp, 5900 "O" Street,
P.O. Box 81889, Lincoln, Nebraska 68501.
** Principal address for: James P. Abel, NEBCO, Inc., P.O. Box 80268, Lincoln,
Nebraska 68501; Duane W. Acklie, Crete Carrier Corporation, P.O. Box 81228,
Lincoln, Nebraska 68501; William W. Cook, Jr., The Beatrice National Bank
and Trust Company, P.O. Box 100, Beatrice, Nebraska 68310; Bert A. Getz,
Globe Corporation, Scottsdale Spectrum, 6730 N. Scottsdale Road, Suite 250,
Scottsdale, Arizona 85253; James R. Knapp, Brookhollow Group, One
Brookhollow Drive, Santa Ana, California 92705; Robert F. Krohn; PSI Group,
Inc., 10011 J Street, Omaha, Nebraska 68127; Wilfred Maddux, Maddux Cattle
Company, P.O. Box 217, Wauneta, Nebraska 69045; Paul C. Schorr, III, ComCor
Holding, Inc., 6940 "O" Street, Suite 336, P.O. Box 57310, Lincoln,
Nebraska 68505; William C. Smith, William C. Smith & Co., Cornhusker Plaza,
Suite 401, 301 So. 13th Street, Lincoln, Nebraska 68508; Neal E. Tyner, NET
Consultants, 6940 "O" Street, Suite 324, Lincoln, Nebraska 68510; Winston
J. Wade, c/o PMI-USW 843-1, P.O. Box 311, Mendham, New Jersey 07945-0311.
LEGAL MATTERS
All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and Ameritas'right to issue the Policy under Nebraska Insurance Law,
have been passed upon by Donald R. Stading, Senior Vice President, Secretary and
Corporate General Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account LLVL is a party or to
which the assets of Separate Account LLVL are subject. Ameritas is not involved
in any litigation that is of material importance in relation to its ability to
LLSVUL
35
<PAGE>
meet its obligations under the Policies, or that relates to Separate Account
LLVL. AIC is not involved in any litigation that is of material importance in
relation to its ability to perform under its underwriting agreement.
EXPERTS
The consolidated financial statements of Ameritas as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998, and
the financial statements of Separate Account LLVL as of December 31, 1998, and
for each of the three years in the period then ended, included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
Actuarial matters included in this prospectus have been examined by Thomas P.
McArdle, Assistant Vice President and Associate Actuary of Ameritas Life
Insurance Corp., as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning Separate Account LLVL, Ameritas and the Policy offered
hereby. Statements contained in this prospectus as to the contents of the Policy
and other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of Ameritas which are included in this prospectus
should be considered only as bearing on the ability of Ameritas to meet its
obligations under the Policies. They should not be considered as bearing on the
investment performance of the assets held in Separate Account LLVL.
LLSVUL
36
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Life Insurance Corp.
Lincoln, Nebraska
We have audited the accompanying statement of net assets of Ameritas Life
Insurance Corp. Separate Account LLVL as of December 31, 1998, and the related
statements of operations and changes in net assets for each of the three years
in the period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1998. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Life Insurance Corp. Separate
Account LLVL as of December 31, 1998, and the results of its operations and
changes in net assets for each of the three years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 1999
F-I- 1
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VANGUARD VARIABLE INSURANCE FUND:
Money Market Portfolio -- 9,783,726.040 shares at
$1.0000 per share (cost $9,783,726)................... $ 9,783,726
Equity Index Portfolio -- 252,539.764 shares at
$32.1543 per share (cost $5,992,382).................. 8,120,239
Equity Income Portfolio -- 141,075.624 shares at
$21.4453 per share (cost $2,515,438).................. 3,025,409
Growth Portfolio -- 238,478.783 shares at $28.4238 per
share (cost $5,178,240)............................... 6,778,473
Balanced Portfolio -- 210,958.652 shares at $17.0921
per share (cost $3,546,562)........................... 3,605,726
High-Grade Bond Portfolio -- 80,311.175 shares at
$10.9106 per share (cost $850,239).................... 876,243
International Portfolio -- 233,573.775 shares at
$15.0527 per share (cost $3,171,841).................. 3,515,916
High Yield Bond Portfolio -- 54,187.996 shares at
$10.1059 per share (cost $564,451).................... 547,619
Small Company Growth Portfolio -- 123,053.709 shares at
$11.7475 per share (cost $1,306,799).................. 1,445,574
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Balanced Portfolio -- 14,641.746 shares at $16.34 per
share (cost $228,306)................................. 239,246
Growth Portfolio -- 36,319.622 shares at $26.29 per
share (cost $899,192)................................. 954,843
Partners Portfolio -- 158,238.030 shares at $18.93 per
share (cost $2,823,739)............................... 2,995,446
Limited Maturity Bond Portfolio -- 3,985.613 shares at
$13.82 per share (cost $54,502)....................... 55,081
BERGER INSTITUTIONAL PRODUCTS TRUST:
100 Fund Portfolio -- 13,476.264 shares at $12.89 per
share (cost $166,028)................................. 173,709
Small Company Growth Portfolio -- 32,764.181 shares at
$12.28 per share (cost $377,871)...................... 402,344
-----------
Net Assets Representing Equity of Policyowners.... $42,519,594
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 2
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 3
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
---------------------------------------------
MONEY MARKET EQUITY INDEX EQUITY INCOME
TOTAL PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
1998
INVESTMENT INCOME:
Dividend distributions received................. $ 887,746 $446,322 $ 88,442 $ 62,950
Mortality and expense risk charge............... 242,752 62,330 44,946 16,755
---------- -------- ---------- --------
NET INVESTMENT INCOME(LOSS)....................... 644,994 383,992 43,496 46,195
---------- -------- ---------- --------
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss) on investments.......... 1,061,059 -- 31,074 14,132
Net change in unrealized
appreciation(depreciation).................... 3,364,606 -- 1,422,460 306,650
---------- -------- ---------- --------
NET GAIN(LOSS) ON INVESTMENTS..................... 4,425,665 -- 1,453,534 320,782
---------- -------- ---------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $5,070,659 $383,992 $1,497,030 $366,977
========== ======== ========== ========
1997
INVESTMENT INCOME:
Dividend distributions received................. $ 462,801 $245,562 $ 47,557 $ 24,444
Mortality and expense risk charge............... 110,634 33,383 20,371 5,918
---------- -------- ---------- --------
NET INVESTMENT INCOME(LOSS)....................... 352,167 212,179 27,186 18,526
---------- -------- ---------- --------
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss) on investments.......... 303,704 -- 33,570 22,916
Net change in unrealized
appreciation(depreciation).................... 1,466,662 -- 633,010 181,981
---------- -------- ---------- --------
NET GAIN(LOSS) ON INVESTMENTS..................... 1,770,366 -- 666,580 204,897
---------- -------- ---------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $2,122,533 $212,179 $ 693,766 $223,423
========== ======== ========== ========
1996
INVESTMENT INCOME:
Dividend distributions received................. $ 34,810 $ 32,053 $ -- $ --
Mortality and expense risk charge............... 14,813 4,536 2,639 867
---------- -------- ---------- --------
NET INVESTMENT INCOME(LOSS)....................... 19,997 27,517 (2,639) (867)
---------- -------- ---------- --------
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss) on investments.......... 73,977 -- 12,616 6,453
Net change in unrealized
appreciation(depreciation).................... 229,011 -- 72,387 21,339
---------- -------- ---------- --------
NET GAIN(LOSS) ON INVESTMENTS..................... 302,989 -- 85,003 27,792
---------- -------- ---------- --------
NET INCREASE(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $ 322,985 $ 27,517 $ 82,364 $ 26,925
========== ======== ========== ========
</TABLE>
- ---------------
(1) Commenced business 01/09/96
(2) Commenced business 01/31/96
(3) Commenced business 02/06/96
(4) Commenced business 01/22/96
(5) Commenced business 02/12/96
(6) Commenced business 02/12/96
(7) Commenced business 01/22/96
(8) Commenced business 03/10/97
(9) Commenced business 01/29/97
The accompanying notes are an integral part of these financial statements.
F-I- 4
<PAGE>
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
------------------------------------------------------------------------------------------------------
GROWTH BALANCED HIGH-GRADE BOND INTERNATIONAL HIGH YIELD BOND SMALL COMPANY
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) GROWTH PORTFOLIO(9)
------------ ------------ ---------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$ 32,780 $116,090 $40,993 $ 43,651 $33,203 $ 6,273
34,924 20,046 5,086 20,770 2,934 5,841
---------- -------- ------- -------- ------- --------
(2,144) 96,044 35,907 22,881 30,269 432
---------- -------- ------- -------- ------- --------
313,459 239,670 2,291 -- 803 1,045
1,308,658 (22,651) 12,857 419,205 (19,842) 126,551
---------- -------- ------- -------- ------- --------
1,622,117 217,019 15,148 419,205 (19,039) 127,596
---------- -------- ------- -------- ------- --------
$1,619,973 $313,063 $51,055 $442,086 $11,230 $128,028
========== ======== ======= ======== ======= ========
$ 24,821 $ 62,554 $17,945 $ 24,884 $ 7,800 $ 1,148
13,622 8,857 2,094 10,213 670 1,158
---------- -------- ------- -------- ------- --------
11,199 53,697 15,851 14,671 7,130 (10)
---------- -------- ------- -------- ------- --------
70,741 86,534 -- 19,354 254 --
269,256 73,173 12,105 (87,836) 3,011 12,224
---------- -------- ------- -------- ------- --------
339,997 159,707 12,105 (68,482) 3,265 12,224
---------- -------- ------- -------- ------- --------
$ 351,196 $213,404 $27,956 $(53,811) $10,395 $ 12,214
========== ======== ======= ======== ======= ========
$ -- $ -- $ 2,757 $ -- $ -- $ --
1,524 964 316 1,479 -- --
---------- -------- ------- -------- ------- --------
(1,524) (964) 2,441 (1,479) -- --
---------- -------- ------- -------- ------- --------
22,375 17,899 -- 14,166 -- --
22,319 8,642 1,042 12,704 -- --
---------- -------- ------- -------- ------- --------
44,694 26,541 1,042 26,870 -- --
---------- -------- ------- -------- ------- --------
$ 43,170 $ 25,577 $ 3,483 $ 25,391 $ -- $ --
========== ======== ======= ======== ======= ========
</TABLE>
F-I- 5
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
------------------------------------------------------------
LIMITED
MATURITY
BALANCED GROWTH PARTNERS BOND
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1998
INVESTMENT INCOME:
Dividend distributions received................. $ 4,578 $ -- $ 8,593 $3,417
Mortality and expense risk charge............... 1,618 5,470 18,794 440
------- -------- --------- ------
NET INVESTMENT INCOME (LOSS)...................... 2,960 (5,470) (10,201) 2,977
------- -------- --------- ------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments......... 32,161 155,681 270,666 --
Net change in unrealized appreciation
(depreciation)............................... (8,769) (47,951) (161,651) (991)
------- -------- --------- ------
NET GAIN (LOSS) ON INVESTMENTS.................... 23,392 107,730 109,015 (991)
------- -------- --------- ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $26,352 $102,260 $ 98,814 $1,986
======= ======== ========= ======
1997
INVESTMENT INCOME:
Dividend distributions received................. $ 2,227 $ -- $ 1,903 $1,514
Mortality and expense risk charge............... 1,062 3,818 8,694 289
------- -------- --------- ------
NET INVESTMENT INCOME (LOSS)...................... 1,165 (3,818) (6,791) 1,225
------- -------- --------- ------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments......... 5,717 34,617 29,308 --
Net change in unrealized appreciation
(depreciation)............................... 16,398 83,104 267,038 1,122
------- -------- --------- ------
NET GAIN (LOSS) ON INVESTMENTS.................... 22,115 117,721 296,346 1,122
------- -------- --------- ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $23,280 $113,903 $ 289,555 $2,347
======= ======== ========= ======
1996
INVESTMENT INCOME:
Dividend distributions received................. $ -- $ -- $ -- $ --
Mortality and expense risk charge............... 294 814 1,338 42
------- -------- --------- ------
NET INVESTMENT INCOME (LOSS)...................... (294) (814) (1,338) (42)
------- -------- --------- ------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments......... 92 253 115 8
Net change in unrealized appreciation
(depreciation)............................... 3,312 20,498 66,320 448
------- -------- --------- ------
NET GAIN (LOSS) ON INVESTMENTS.................... 3,404 20,751 66,435 456
------- -------- --------- ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $ 3,110 $ 19,937 $ 65,097 $ 414
======= ======== ========= ======
</TABLE>
- ---------------
(1) Commenced business 01/31/96
(2) Commenced business 01/22/96
(3) Commenced business 02/06/96
(4) Commenced business 01/31/96
(5) Commenced business 06/11/97
(6) Commenced business 05/21/97
The accompanying notes are an integral part of these financial statements.
F-I- 6
<PAGE>
<TABLE>
<CAPTION>
BERGER INSTITUTIONAL
PRODUCTS TRUST
----------------------------
SMALL
COMPANY
100 FUND GROWTH
PORTFOLIO(5) PORTFOLIO(6)
------------ ------------
<S> <C> <C>
$ 294 $ 160
745 2,053
------- -------
(451) (1,893)
------- -------
77 --
9,498 20,582
------- -------
9,575 20,582
------- -------
$ 9,124 $18,689
======= =======
$ 442 $ --
54 431
------- -------
388 (431)
------- -------
693 --
(1,816) 3,892
------- -------
(1,123) 3,892
------- -------
$ (735) $ 3,461
======= =======
$ -- $ --
-- --
------- -------
-- --
------- -------
-- --
-- --
------- -------
-- --
------- -------
$ -- $ --
======= =======
</TABLE>
F-I- 7
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
---------------------------------------------
MONEY MARKET EQUITY INDEX EQUITY INCOME
TOTAL PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
1998
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ 644,994 $ 383,992 $ 43,496 $ 46,195
Net realized gain (loss) on investments.......... 1,061,059 -- 31,074 14,132
Net change in unrealized appreciation
(depreciation)................................. 3,364,606 -- 1,422,460 306,650
----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 5,070,659 383,992 1,497,030 366,977
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 13,120,915 2,181,465 2,541,249 1,133,653
----------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 18,191,574 2,565,457 4,038,279 1,500,630
----------- ---------- ---------- ----------
NET ASSETS AT JANUARY 1, 1998...................... 24,328,020 7,218,269 4,081,960 1,524,779
----------- ---------- ---------- ----------
NET ASSETS AT DECEMBER 31, 1998.................... $42,519,594 $9,783,726 $8,120,239 $3,025,409
=========== ========== ========== ==========
1997
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ 352,167 $ 212,179 $ 27,186 $ 18,526
Net realized gain (loss) on investments.......... 303,704 -- 33,570 22,916
Net change in unrealized appreciation
(depreciation)................................. 1,466,662 -- 633,010 181,981
----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 2,122,533 212,179 693,766 223,423
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 16,472,031 5,731,104 2,039,686 984,196
----------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 18,594,564 5,943,283 2,733,452 1,207,619
----------- ---------- ---------- ----------
NET ASSETS AT JANUARY 1, 1997...................... 5,733,456 1,274,986 1,348,508 317,160
----------- ---------- ---------- ----------
NET ASSETS AT DECEMBER 31, 1997.................... $24,328,020 $7,218,269 $4,081,960 $1,524,779
=========== ========== ========== ==========
1996
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ 19,997 $ 27,517 $ (2,639) $ (867)
Net realized gain (loss) on investments.......... 73,977 -- 12,616 6,453
Net change in unrealized appreciation
(depreciation)................................. 229,011 -- 72,387 21,339
----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 322,985 27,517 82,364 26,925
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 5,410,471 1,247,469 1,266,144 290,235
----------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 5,733,456 1,274,986 1,348,508 317,160
----------- ---------- ---------- ----------
NET ASSETS AT JANUARY 1, 1996...................... -- -- -- --
----------- ---------- ---------- ----------
NET ASSETS AT DECEMBER 31, 1996.................... $ 5,733,456 $1,274,986 $1,348,508 $ 317,160
=========== ========== ========== ==========
</TABLE>
- ---------------
(1) Commenced business 01/09/96
(2) Commenced business 01/31/96
(3) Commenced business 02/06/96
(4) Commenced business 01/22/96
(5) Commenced business 02/12/96
(6) Commenced business 02/12/96
(7) Commenced business 01/22/96
(8) Commenced business 03/10/97
(9) Commenced business 01/29/97
The accompanying notes are an integral part of these financial statements.
F-I- 8
<PAGE>
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
- ---------------------------------------------------------------------------------------------
HIGH-GRADE HIGH YIELD SMALL COMPANY
GROWTH BALANCED BOND INTERNATIONAL BOND GROWTH
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) PORTFOLIO(9)
------------ ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
$ (2,144) $ 96,044 $ 35,907 $ 22,881 $ 30,269 $ 432
313,459 239,670 2,291 -- 803 1,045
1,308,658 (22,651) 12,857 419,205 (19,842) 126,551
---------- ---------- -------- ---------- -------- ----------
1,619,973 313,063 51,055 442,086 11,230 128,028
1,946,946 1,254,873 331,358 1,023,332 305,742 940,675
---------- ---------- -------- ---------- -------- ----------
3,566,919 1,567,936 382,413 1,465,418 316,972 1,068,703
---------- ---------- -------- ---------- -------- ----------
3,211,554 2,037,790 493,830 2,050,498 230,647 376,871
---------- ---------- -------- ---------- -------- ----------
$6,778,473 $3,605,726 $876,243 $3,515,916 $547,619 $1,445,574
========== ========== ======== ========== ======== ==========
$ 11,199 $ 53,697 $ 15,851 $ 14,671 $ 7,130 $ (10)
70,741 86,534 -- 19,354 254 --
269,256 73,173 12,105 (87,836) 3,011 12,224
---------- ---------- -------- ---------- -------- ----------
351,196 213,404 27,956 (53,811) 10,395 12,214
2,154,152 1,428,768 357,373 1,524,915 220,252 364,657
---------- ---------- -------- ---------- -------- ----------
2,505,348 1,642,172 385,329 1,471,104 230,647 376,871
---------- ---------- -------- ---------- -------- ----------
706,206 395,618 108,501 579,394 -- --
---------- ---------- -------- ---------- -------- ----------
$3,211,554 $2,037,790 $493,830 $2,050,498 $230,647 $ 376,871
========== ========== ======== ========== ======== ==========
$ (1,524) $ (964) $ 2,441 $ (1,479) $ -- $ --
22,375 17,899 -- 14,166 -- --
22,319 8,642 1,042 12,704 -- --
---------- ---------- -------- ---------- -------- ----------
43,170 25,577 3,483 25,391 -- --
663,036 370,041 105,018 554,003 -- --
---------- ---------- -------- ---------- -------- ----------
706,206 395,618 108,501 579,394 -- --
---------- ---------- -------- ---------- -------- ----------
-- -- -- -- -- --
---------- ---------- -------- ---------- -------- ----------
$ 706,206 $ 395,618 $108,501 $ 579,394 $ -- $ --
========== ========== ======== ========== ======== ==========
</TABLE>
F-I- 9
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
---------------------------------------------------------
LIMITED
MATURITY
BALANCED GROWTH PARTNERS BOND
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ 2,960 $ (5,470) $ (10,201) $ 2,977
Net realized gain (loss) on investments.......... 32,161 155,681 270,666 --
Net change in unrealized appreciation
(depreciation)................................. (8,769) (47,951) (161,651) (991)
-------- -------- ---------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 26,352 102,260 98,814 1,986
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 26,914 185,812 935,607 (7,496)
-------- -------- ---------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 53,266 288,072 1,034,421 (5,510)
-------- -------- ---------- -------
NET ASSETS AT JANUARY 1, 1998...................... 185,980 666,771 1,961,025 60,591
-------- -------- ---------- -------
NET ASSETS AT DECEMBER 31, 1998.................... $239,246 $954,843 $2,995,446 $55,081
======== ======== ========== =======
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ 1,165 $ (3,818) $ (6,791) $ 1,225
Net realized gain (loss) on investments.......... 5,717 34,617 29,308 --
Net change in unrealized appreciation
(depreciation)................................. 16,398 83,104 267,038 1,122
-------- -------- ---------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 23,280 113,903 289,555 2,347
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 74,276 228,396 1,107,185 32,342
-------- -------- ---------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 97,556 342,299 1,396,740 34,689
-------- -------- ---------- -------
NET ASSETS AT JANUARY 1, 1997...................... 88,424 324,472 564,285 25,902
-------- -------- ---------- -------
NET ASSETS AT DECEMBER 31, 1997.................... $185,980 $666,771 $1,961,025 $60,591
======== ======== ========== =======
1996
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................... $ (294) $ (814) $ (1,338) $ (42)
Net realized gain (loss) on investments.......... 92 253 115 8
Net change in unrealized appreciation
(depreciation)................................. 3,312 20,498 66,320 448
-------- -------- ---------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 3,110 19,937 65,097 414
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS..................................... 85,314 304,535 499,188 25,488
-------- -------- ---------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS............ 88,424 324,472 564,285 25,902
-------- -------- ---------- -------
NET ASSETS AT JANUARY 1, 1996...................... -- -- -- --
-------- -------- ---------- -------
NET ASSETS AT DECEMBER 31, 1996.................... $ 88,424 $324,472 $ 564,285 $25,902
======== ======== ========== =======
</TABLE>
- ---------------
(1) Commenced business 01/31/96
(2) Commenced business 01/22/96
(3) Commenced business 02/06/96
(4) Commenced business 01/31/96
(5) Commenced business 06/11/97
(6) Commenced business 05/21/97
The accompanying notes are an integral part of these financial statements.
F-I- 10
<PAGE>
<TABLE>
<CAPTION>
BERGER INSTITUTIONAL
PRODUCTS TRUST
---------------------------
SMALL
COMPANY
100 FUND GROWTH
PORTFOLIO(5) PORTFOLIO(6)
------------ ------------
<S> <C> <C>
$ (451) $ (1,893)
77 --
9,498 20,582
-------- --------
9,124 18,689
144,794 175,991
-------- --------
153,918 194,680
-------- --------
19,791 207,664
-------- --------
$173,709 $402,344
======== ========
$ 388 $ (431)
693 --
(1,816) 3,892
-------- --------
(735) 3,461
20,526 204,203
-------- --------
19,791 207,664
-------- --------
-- --
-------- --------
$ 19,791 $207,664
======== ========
$ -- $ --
-- --
-- --
-------- --------
-- --
-- --
-------- --------
-- --
-------- --------
-- --
-------- --------
-- --
======== ========
</TABLE>
F-I- 11
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Life Insurance Corp. Separate Account LLVL (the Account) was
established under Nebraska law on August 24, 1994. The assets of the Account are
held by Ameritas Life Insurance Corp. (ALIC) and are aggregated from all of
ALIC's other assets.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At December 31, 1998, there are fifteen subaccounts
within the Account. Nine of the subaccounts invest only in a corresponding
Portfolio of the Vanguard Variable Insurance Fund which is a diversified
open-end management investment company managed by The Vanguard Group. Four of
the subaccounts invest only in a corresponding Portfolio of the Neuberger &
Berman Advisers Management Trust which is a diversified open-end management
investment company managed by Neuberger & Berman Management Incorporated. Two of
the subaccounts invest only in a corresponding Portfolio of the Berger
Institutional Products Trust which is a diversified open-end management
investment company managed by Berger Associates. Each Portfolio pays the manager
a monthly fee for managing its investments and business affairs. The assets of
the Account are carried at the net asset value of the underlying Portfolios of
the funds, and the value of the policyowners' units corresponds to the Account's
investment in the underlying subaccounts.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
The assets of the account are carried at the net asset value of the underlying
Portfolios of the Funds. The value of the policyowners' units corresponds to the
Account's investment in the underlying subaccounts. The availability of
investment portfolio and subaccount options may vary between products. Share
transactions and security transactions are accounted for on a trade date basis.
FEDERAL AND STATE TAXES
The operations of the Account are included in the federal income tax return of
ALIC, which is taxed as a life insurance company under the Internal Revenue
Code. ALIC has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, ALIC does not make
a charge for income or other taxes. Charges for state and local taxes, if any,
attributable to the Account may also be made.
2. POLICYOWNER CHARGES
ALIC charges the account for mortality and expense risks assumed. A daily charge
is made on the average daily value of the net assets representing equity of
policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.
F-I- 12
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 13
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED
The Account invests in shares of mutual funds. Share activity and total shares
owned are as follows:
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
-------------------------------------------------------------------------------
MONEY MARKET EQUITY INDEX EQUITY INCOME GROWTH BALANCED
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4) PORTFOLIO(5)
-------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1998..................... 7,218,268.940 160,571.157 81,200.304 148,714.710 119,858.700
Shares acquired............ 15,650,323.440 241,112.370 152,559.334 212,357.265 153,032.898
Shares disposed............ 13,084,866.340 149,143.763 92,684.014 122,593.192 61,932.946
-------------- ----------- ----------- ----------- -----------
Shares owned at December
31, 1998................. 9,783,726.040 252,539.764 141,075.624 238,478.783 210,958.652
============== =========== =========== =========== ===========
Shares owned at January 1,
1997..................... 1,274,985.810 68,977.369 21,723.303 39,921.198 26,356.946
Shares acquired............ 33,061,438.440 132,217.038 71,066.379 135,646.593 103,263.991
Shares disposed............ 27,118,155.310 40,623.250 11,589.378 26,853.081 9,762.237
-------------- ----------- ----------- ----------- -----------
Shares owned at December
31, 1997................. 7,218,268.940 160,571.157 81,200.304 148,714.710 119,858.700
============== =========== =========== =========== ===========
Shares owned at January 1,
1996..................... -- -- -- -- --
Shares acquired............ 6,549,300.150 81,127.644 25,593.798 43,455.725 27,155.684
Shares disposed............ 5,274,314.340 12,150.275 3,870.495 3,534.527 798.738
-------------- ----------- ----------- ----------- -----------
Shares owned at December
31, 1996................. 1,274,985.810 68,977.369 21,723.303 39,921.198 26,356.946
============== =========== =========== =========== ===========
</TABLE>
- ---------------
(1) Commenced business 01/09/96
(2) Commenced business 01/31/96
(3) Commenced business 02/06/96
(4) Commenced business 01/22/96
(5) Commenced business 02/12/96
(6) Commenced business 02/12/96
(7) Commenced business 01/22/96
(8) Commenced business 03/10/97
(9) Commenced business 01/29/97
(10) Commenced business 01/31/96
(11) Commenced business 01/22/96
(12) Commenced business 02/06/96
(13) Commenced business 01/31/96
F-I- 14
<PAGE>
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
---------------------------------------------------------- -------------------------------------------------------------
SMALL LIMITED
HIGH-GRADE HIGH-YIELD COMPANY MATURITY
BOND INTERNATIONAL BOND GROWTH BALANCED GROWTH PARTNERS BOND
PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) PORTFOLIO(9) PORTFOLIO(10) PORTFOLIO(11) PORTFOLIO(12) PORTFOLIO(13)
------------ ------------- ------------ ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
46,139.367 159,524.666 21,777.881 34,377.906 10,448.294 21,832.699 95,195.374 4,291.165
75,804.160 193,442.989 92,142.577 131,425.948 38,561.561 44,261.721 162,050.110 16,961.787
41,632.352 119,393.880 59,732.462 42,750.145 34,368.109 29,774.798 99,007.454 17,267.339
---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
80,311.175 233,573.775 54,187.996 123,053.709 14,641.746 36,319.622 158,238.030 3,985.613
========== =========== ========== =========== ========== ========== =========== ==========
10,402.808 45,478.330 -- -- 5,554.279 12,586.203 34,240.606 1,843.518
48,976.148 175,097.691 57,152.830 58,091.174 7,945.804 20,902.519 87,117.912 7,782.264
13,239.589 61,051.355 35,374.949 23,713.268 3,051.789 11,656.023 26,163.144 5,334.617
---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
46,139.367 159,524.666 21,777.881 34,377.906 10,448.294 21,832.699 95,195.374 4,291.165
========== =========== ========== =========== ========== ========== =========== ==========
-- -- -- -- -- -- -- --
16,079.128 54,688.548 -- -- 5,783.296 13,583.830 40,372.867 2,210.932
5,676.320 9,210.218 -- -- 229.017 997.627 6,132.261 367.414
---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
10,402.808 45,478.330 -- -- 5,554.279 12,586.203 34,240.606 1,843.518
========== =========== ========== =========== ========== ========== =========== ==========
</TABLE>
F-I- 15
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
owned are as follows:
<TABLE>
<CAPTION>
BERGER INSTITUTIONAL PRODUCTS TRUST
-----------------------------------
100 FUND SMALL COMPANY
PORTFOLIO(1) GROWTH PORTFOLIO(2)
------------ -------------------
<S> <C> <C>
Shares owned at January 1, 1998............................. 1,781.412 17,219.256
Shares acquired............................................. 31,043.806 57,521.740
Shares disposed............................................. 19,348.954 41,976.815
---------- ----------
Shares owned at December 31, 1998........................... 13,476.264 32,764.181
========== ==========
Shares owned at January 1, 1997............................. -- --
Shares acquired............................................. 2,859.270 38,912.582
Shares disposed............................................. 1,077.858 21,693.326
---------- ----------
Shares owned at December 31, 1997........................... 1,781.412 17,219.256
========== ==========
Shares owned at January 1, 1996............................. -- --
Shares acquired............................................. -- --
Shares disposed............................................. -- --
---------- ----------
Shares owned at December 31, 1996 -- --
========== ==========
</TABLE>
- ---------------
(1) Commenced business 06/11/97
(2) Commenced business 05/21/97
F-I- 16
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
STATEMENT OF NET ASSETS
MARCH 31, 1999
(UNAUDITED)
ASSETS
INVESTMENTS AT NET ASSET VALUE:
<S> <C>
Vanguard Variable Insurance Fund:
Money Market Portfolio--10,730,248.720 shares at $1.0000
per share (cost $10,730,249) $ 10,730,249
Equity Index Portfolio--289,468.722 shares at $33.7515
per share (cost $7,218,915) 9,770,004
Equity Income Portfolio--140,793.089 shares at $21.1855
per share (cost $2,509,619) 2,982,772
Growth Portfolio--262,732.811 shares at $29.5291 per share
(cost $5,882,232) 7,758,264
Balanced Portfolio--214,984.078 shares at $17.0947 per share
(cost $3,614,658) 3,675,088
High-Grade Bond Portfolio--158,281.170 shares at $10.7053
per share (cost $1,691,599) 1,694,448
International Portfolio--235,143.891 shares at $14.9120
per share (cost $3,195,622) 3,506,466
High Yield Bond Portfolio--76,571.880 shares at $10.0968
per share (cost $789,887) 773,131
Small Company Growth Portfolio--128,575.034 shares at $10.8302
per share (cost $1,372,824) 1,392,493
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Balanced Portfolio--15,606.778 shares at $15.35
per share (cost $243,830) 239,564
Growth Portfolio--40,791.756 shares at $23.97 per share
(cost $1,002,898) 977,778
Partners Portfolio--155,629.569 shares at $18.64 per
share (cost $2,770,526) 2,900,935
Limited Maturity Bond Portfolio--8,582.828 shares at $13.09
per share (cost 117,855) 112,349
BERGER INSTITUTIONAL PRODUCTS TRUST:
100 Fund Portfolio--12,377.509 shares at 13.33 per
share (cost $151,108) 164,992
Small Company Growth Portfolio--29,368.936 shares
at 11.98 per share (cost $333,904) 351,840
-----------
Net Assets Representing Equity of Policyowners $47,030,373
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I(U)-1
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
STATEMENT OF OPERATIONS:
<S> <C> <C> <C> <C> <C>
VANGUARD VARIABLE INSURANCE FUND
--------------------------------
MONEY EQUITY EQUITY
MARKET INDEX INCOME
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
----- --------- --------- ---------
1999
INVESTMENT INCOME:
Dividend distributions
received $ 203,223 $ 123,881 $ -- $ --
Mortality and expense
risk charge 82,801 18,835 16,464 5,642
-------- -------- -------- --------
NET INVESTMENT INCOME(LOSS) 120,422 105,046 (16,464) (5,642)
-------- -------- --------- ---------
REALIZED AND UNREALIZED
GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss)
on investment 118,654 -- -- --
Net change in unrealized
appreciation(depreciation) 344,368 -- 423,231 (36,817)
-------- -------- -------- ---------
NET GAIN(LOSS) ON INVESTMENTS 463,022 -- 423,231 (36,817)
-------- -------- -------- ---------
NET INCREASE(DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $ 583,444 $ 105,046 $ 406,767 $ (42,459)
========= ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
VANGUARD VARIABLE INSURANCE FUND
--------------------------------
MONEY EQUITY EQUITY
MARKET INDEX INCOME
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
1999
INCREASE(DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income (loss) $ 120,422 $ 105,046 $ (16,464) $ (5,642)
Net realized gain (loss)
on investments 118,654 -- -- --
Net change in unrealized
appreciation (depreciation) 344,368 -- 423,231 (36,817)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS 583,444 105,046 406,767 (42,459)
NET INCREASE (DECREASE)
FROM POLICYOWNER
TRANSACTIONS 3,927,335 841,477 1,242,998 (178)
---------- --------- --------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS 4,510,779 946,523 1,649,765 (42,637)
---------- ---------- ---------- -----------
NET ASSETS AT JANUARY 1, 1999 42,519,594 9,783,726 8,120,239 3,025,409
---------- ---------- ---------- ----------
NET ASSETS AT
MARCH 31, 1999 $47,030,373 $10,730,249 $9,770,004 $2,982,772
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-I(U)-2
<PAGE>
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
--------------------------------
<S> <C> <C> <C> <C> <C>
SMALL COMPANY
GROWTH BALANCED HIGH-GRADE BOND INTERNATIONAL HIGH YIELD BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
$ -- $ -- $ 20,375 $ -- $ 12,682 $ --
13,451 6,742 2,566 6,532 1,133 2,608
--------- ---------- ---------- ---------- --------- ----------
(13,451) (6,742) 17,809 (6,532) 11,549 (2,608)
---------- ----------- ---------- ----------- --------- -----------
-- -- -- -- -- --
275,799 1,265 (23,155) (33,231) 75 (119,106)
--------- ---------- ---------- ---------- --------- ----------
275,799 1,265 (23,155) (33,231) 75 (119,106)
--------- ---------- ----------- ---------- --------- ----------
$ 262,348 $ (5,477) $ (5,346) $ (39,763) $ 11,624 $ (121,714)
========= =========== ========== ========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
VANGUARD VARIABLE INSURANCE FUND
--------------------------------
<S> <C> <C> <C> <C> <C>
SMALL COMPANY
GROWTH BALANCED HIGH-GRADE BOND INTERNATIONAL HIGH YIELD BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
$ (13,451) $ (6,742) $ 17,809 $ (6,532) $ 11,549 $ (2,608)
-- -- -- -- -- --
275,799 1,265 (23,155) (33,231) 75 (119,106)
---------- ---------- --------- ---------- -------- ----------
262,348 (5,477) (5,346) (39,763) 11,624 (121,714)
717,443 74,839 823,551 30,313 213,888 68,633
---------- ---------- --------- ---------- -------- ---------
979,791 69,362 818,205 (9,450) 225,512 (53,081)
---------- ---------- --------- ---------- -------- ----------
6,778,473 3,605,726 876,243 3,515,916 547,619 1,445,574
---------- ---------- --------- ---------- -------- ---------
$ 7,758,264 $3,675,088 $1,694,448 $3,506,466 $ 773,131 $1,392,493
=========== ========== ========== ========== ========= ==========
</TABLE>
F-I(U)-3
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
STATEMENT OF OPERATIONS: NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
---------------------------------------------------
<S> <C> <C> <C> <C>
LIMITED
MATURITY
BALANCED GROWTH PARTNERS BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
1999
INVESTMENT INCOME:
Dividend distributions
received $ 4,225 $ -- $ 35,509 $ 6,551
Mortality and expense
risk charge 446 1,743 5,471 168
------- --------- -------- --------
NET INVESTMENT INCOME (LOSS) 3,779 (1,743) 30,038 6,383
------- ---------- -------- --------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments 6,259 50,640 61,755 --
Net change in unrealized
appreciation (depreciation) (15,206) (80,770) (41,299) (6,085)
-------- ---------- --------- --------
NET GAIN (LOSS) ON INVESTMENTS (8,947) (30,130) 20,456 (6,085)
-------- ---------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $(5,168) $ (31,873) $ 50,494 $ 298
======== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS: NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
-----------------------------------------------
<S> <C> <C> <C> <C>
LIMITED
MATURITY
BALANCED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
1999
INCREASE(DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income (loss) $ 3,779 $ (1,743) $ 30,038 $ 6,383
Net realized gain (loss)
on investments 6,259 50,640 61,755 --
Net change in unrealized
appreciation (depreciation) (15,206) (80,770) (41,299) (6,085)
-------- --------- ----------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS (5,168) (31,873) 50,494 298
NET INCREASE (DECREASE)
FROM POLICYOWNER
TRANSACTIONS 5,486 54,808 (145,005) 56,970
-------- -------- ----------- --------
TOTAL INCREASE (DECREASE)
IN NET ASSETS 318 22,935 (94,511) 57,268
-------- -------- ----------- --------
NET ASSETS AT JANUARY 1, 1999 239,246 954,843 2,995,446 55,081
-------- -------- ---------- --------
NET ASSETS AT
MARCH 31, 1999 $ 239,564 $ 977,778 $2,900,935 $ 112,349
========= ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-I(U)-4
<PAGE>
BERGER INSTITUTIONAL
PRODUCTS TRUST
----------------------
SMALL
COMPANY
100 FUND GROWTH
PORTFOLIO PORTFOLIO
--------- ---------
$ -- $ --
315 685
-------- --------
(315) (685)
--------- ---------
-- --
6,204 (6,537)
-------- ---------
6,204 (6,537)
-------- ---------
$ 5,889 $ (7,222)
======== =========
BERGER INSTITUTIONAL
PRODUCTS TRUST
----------------------
SMALL
COMPANY
100 FUND GROWTH
PORTFOLIO PORTFOLIO
--------- ---------
$ (315) $ (685)
-- --
6,204 (6,537)
-------- --------
5,889 (7,222)
(14,606) (43,282)
--------- ---------
(8,717) (50,504)
--------- ---------
173,709 402,344
-------- --------
$164,992 $351,840
======== ========
F-I(U)-5
<PAGE>
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Life Insurance Corp. Separate Account LLVL (the Account) was
established under Nebraska law on August 24, 1994. The assets of the Account are
held by Ameritas Life Insurance Corp. (ALIC) and are segregated from all of
ALIC's other assets.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At March 31, 1999, there are fifteen subaccounts
within the Account. Nine of the subaccounts invest only in a corresponding
Portfolio of the Vanguard Variable Insurance Fund which is a diversified
open-end management investment company managed by The Vanguard Group. Four of
the subaccounts invest only in a corresponding Portfolio of the Neuberger &
Berman Advisers Management Trust which is a diversified open-end management
investment company managed by Neuberger & Berman Management Incorporated. Two of
the subaccounts invest only in a corresponding Portfolio of the Berger
Institutional Products Trust which is a diversified open-end management
investment company managed by Berger Associates.
Each Portfolio pays the manager a monthly fee for managing its investments and
business affairs. The assets of the Account are carried at the net asset value
of the underlying Portfolios of the funds, and the value of the policyowners'
units corresponds to the Account's investment in the underlying subaccounts.
ALIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of variable life policies.
If, however, ALIC determines that it may incur such taxes attributable to the
Account, it may assess a charge for such taxes against the account.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statements have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
audited financial statements and notes thereto for the years ended December 31,
1998, 1997, and 1996.
F-I(U)-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Life Insurance Corp.
Lincoln, Nebraska
We have audited the accompanying consolidated balance sheets of Ameritas
Life Insurance Corp. (a wholly owned subsidiary of Ameritas Holding Company) and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, comprehensive income, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Ameritas Life Insurance Corp.
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
February 5, 1999
F-II- 1
<PAGE> 58
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities held to maturity (fair value
$620,543 -- 1998, $792,856 -- 1997).................... $ 586,419 $ 754,581
Fixed maturity securities available for sale (amortized
cost $466,025 -- 1998, $462,831 -- 1997)............... 484,491 479,990
Equity securities (cost $59,411 -- 1998,
$59,383 -- 1997)....................................... 121,905 108,744
Mortgage loans on real estate............................. 222,151 228,709
Loans on insurance policies............................... 29,047 70,638
Real estate, less accumulated depreciation
($17,431 -- 1998, $18,324 -- 1997)..................... 33,420 43,085
Other investments......................................... 45,104 33,971
Short-term investments.................................... 1,341 655
---------- ----------
Total Investments................................. 1,523,878 1,720,373
Cash and cash equivalents................................... 79,019 83,139
Accrued investment income................................... 20,104 25,186
Deferred policy acquisition costs........................... 171,201 164,564
Property and equipment, less accumulated depreciation
($31,985 -- 1998, $29,199 -- 1997)........................ 20,946 20,191
Other assets................................................ 21,903 16,668
Closed block assets......................................... 309,326 --
Separate accounts........................................... 1,954,931 1,437,165
---------- ----------
Total............................................. $4,101,308 $3,467,286
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy and contract reserves................................ $ 100,190 $ 364,168
Policy and contract claims.................................. 29,823 27,467
Accumulated contract values................................. 1,019,849 1,039,938
Unearned policy charges..................................... 12,160 13,177
Unearned reinsurance ceded allowance........................ 1,480 1,763
Federal income taxes:
Current................................................... 6,710 339
Deferred.................................................. 50,795 46,236
Dividends payable........................................... -- 10,134
Other liabilities........................................... 45,509 41,467
Closed block liabilities.................................... 334,622 --
Separate accounts........................................... 1,954,931 1,436,677
---------- ----------
Total Liabilities................................. 3,556,069 2,981,366
---------- ----------
Commitments and contingencies
Minority interest in subsidiary............................. 27,523 24,483
Common stock, par value $0.10 per share; 25,000,000 shares
authorized, issued and outstanding........................ 2,500 --
Additional paid-in capital.................................. 5,000 --
Retained earnings........................................... 459,065 419,797
Accumulated other comprehensive income...................... 51,151 41,640
---------- ----------
Total Stockholder's Equity........................ 517,716 461,437
---------- ----------
Total............................................. $4,101,308 $3,467,286
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 2
<PAGE> 59
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Premiums:
Life insurance......................................... $ 21,159 $ 26,794 $ 26,855
Accident and health insurance.......................... 256,742 181,952 163,557
Contract charges.......................................... 68,145 57,199 49,667
Reinsurance, net.......................................... 19,930 (1,037) (6,205)
Reinsurance ceded allowance............................... 3,667 2,475 1,746
Investment revenues:
Investment income, net.................................... 130,102 137,744 126,862
Realized gains, net....................................... 14,288 10,295 13,103
Other....................................................... 23,011 14,987 8,961
Loss in closed block........................................ (105) -- --
-------- -------- --------
536,939 430,409 384,546
-------- -------- --------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 19,879 20,710 18,402
Surrender benefits........................................ 6,730 10,084 10,708
Accident and health benefits.............................. 200,405 130,908 112,005
Interest credited......................................... 68,698 66,788 65,494
Decrease in policy and contract reserves.................. (2,570) (3,307) (5,060)
Other..................................................... 21,920 23,747 23,216
Sales and operating expenses................................ 126,199 90,737 77,086
Amortization of deferred policy acquisition costs........... 18,584 16,441 16,790
-------- -------- --------
459,845 356,108 318,641
-------- -------- --------
INCOME BEFORE FEDERAL INCOME TAXES AND MINORITY INTEREST IN
EARNINGS OF SUBSIDIARY.................................... 77,094 74,301 65,905
Income taxes -- current..................................... 27,229 26,401 29,081
Income taxes -- deferred.................................... 157 39 (1,560)
-------- -------- --------
Total federal income taxes........................... 27,386 26,440 27,521
-------- -------- --------
Income before minority interest in earnings of subsidiary... 49,708 47,861 38,384
Minority interest in earnings of subsidiary................. (2,940) (1,987) (1,259)
-------- -------- --------
NET INCOME.................................................. $ 46,768 $ 45,874 $ 37,125
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 3
<PAGE> 60
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income.................................................. $46,768 $45,874 $37,125
Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the
period
(net of deferred tax of $6,913 -- 1998,
$11,628 -- 1997,
and $814 -- 1996).................................... 12,646 21,290 1,512
Reclassification adjustment for gains included in net
income
(net of deferred tax of $1,635 -- 1998,
$2,548 -- 1997,
and $4,285 -- 1996).................................. (3,036) (4,733) (7,958)
Minority interest...................................... (99) (158) 27
------- ------- -------
Other comprehensive income (loss)......................... 9,511 16,399 (6,419)
------- ------- -------
Comprehensive income........................................ $56,281 $62,273 $30,706
======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 4
<PAGE> 61
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
------------------- PAID - IN RETAINED COMPREHENSIVE STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS INCOME EQUITY
--------- ------ ---------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996.......... -- $ -- $ -- $336,798 $31,660 $368,458
Net unrealized investment
losses, net................... -- -- -- -- (6,446) (6,446)
Minority interest in net
unrealized investment losses,
net........................... -- -- -- -- 27 27
Net income...................... -- -- -- 37,125 -- 37,125
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1996........ -- -- -- 373,923 25,241 399,164
Net unrealized investment gains,
net........................... -- -- -- -- 16,557 16,557
Minority interest in net
unrealized investment gains,
net........................... -- -- -- -- (158) (158)
Net income...................... -- -- -- 45,874 -- 45,874
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1997........ -- -- -- 419,797 41,640 461,437
Issuance of common stock........ 25,000,000 2,500 5,000 (7,500) -- --
Net unrealized investment gains,
net........................... -- -- -- -- 9,610 9,610
Minority interest in net
unrealized investment gains,
net........................... -- -- -- -- (99) (99)
Net income...................... -- -- -- 46,768 -- 46,768
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1998........ 25,000,000 $2,500 $5,000 $459,065 $51,151 $517,716
========= ====== ====== ======== ======= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 5
<PAGE> 62
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1998 1997 1996
-------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 46,768 $ 45,874 $ 37,125
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization............................. 5,717 5,275 4,231
Amortization of deferred policy acquisition costs......... 19,090 16,441 16,790
Policy acquisition costs deferred......................... (40,349) (36,117) (30,611)
Interest credited to contract values...................... 69,487 66,788 65,494
Amortization of discounts or premiums..................... (4,611) (1,747) (1,513)
Net realized gains on investment transactions............. (14,288) (10,295) (13,103)
Deferred income taxes..................................... 157 39 (1,560)
Minority interest in earnings of subsidiary............... 2,940 1,987 1,259
Change in assets and liabilities:
Accrued investment income.............................. (455) (10) (1,071)
Other assets........................................... (6,544) (3,239) (1,372)
Policy and contract reserves........................... (2,798) (3,446) 2,266
Policy and contract claims............................. 3,992 6,047 2,538
Unearned policy charges................................ (1,017) (315) (2,141)
Unearned reinsurance ceded allowance................... (283) 511 373
Federal income taxes payable -- current................ 5,422 (7,977) 1,300
Dividends payable...................................... 479 (183) (111)
Other liabilities...................................... 6,039 6,509 5,445
Cash from closed block................................. (2,526) -- --
-------- --------- ---------
Net cash from operating activities........................ 87,220 86,142 85,339
-------- --------- ---------
INVESTING ACTIVITIES
Purchase of investments:
Fixed maturity securities held to maturity................ (62,244) (39,522) (122,182)
Fixed maturity securities available for sale.............. (137,319) (115,864) (40,572)
Equity securities......................................... (21,944) (29,432) (19,925)
Mortgage loans on real estate............................. (68,518) (56,251) (57,248)
Real estate............................................... (998) (1,676) (642)
Short-term investments.................................... (1,632) (2,124) (5,844)
Other investments......................................... (16,343) (6,026) (23,073)
Proceeds from sale of investments:
Fixed maturity securities available for sale 14,447 16,419 4,774
Equity securities -- unaffiliated......................... 24,681 19,914 18,676
Equity securities -- affiliated........................... -- -- 190
Real estate............................................... 14,117 1,723 951
Other investments......................................... 4,166 649 7,949
Proceeds from maturities or repayment of investments:
Fixed maturity securities held to maturity................ $ 84,662 $ 68,069 $ 71,317
Fixed maturity securities available for sale.............. 68,338 45,942 36,519
Mortgage loans on real estate............................. 37,810 49,750 34,594
Real estate............................................... -- -- --
Other investments......................................... 5,325 6,278 15,106
Short-term investments.................................... 958 3,050 16,571
Purchase of property and equipment.......................... (4,002) (5,413) (3,711)
Proceeds from sale of property and equipment................ 43 45 78
Net change in loans on insurance policies................... (3,377) (2,622) 1,252
Closed block investing activities........................... 178 -- --
-------- --------- ---------
Net cash from investing activities........................ (61,652) (47,091) (65,220)
-------- --------- ---------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 6
<PAGE> 63
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1998 1997 1996
-------- --------- ---------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Contribution for minority interest in subsidiary............ -- 1,530 22,445
Net change in accumulated contract values................... (30,380) (34,584) (47,186)
Closed block financing activities........................... 692 -- --
-------- --------- ---------
Net cash from financing activities........................ (29,688) (33,054) (24,741)
-------- --------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............ (4,120) 5,997 (4,622)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 83,139 77,142 81,764
-------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 79,019 $ 83,139 $ 77,142
======== ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes.................................. $ 21,936 $ 34,397 $ 27,748
NON-CASH FINANCING ACTIVITIES:
Issuance of common stock.................................. $ 7,500 $ -- $ --
Assets transferred to closed block........................ 307,754 -- --
Liabilities transferred to closed block................... 332,223 -- --
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 7
<PAGE> 64
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
On September 13, 1997, the Board of Directors of Ameritas Life Insurance Corp.
(Ameritas) adopted the Plan which authorized the reorganization (Reorganization)
of Ameritas into a mutual insurance holding company structure. The Nebraska
Department of Insurance held a public hearing on the Reorganization on October
14, 1997 and approved the Plan on October 24, 1997. The policyowners' of
Ameritas approved the Plan on December 8, 1997 and the Reorganization became
effective on January 1, 1998 (effective date).
Pursuant to the Reorganization, Ameritas (i) formed Ameritas Mutual Insurance
Holding Company (AMHC) as a mutual insurance holding company under the insurance
laws of the State of Nebraska, (ii) formed Ameritas Holding Company (AHC) as an
intermediate stock holding company under the general laws of the State of
Nebraska, and (iii) amended and restated its Charter and Articles of
Incorporation to authorize the issuance of capital stock and the continuance of
its existence as a stock life insurance company under the same name. As of the
effective date of the Reorganization, the membership interests and the
contractual rights of the policyowners of Ameritas were separated -- the
membership interests automatically became, by operation of law, membership
interests in AMHC and the contractual rights remained in Ameritas. Each person
who becomes the owner of a designated policy issued by Ameritas after the
effective date of the Reorganization will become a member of AMHC and have a
membership interest in AMHC so long as such policy remains in force. The
membership interests in AMHC follow, and are not severable, from the policy from
which the membership interest in AMHC is derived.
On the effective date, Ameritas issued 25 million of its authorized shares of
capital stock to AMHC. AMHC then contributed all of these to AHC in exchange for
20 million shares of its common stock. As a result, AHC directly owns Ameritas,
and AMHC indirectly owns Ameritas, through AHC. The reorganization was accounted
for at historical cost in a manner similar to a pooling of interests.
Accordingly, the accompanying financial statements and disclosures reflect the
operations of Ameritas for all periods presented.
Ameritas' insurance operations consist of life and health insurance and annuity
and pension contracts. Ameritas and its subsidiaries operates in all 50 states
and the District of Columbia. Wholly owned insurance subsidiaries include First
Ameritas Life Insurance Corp. Of New York and Pathmark Assurance Company.
Ameritas is also a 66% owner of AMAL Corporation (incorporated March 8, 1996),
which owns 100% of Ameritas Variable Life Insurance Company and Ameritas
Investment Corp. (a broker/dealer). In addition to the subsidiaries noted above,
Ameritas conducts other diversified financial-service-related operations through
the following wholly owned subsidiaries: Veritas Corp (a marketing organization
for low-load insurance products); Ameritas Investment Advisors, Inc. (an advisor
providing investment management services); and Ameritas Managed Dental Plan,
Inc. (A prepaid dental organization).
CLOSED BLOCK
Effective October 1, 1998 (the Effective Date) Ameritas formed a closed block
(the Closed Block) of policies, under an arrangement approved by the Insurance
Department of the State of Nebraska, to provide for dividends on policies that
were in force on the Effective Date and which were within the classes of
individual policies for which Ameritas had a dividend scale in effect on the
Effective Date. The Closed Block was designed to give reasonable assurance to
owners of affected policies that the assets will be available to support such
policies including maintaining dividend scales in effect at the Effective Date,
if the experience underlying such scales continues. The assets, including
revenue thereon, will accrue solely to the benefit of the owners of policies
included in the block until the block is no longer in effect.
F-II- 8
<PAGE>
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
The financial results of the Closed Block, while prepared on a GAAP basis,
reflect the provisions of the approved arrangement and not the actual results of
operations and financial position. The arrangement provides for the level of
expenses charged to the Closed Block, actual expenses related to the Closed
Block operations are charged outside of the Closed Block; therefore the
contribution or loss from the Closed Block does not represent the actual
operations of the Closed Block.
Summarized financial information of the Closed Block as of December 31, 1998 and
from October 1, 1998 to December 31, 1998, is as follows (in thousands):
<TABLE>
<CAPTION>
CLOSED BLOCK
------------
<S> <C>
ASSETS:
Fixed maturity securities held to maturity (fair value
$156,499).............................................. $148,398
Fixed maturity securities available for sale (amortized
cost $53,679).......................................... 56,384
Mortgage loans on real estate............................. 38,756
Loans on insurance policies............................... 44,968
Cash and cash equivalents................................. 1,656
Accrued investment income................................. 5,537
Deferred policy acquisition costs......................... 12,364
Other assets.............................................. 1,263
--------
Total Closed Block Assets.............................. $309,326
========
LIABILITIES:
Policy and contract reserves.............................. $261,180
Policy and contract claims................................ 1,636
Accumulated contract values............................... 59,196
Dividends payable......................................... 10,613
Other liabilities......................................... 1,997
--------
Total Closed Block Liabilities......................... $334,622
========
INCOME, BENEFITS AND EXPENSES:
Premiums.................................................. $ 4,354
Investment income, net.................................... 5,054
Policy benefits........................................... (5,123)
Sales and operating expenses.............................. (812)
Amortization of deferred policy acquisition costs......... (506)
Dividends appropriated for policyowners................... (3,072)
--------
Loss in Closed Block................................... $ (105)
========
</TABLE>
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ameritas Life
Insurance Corp. and its majority-owned subsidiaries (the Company). These
consolidated financial statements exclude the effects of all material
intercompany transactions.
USE OF ESTIMATES
The preparation of consolidated 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 consolidated
F-II- 9
<PAGE> 66
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain items on the prior year financial statements have been restated to
conform to current year presentation.
The principal accounting and reporting practices followed are:
INVESTMENTS
The Company classifies its securities into categories based upon the Company's
intent relative to the eventual disposition of the securities. The first
category, held to maturity securities, includes fixed maturity securities which
the Company has the positive intent and ability to hold to maturity. These
securities are carried at amortized cost. The second category, available for
sale securities, may be sold to address the liquidity and other needs of the
Company. Securities classified as available for sale are carried at fair value
on the balance sheet with unrealized gains and losses excluded from operations
and reported as a separate component of stockholder's equity included in
accumulated other comprehensive income, net of related deferred acquisition
costs and income tax effects. The third category, trading securities, is for
debt and equity securities acquired for the purpose of selling them in the near
term. The Company has not classified any of its securities as trading
securities.
Equity securities (common stock and nonredeemable preferred stock) are valued at
fair value, and are classified as available for sale.
Mortgage loans on real estate are carried at amortized cost less an allowance
for estimated uncollectible amounts. SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," which was amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and Disclosures,"
requires that an impaired loan be measured at the present value of expected
future cash flows, or alternatively, the observable market price or the fair
value of the collateral. Total impaired loans as of December 31, 1998 and 1997,
and the associated interest income were not material.
Investment real estate owned directly by the Company is carried at cost less
accumulated depreciation and allowances for estimated losses. Real estate
acquired through foreclosure is carried at the lower of cost or fair value minus
estimated costs to sell.
Other investments primarily include investments in venture capital partnerships
and real estate joint ventures accounted for using the equity method, and
securities owned by the broker dealer subsidiary valued at fair value. Changes
in the fair value of the securities owned by the broker dealer are included in
investment income.
Short-term investments are carried at amortized cost, which approximates fair
value.
Realized investment gains and losses on sales of securities are determined on
the specific identification method. Write-offs of investments that decline in
value below cost on other than a temporary basis and the change in the
allowances for mortgage loans and wholly owned real estate are included with
realized gains in the consolidated statements of operations.
The Company records write-offs or allowances for its investments based upon an
evaluation of specific problem investments. The Company reviews, on a continual
basis, all invested assets to identify
F-II- 10
<PAGE> 67
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
investments where the Company may have credit concerns. Investments with credit
concerns include those the Company has identified as experiencing a
deterioration in financial condition.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with a
remaining maturity of less than three months to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation. The
Company provides for depreciation of property and equipment using straight-line
and accelerated methods over the estimated useful lives of the assets.
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contractholders. The assets (principally investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. The separate accounts are an
investment alternative for pension, variable life, and variable annuity products
which the Company markets. Amounts are reported at fair value.
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
RECOGNITION OF PARTICIPATING AND TERM LIFE, ACCIDENT AND HEALTH AND ANNUITY
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
Participating life insurance products include those products with fixed and
guaranteed premiums and benefits on which dividends are paid by the Company.
Premiums on participating and term life products and certain annuities with life
contingencies (immediate annuities) are recognized as premium revenue when due.
Accident and health insurance premiums are recognized as premium revenue over
the time period to which the premiums relate. Benefits and expenses are
associated with earned premiums so as to result in recognition of profits over
the premium-paying period of the contracts. This association is accomplished by
means of the provision for liabilities for future policy benefits and the
amortization of deferred policy acquisition costs.
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
POLICYOWNERS
Universal life-type policies are insurance contracts with terms that are not
fixed and guaranteed. The terms that may be changed could include one or more of
the amounts assessed the policyowner, premiums paid by the policyowner or
interest accrued to policyowners' balances. Amounts received as payments for
such contracts are reflected as deposits in accumulated contract values and are
not reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading, mortality risk expense, the
cost of insurance and policy administration. Policy benefits and claims that are
charged to expense include interest credited to contracts and benefit claims
incurred in the period in excess of related policy account balances.
F-II- 11
<PAGE> 68
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYOWNERS
Contracts that do not subject the Company to risks arising from policyowner
mortality or morbidity are referred to as investment contracts. Deposit
administration plans and certain deferred annuities are considered investment
contracts. Amounts received as payments for such contracts are reflected as
deposits in accumulated contract values and are not reported as premium
revenues.
Revenues for investment products consist of investment income and policy
administration charges. Contract benefits that are charged to expense include
benefit claims incurred in the period in excess of related contract balances,
and interest credited to contract balances.
POLICY ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are directly related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future premiums. Such costs include
commissions, certain costs of policy issuance and underwriting, and certain
agency expenses.
Costs deferred related to term life insurance are amortized over the
premium-paying period of the related policies, in proportion to the ratio of
annual premium revenues to total anticipated premium revenues. Such anticipated
premium revenues are estimated using the same assumptions used for computing
liabilities for future policy benefits.
Costs deferred related to participating life, universal life-type policies and
investment-type contracts are amortized generally over the lives of the
policies, in relation to the present value of estimated gross profits from
mortality, investment and expense margins. The estimated gross profits are
reviewed periodically based on actual experience and changes in assumptions.
A roll-forward of the amounts reflected in the consolidated balance sheets as
deferred policy acquisition costs is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Beginning balance........................................... $164,564 $146,405 $130,420
Acquisition costs deferred.................................. 40,324 36,117 30,611
Amortization of deferred policy acquisition costs........... (18,584) (16,441) (16,790)
Amount transferred to closed block.......................... (12,845) -- --
Adjustment for unrealized investment (gain)/loss............ (2,258) (1,517) 2,164
-------- -------- --------
Ending balance.............................................. $171,201 $164,564 $146,405
======== ======== ========
</TABLE>
To the extent that unrealized gains or losses on available for sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded as an adjustment of the unrealized investment
gains or losses included in stockholder's equity.
FUTURE POLICY AND CONTRACT BENEFITS
Liabilities for future policy benefits for participating and term life contracts
and additional coverages offered under policy riders are calculated using the
net level premium method and assumptions as to investment yields, mortality,
withdrawals and dividends. The assumptions are based on projections of past
F-II- 12
<PAGE> 69
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
experience and include provisions for possible unfavorable deviation. These
assumptions are made at the time the contract is issued. These liabilities are
shown as policy and contract reserves.
Liabilities for future policy and contract benefits on universal life-type and
investment-type contracts are based on the policy account balance, and are shown
as accumulated contract values.
The liabilities for future policy and contract benefits for group long-term
disability reserves are based upon interest rate assumptions and morbidity and
termination rates from published tables, modified for Company experience.
DIVIDENDS TO POLICYOWNERS
A portion of the Company's business has been issued on a participating basis.
The amount of policyowners' dividends to be paid is determined annually by the
Board of Directors.
INCOME TAXES
All companies included in these consolidated financial statements, with the
exception of AMAL and its subsidiaries, files a consolidated life/non-life tax
return. An agreement among the members of the consolidated group provides for
distribution of consolidated tax results as if filed on a separate return basis.
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the cumulative differences in assets and liabilities
determined on a tax return and financial statement basis at the current enacted
tax rates.
Federal income tax returns have been examined by the Internal Revenue Service
(IRS) through 1995. Management is currently appealing certain adjustments
proposed by the IRS for tax years 1988 and 1990 through 1995, and believes
adequate provisions have been made for any additional taxes which may become due
with respect to the adjustments proposed by the IRS.
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities held to maturity.................. $ 53,680 $ 59,700 $ 59,366
Fixed maturity securities available for sale................ 33,846 32,605 30,039
Equity securities........................................... 1,783 1,899 1,571
Mortgage loans on real estate............................... 20,312 19,866 19,376
Real estate................................................. 11,871 12,317 9,699
Loans on insurance policies................................. 3,849 4,341 4,265
Other investments........................................... 9,639 15,494 8,572
Short-term investments and cash and cash equivalents........ 8,665 4,266 5,069
-------- -------- --------
Gross investment income................................... 143,645 150,488 137,957
Investment expenses......................................... 13,543 12,744 11,095
-------- -------- --------
Net investment income..................................... $130,102 $137,744 $126,862
======== ======== ========
</TABLE>
F-II- 13
<PAGE> 70
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net gains (losses) on disposals, including calls, of
investments
Fixed maturity securities held to maturity................ $ 2,235 $ 1,059 $ 237
Fixed maturity securities available for sale.............. 1,906 494 802
Equity securities......................................... 2,764 6,787 11,439
Mortgage loans on real estate............................. 1,583 959 66
Real estate............................................... 5,877 502 136
Other..................................................... (2) 564 503
-------- -------- --------
14,363 10,365 13,183
-------- -------- --------
Provisions for losses on investments
Mortgage loans on real estate............................. (100) (20) (80)
Real estate............................................... 25 (50) --
-------- -------- --------
Net pretax realized investment gains........................ $ 14,288 $ 10,295 $ 13,103
======== ======== ========
</TABLE>
Proceeds from sales of securities and gross gains and losses realized on those
sales were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 14,447 $ 433 $ 302
Equity securities........................................... 24,681 3,874 1,110
-------- -------- --------
$ 39,128 $ 4,307 $ 1,412
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 16,419 $ 161 $ 8
Equity securities........................................... 19,914 7,725 938
-------- -------- --------
$ 36,333 $ 7,886 $ 946
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 4,774 $ 30 $ 247
Equity securities........................................... 18,676 11,796 357
-------- -------- --------
$ 23,450 $ 11,826 $ 604
======== ======== ========
</TABLE>
F-II- 14
<PAGE> 71
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
The amortized cost and fair value of investments in securities by type of
investment were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------
COST GAINS LOSSES FAIR VALUE
---------- -------- ------ ----------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity
U.S. Corporate................................... $ 351,099 $ 20,258 $ 417 $ 370,940
Mortgage-backed.................................. 114,146 6,294 -- 120,440
U.S. Treasury securities and obligations of U.S.
government agencies........................... 57,879 5,870 -- 63,749
Foreign.......................................... 63,295 2,231 112 65,414
---------- -------- ------ ----------
Total fixed maturity securities held to
maturity.................................... 586,419 34,653 529 620,543
---------- -------- ------ ----------
Fixed maturity securities available for sale
U.S. Corporate................................... 305,576 12,361 466 317,471
Mortgage-backed.................................. 80,018 1,295 19 81,294
Asset-backed..................................... 7,998 202 -- 8,200
U.S. Treasury securities and obligations of U.S.
government agencies........................... 58,841 4,425 -- 63,266
Foreign.......................................... 13,592 668 -- 14,260
---------- -------- ------ ----------
Total fixed maturity securities available for
sale........................................ 466,025 18,951 485 484,491
---------- -------- ------ ----------
Equity securities................................ 59,411 63,511 1,017 121,905
Short-term investments........................... 1,341 -- -- 1,341
---------- -------- ------ ----------
Total available for sale securities........... 526,777 82,462 1,502 607,737
---------- -------- ------ ----------
Total....................................... $1,113,196 $117,115 $2,031 $1,228,280
========== ======== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------
COST GAINS LOSSES FAIR VALUE
---------- -------- ------ ----------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity
U.S. Corporate................................... $ 448,344 $ 23,764 $ 423 $ 471,685
Mortgage-backed.................................. 147,741 6,523 14 154,250
U.S. Treasury securities and obligations of U.S.
government agencies........................... 82,107 5,764 -- 87,871
Foreign.......................................... 76,389 2,769 108 79,050
---------- -------- ------ ----------
Total fixed maturity securities held to
maturity.................................... 754,581 38,820 545 792,856
---------- -------- ------ ----------
Fixed maturity securities available for sale
U.S. Corporate................................... 282,265 11,742 280 293,727
Mortgage-backed.................................. 86,370 1,957 165 88,162
Asset-backed..................................... 7,997 169 -- 8,166
U.S. Treasury securities and obligations of U.S.
government agencies........................... 67,342 3,455 242 70,555
Foreign.......................................... 18,857 524 1 19,380
---------- -------- ------ ----------
Total fixed maturity securities available for
sale........................................ 462,831 17,847 688 479,990
---------- -------- ------ ----------
Equity securities................................ 59,383 49,893 532 108,744
Short-term investments........................... 655 -- -- 655
---------- -------- ------ ----------
Total available for sale securities........... 522,869 67,740 1,220 589,389
---------- -------- ------ ----------
Total....................................... $1,277,450 $106,560 $1,765 $1,382,245
========== ======== ====== ==========
</TABLE>
F-II- 15
<PAGE> 72
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
The amortized cost and fair value of fixed maturity securities by contractual
maturity at December 31, 1998 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
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Due in one year or less............................. $ 15,916 $ 16,110 $ 7,600 $ 7,693
Due after one year through five years............... 168,635 175,041 130,762 136,181
Due after five years through ten years.............. 150,487 156,680 243,218 257,923
Due after ten years................................. 42,971 47,167 90,693 98,306
Mortgage-backed and asset-backed securities......... 88,016 89,493 114,146 120,440
-------- -------- -------- --------
Total............................................. $466,025 $484,491 $586,419 $620,543
======== ======== ======== ========
</TABLE>
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net unrealized investment gains............................. $ 35,211 $ 29,569
Equity in subsidiaries...................................... 12,058 9,992
Deferred policy acquisition costs........................... 53,003 47,713
Prepaid expenses............................................ 3,903 3,246
Other....................................................... 2,277 2,327
-------- --------
Gross deferred tax liability................................ 106,452 92,847
-------- --------
Future policy and contract benefits......................... 38,333 30,593
Deferred future revenues.................................... 5,845 6,091
Policyowner dividends....................................... 3,715 3,547
Pension and postretirement benefits......................... 2,917 2,715
Other....................................................... 4,847 3,665
-------- --------
Gross deferred tax asset.................................... 55,657 46,611
-------- --------
Net deferred tax liability................................ $ 50,795 $ 46,236
======== ========
</TABLE>
The difference between the U.S. federal income tax rate and the consolidated tax
provision rate is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Equity in subsidiaries...................................... 2.6 2.4 1.2
Surplus tax................................................. -- (2.7) 7.1
Other....................................................... (2.1) 0.9 (1.5)
---- ---- ----
Effective tax rate........................................ 35.5% 35.6% 41.8%
==== ==== ====
</TABLE>
The "surplus tax," IRC Section 809, is an imputation of income to mutual life
insurance companies according to a formula based on a comparison of the returns
of equity of the mutual and stock segments of the life insurance industry. The
Company's provision for its surplus tax is based on the Company's best estimate
of what its final surplus tax will be.
F-II- 16
<PAGE> 73
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
4. EMPLOYEE AND AGENT BENEFIT PLANS
The Company has a noncontributory defined benefit plan covering substantially
all employees. Plan benefits are based on years of credited service and the
employee's compensation during the last five years of employment. The Company's
funding policy is to make contributions each year at least equal to the minimum
funding requirements for tax-qualified retirement plans. Pension costs include
current service costs, which are accrued and funded on a current year basis, and
past service costs, which are amortized over the average remaining service life
of all employees on the adoption date. The assets of the plan are not
segregated.
The Company also provides certain health care benefits to retired employees.
These benefits are a specified percentage of premium until age 65 and a flat
dollar amount thereafter. Employees become eligible for these benefits upon the
attainment of age 55, 15 years of service and participation in the Company
medical plan for the immediately preceding five years.
The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets over the two-year period ending
December 31, 1998, and a statement of the funded status as of December 31 of
both years:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Reconciliation of benefit obligation
Benefit obligation at beginning of year............... $23,232 $20,261 $ 4,498 $ 4,746
Service cost.......................................... 1,970 1,408 141 158
Interest cost......................................... 1,777 1,496 251 304
Actuarial (gain)/loss................................. 4,488 1,023 (711) (552)
Benefits paid......................................... (721) (956) (155) (158)
------- ------- ------- -------
Benefit obligation at end of year..................... $30,746 $23,232 $ 4,024 $ 4,498
======= ======= ======= =======
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year........ $24,271 $20,153 $ 1,767 $ 1,252
Actual return on plan assets.......................... 2,517 3,330 120 90
Employer contributions................................ 2,201 1,744 -- 425
Benefits paid......................................... (721) (956) -- --
------- ------- ------- -------
Fair value of plan assets at end of year.............. $28,268 $24,271 $ 1,887 $ 1,767
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Funded Status
Funded status at end of year.......................... $(2,478) $ 1,039 $(2,137) $(2,731)
Unrecognized net actuarial (gain)/loss................ 3,086 (875) (2,075) (1,498)
Unrecognized prior service cost....................... 1,143 1,236 (15) (18)
------- ------- ------- -------
Prepaid/(accrued) benefit cost........................ $ 1,751 $ 1,400 $(4,227) $(4,247)
======= ======= ======= =======
</TABLE>
F-II- 17
<PAGE> 74
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
4. EMPLOYEE AND AGENT BENEFIT PLANS -- (CONTINUED)
Periodic pension expense for the Company included the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 1,970 $ 1,408 $ 1,223
Interest cost............................................... 1,777 1,496 1,866
Expected return on plan assets.............................. (2,517) (3,329) (2,817)
Amortization of transition (asset) obligation............... 94 94 94
Amortization of net loss.................................... 526 1,742 838
------- ------- -------
Net periodic benefit cost................................... $ 1,850 $ 1,411 $ 1,204
======= ======= =======
</TABLE>
Periodic postretirement medical expense for the Company included the following
components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Service cost................................................ $ 141 $ 158 $ 177
Interest cost............................................... 251 304 315
Expected return on plan assets.............................. (124) (89) (57)
Amortization of prior service cost.......................... (2) -- --
Amortization of net gain.................................... (130) (77) (35)
----- ----- -----
Net periodic benefit cost................................... $ 136 $ 296 $ 400
===== ===== =====
</TABLE>
The assumptions used in the measurement of the Company's benefit obligation are
shown in the following table:
<TABLE>
<CAPTION>
PENSION
BENEFITS OTHER BENEFITS
------------ --------------
1998 1997 1998 1997
---- ---- ----- -----
<S> <C> <C> <C> <C>
Weighted-average assumptions as of December 31
Discount rate............................................. 6.75 7.25 6.75 7.25
Expected return on plan assets............................ 8.00 8.00 7.50 7.50
Rate of compensation increase............................. 4.50 4.50 -- --
</TABLE>
The assumed health care trend line rate used in measuring the accumulated
postretirement benefit obligation, for pre-65 employees, was 7.5% in 1997
decreasing linearly each successive year until it reaches 5.5% in 1999, after
which it remains constant.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in health care trend rates would
have the following effects:
<TABLE>
<CAPTION>
1% INCREASE 1% DECREASE
----------- -----------
<S> <C> <C>
Effect on total of service and interest cost components of
net periodic postretirement health care benefit cost...... $ 17 $ (17)
Effect on the health care component of the accumulated
postretirement benefit obligation......................... $ 117 $(131)
</TABLE>
The Company's employees and agents also participate in defined contribution
plans that cover substantially all full-time employees and agents. Company
contributions were $852 in 1998, $868 in 1997 and $800 in 1996.
F-II- 18
<PAGE> 75
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
5. INSURANCE REGULATORY MATTERS
STATUTORY SURPLUS AND NET INCOME
Net income of Ameritas and its insurance subsidiaries, as determined in
accordance with statutory accounting practices, was $41,019, $47,200, and
$44,100 for 1998, 1997 and 1996, respectively and statutory surplus was
$357,700, $311,300, and $257,300 at December 31, 1998, 1997 and 1996,
respectively. Insurance companies are required to maintain a certain level of
surplus to be in compliance with state laws and regulations. Surplus is
monitored by state regulators to ensure compliance with risk based capital
requirements.
Under statutes of the Insurance Department of Nebraska, the amount of dividends
payable to stockholders are limited.
6. REINSURANCE
In the ordinary course of business, the Company assumes and cedes reinsurance
with other insurers and reinsurers. These arrangements provide greater
diversification of business and limit the maximum net loss potential on large
risks.
The effect of reinsurance on premiums earned is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Assumed..................................................... $ 32,191 $ 9,740 $ 6,344
Ceded....................................................... (12,261) (10,777) (12,549)
-------- -------- --------
$ 19,930 $ (1,037) $ (6,205)
======== ======== ========
</TABLE>
The Company remains contingently liable in the event that a reinsurer is unable
to meet the obligations ceded under the reinsurance agreement.
7. RESERVE FOR UNPAID CLAIMS
The change in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Balance at January 1........................................ $ 22,433 $ 17,957 $ 14,925
Reinsurance reserves (net).................................. (1,748) (89) 121
-------- -------- --------
20,685 17,868 15,046
-------- -------- --------
Incurred related to:
Current year.............................................. 186,940 132,940 117,610
Prior year................................................ (6,678) (4,675) (2,051)
-------- -------- --------
Total incurred......................................... 180,262 128,265 115,559
-------- -------- --------
Paid related to:
Current year.............................................. 161,843 112,255 99,742
Prior year................................................ 14,007 13,193 12,995
-------- -------- --------
Total paid............................................. 175,850 125,448 112,737
-------- -------- --------
25,097 20,685 17,868
Reinsurance reserves (net).................................. 2,561 1,748 89
-------- -------- --------
Balance at December 31...................................... $ 27,658 $ 22,433 $ 17,957
======== ======== ========
</TABLE>
F-II- 19
<PAGE> 76
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
7. RESERVE FOR UNPAID CLAIMS -- (CONTINUED)
The liability for unpaid accident and health claims and claim adjustment
expenses is included in policy and contract claims on the consolidated balance
sheets.
8. COMMITMENTS AND CONTINGENCIES
INVESTMENTS
Securities commitments of $30,545 and $25,848, and mortgage loan and real estate
commitments of $8,284 and $17,742 were outstanding for investments to be
purchased in subsequent years as of December 31, 1998 and 1997, respectively.
These commitments have been made in the normal course of investment operations
and are not reflected in the accompanying financial statements. The Company's
exposure to credit loss is represented by the contractual notional amount of
those instruments. The Company uses the same credit policies and collateral
requirements in making commitments and conditional obligations as it does for
on-balance sheet instruments.
LINE OF CREDIT
The Company has a $25,000 unsecured line of credit available at December 31,
1998. No balance was outstanding at any time during 1998 or 1997.
STATE LIFE AND HEALTH GUARANTY FUNDS
As a condition of doing business, all states and jurisdictions have adopted laws
requiring membership in life and health insurance guaranty funds. Member
companies are subject to assessments each year based on life, health or annuity
premiums collected in the state. In some states these assessments may be applied
against premium taxes. The Company has estimated its costs related to past
insolvencies and has provided a reserve included in other liabilities of $2,650
and $2,325 as of December 31, 1998 and 1997, respectively.
LITIGATION
From time to time, the Company and its subsidiaries is subject to litigation in
the normal course of business. Management does not believe that the Company is
party to any such pending litigation which would have a material adverse effect
on its financial statements or future operations.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made regarding fair value information about
certain financial instruments for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates, in many cases, could not be realized on immediate
settlement of the instrument. All nonfinancial instruments are excluded from
disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1998 and 1997. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
F-II- 20
<PAGE> 77
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for each class of financial instrument for which it is
practicable to estimate a value:
FIXED MATURITY SECURITIES -- For publicly traded securities, fair
value is determined using an independent pricing source. For securities
without a readily ascertainable fair value, the value has been determined
using an interest rate spread matrix based upon quality, weighted average
maturity and Treasury yields.
EQUITY SECURITIES -- For publicly traded securities, fair value is
determined using prices from an independent pricing source.
LOANS ON INSURANCE POLICIES -- Fair value for loans on insurance
policies is estimated using a discounted cash flow analysis at interest
rates currently offered for similar loans. Loans on insurance policies with
similar characteristics are aggregated for purposes of the calculations.
MORTGAGE LOANS ON REAL ESTATE -- Mortgage loans in good standing are
valued on the basis of discounted cash flow. The interest rate that is
assumed is based upon the weighted average term of the mortgage and
appropriate spread over Treasuries.
OTHER INVESTMENTS -- Fair value for venture capital partnerships is
estimated based on values as last reported by the partnership and
discounted for their lack of marketability. Real estate partnerships are
carried on the equity method and are excluded from the fair value
disclosure.
SHORT-TERM INVESTMENTS -- The carrying amount approximates fair value
because of the short maturity of these instruments.
CASH AND CASH EQUIVALENTS -- The carrying amounts equal fair value.
ACCRUED INVESTMENT INCOME -- Fair value equals book value.
ACCUMULATED CONTRACT VALUES -- Funds on deposit with a fixed maturity
are valued at discounted present value using market interest rates. Funds
on deposit which do not have fixed maturities are carried at the amount
payable on demand at the reporting date, which approximates fair value.
COMMITMENTS -- The estimated fair value of commitments approximates
carrying value because the fees currently charged for these arrangements
and the underlying interest rates approximate market.
F-II- 21
<PAGE> 78
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
Estimated fair values are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1998 1997
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities
Held to maturity............................... $586,419 $ 620,543 $754,581 $ 792,856
Available for sale............................. 484,491 484,491 479,990 479,990
Equity securities................................. 121,905 121,905 108,744 108,744
Loans on insurance policies....................... 29,047 30,332 70,638 63,356
Mortgage loans on real estate..................... 222,151 238,006 228,709 240,583
Other investments................................. 23,901 28,391 22,717 32,466
Short-term investments............................ 1,341 1,341 655 655
Cash and cash equivalents......................... 79,019 79,019 83,139 83,139
Accrued investment income......................... 20,104 20,104 25,186 25,186
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 783,275 786,152 764,505 764,998
</TABLE>
10. SUBSEQUENT EVENT
In September, 1998, Ameritas and Acacia Life Insurance Company (Acacia) agreed
in principle that all of Acacia Financial Group, Ltd.'s (the stock holding
company of Acacia) outstanding common stock, would be acquired by Ameritas
Holding Company in a business combination accounted for as a pooling of
interests. This merger became effective January 1, 1999. In addition the members
interest in Acacia Mutual Holding Corporation were merged with those of Ameritas
Mutual Insurance Holding Company. Concurrently, the name was changed to Ameritas
Acacia Mutual Holding Company. Historical financial information presented in
future reports will be restated to included the financial information of the
merged companies.
The following summarized unaudited data gives effect to the acquisition as if
the combination had been consummated. The most current combined financial
information available is as of September 30, 1998.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
Assets...................................................... $6,049,266 $5,740,880
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED
FOR THE NINE MONTH DECEMBER 31
PERIOD ENDED --------------------
SEPTEMBER 30, 1998 1997 1996
------------------ -------- --------
<S> <C> <C> <C>
Income................................................. $619,170 $721,568 $664,578
Net Income............................................. $ 39,363 $ 62,341 $ 44,505
</TABLE>
F-II- 22
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C>
MARCH 31,
1999
---------------------
ASSETS
Investments:
Fixed maturity securities held to maturity $ 579,895
Fixed maturity securities available for sale
490,432
Equity securities 122,024
Mortgage loans on real estate 233,579
Loans on insurance policies 31,409
Real estate, less accumulated depreciation 27,722
Other investments 47,123
Short-term investments 298
---------------------
Total investments 1,532,482
---------------------
Cash and cash equivalents 101,897
Accrued investment income 20,149
Deferred policy acquisition costs 179,483
Property and equipment, less accumulated depreciation 21,161
Other assets 24,938
Closed block assets 308,877
Separate accounts 2,095,628
---------------------
TOTAL $ 4,284,615
=====================
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy and contract reserves $ 100,460
Policy and contract claims 30,597
Accumulated contract values 1,035,789
Unearned policy charges 12,127
Unearned reinsurance ceded allowance 1,465
Federal income taxes-
Current 13,440
Deferred 48,196
Other liabilities 54,967
Closed block liabilities 334,191
Separate accounts 2,095,628
---------------------
TOTAL LIABILITIES 3,726,860
---------------------
Commitments and contingencies
Minority interest in subsidiary 27,835
Common Stock, par value $0.10 per share, 25,000,000 shares
authorized, issued and outstanding 2,500
Additional paid-in capital 5,000
Retained earnings 472,372
Accumulated other comprehensive income 50,048
---------------------
Total Stockholder's Equity 529,920
---------------------
Total $ 4,284,615
=====================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-1
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
FOR THE THREE
MONTHS ENDED
MARCH 31,
1999
---------------------
INCOME:
Insurance revenues:
Premiums
Life Insurance $ 2,186
Accident and health insurance 66,898
Contract charges 18,038
Reinsurance, net 88
Reinsurance, ceded allowance 881
Investment revenues:
Investment income, net 27,545
Realized gains, net 8,365
Other 6,844
Gain in Closed Block 810
---------------------
131,655
---------------------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits 4,935
Surrender benefits (182)
Accident and health benefits 47,336
Interest credited 15,968
Decrease in policy and contract reserves 424
Other 3,200
Sales and operating expenses 32,723
Amortization of deferred policy acquisition costs 5,006
---------------------
109,410
---------------------
Income before federal income taxes and minority interest in
earnings of subsidiary 22,245
Income taxes - current 9,928
Income taxes - deferred (1,561)
---------------------
Total federal income taxes 8,367
---------------------
Income before minority interest in earnings of subsidiary 13,878
Minority interest in earnings of subsidiary (571)
---------------------
NET INCOME $ 13,307
=====================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-2
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
FOR THE THREE
MONTHS ENDED
MARCH 31,
1999
----------------------
Net Income $ 13,307
Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during
period (net of deferred tax of $423 ) (283)
Reclassification adjustment for gains included in
Net income (net of deferred tax of $580) (1,078)
Minority interest 259
----------------------
Other comprehensive income (loss) (1,102)
----------------------
Comprehensive income $ 12,205
======================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-3
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENT OF EQUITY
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Other Total
Common Stock Paid - In Retained Comprehensive Stockholder's
--------------------------
Shares Amount Capital Earnings Income Equity
----------- ----------- ------------ ------------- -------------- -------------
BALANCE, January 1, 1999 25,000 $ 2,500 $ 5,000 $ 459,065 $ 51,151 $ 517,716
Net unrealized investment losses, net - - - - (1,362) (1,362)
Minority interest in net unrealized
investment losses, net - - - - 259 259
Net income - - - 13,307 - 13,307
----------- ----------- ------------ ------------- --------------- -------------
BALANCE, March 31, 1999 25,000 $ 2,500 $ 5,000 $ 472,372 $ 50,048 $ 529,920
=========== =========== ============ ============= =============== =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-4
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
FOR THE THREE
MONTHS ENDED
MARCH 31, 1999
----------------------
OPERATING ACTIVITIES
- --------------------
Net Income $ 13,307
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 1,532
Policy acquisition costs deferred (10,091)
Interest credited to contract values 16,600
Amortization of discounts or premiums (1,280)
Net realized gains on investment transactions (8,375)
Deferred income taxes (1,596)
Minority interest in earnings of subsidiary 571
Change in assets and liabilities:
Accrued investment income 455
Other assets (2,698)
Policy and contract reserves (58)
Policy and contract claims 1,166
Unearned policy charges (32)
Unearned reinsurance ceded allowance (15)
Federal income taxes payable - current 5,781
Dividends payable (286)
Other liabilities 9,378
Cash from Closed Block 2,071
----------------------
Net cash from operating activities 31,440
----------------------
INVESTING ACTIVITIES
- --------------------
Purchase of investments:
Fixed maturity securities held to maturity (11,872)
Fixed maturity securities available for sale (28,607)
(28,607)
Equity securities (1,896)
Mortgage loans on real estate (16,555)
Real estate (682)
Other investments (2,735)
Proceeds from sale of investments:
Equity securities - unaffiliated 6,676
Real estate 12,250
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-5
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
FOR THE THREE
MONTHS ENDED
MARCH 31, 1999
----------------------
INVESTING ACTIVITIES (continued):
- ---------------------------------
Proceed from maturities or repayment of investments:
Fixed maturity securities held to maturity $ 18,803
Fixed maturity securities available for sale 13,116
13,116
Mortgage loans on real estate 5,972
Short-term investments 1,045
Other investments 1,817
Purchase of property and equipment (996)
Proceeds from sale of property and equipment 10
Net change in loans on insurance policies (2,313)
Closed block investing activities 770
----------------------
Net cash from investing activities (5,197)
----------------------
FINANCING ACTIVITIES:
- ---------------------
Net change in accumulated contract values (715)
Closed block financing activities (2,650)
----------------------
Net cash from financing activities (3,365)
----------------------
INCREASE IN CASH AND CASH EQUIVALENTS 22,878
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 79,019
----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 101,897
======================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ 3,215
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II(U)-6
<PAGE>
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------------------------------
Ameritas Life Insurance Corp. (Ameritas), a stock life insurance company
domiciled in the State of Nebraska, is a wholly owned subsidiary of Ameritas
Holding Company which is a wholly owned subsidiary of Ameritas Acacia Mutual
Holding Company. Ameritas' insurance operations consist of life and health
insurance and annuity and pension contracts. Ameritas and its subsidiaries
operates in all 50 states and the District of Columbia. Wholly owned insurance
subsidiaries include First Ameritas Life Insurance Corp. Of New York and
Pathmark Assurance Company. Ameritas is also a 66% owner of AMAL Corporation
(incorporated March 8, 1996), which owns 100% of Ameritas Variable Life
Insurance Company and Ameritas Investment Corp. (a broker/dealer). In addition
to the subsidiaries noted above, Ameritas conducts other diversified
financial-service-related operations through the following wholly owned
subsidiaries: Veritas Corp (a marketing organization for low-load insurance
products); Ameritas Investment Advisors, Inc. (an advisor providing investment
management services); and Ameritas Managed Dental Plan, Inc. (A prepaid dental
organization).
USE OF ESTIMATES
The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
- ------------------------------------------------------------------
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statements have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
audited financial statements and notes thereto for the years ended December 31,
1998, 1997 and 1996.
F-II(U)-7
<PAGE>
Appendix A
Illustrations of Death Benefits and Accumulation Values
The following tables illustrate how the Net Cash Surrender Values and Death
Benefits of a Policy may change with the investment experience of the Fund. The
tables show how the Net Cash Surrender Values and Death Benefits of a Policy
issued to an Insured of a given age and specified underwriting risk
classification who pays the given premium at issue would vary over time if the
investment return on the assets held in each portfolio of the Funds were a
uniform, gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages A-2
through A-5 illustrate a Policy issued to a male, age 45, under a Preferred rate
non-smoker underwriting risk classification. This policy provides for a standard
smoker and non-smoker, and preferred non-smoker classification and different
rates for certain Specified Amounts. The Net Cash Surrender Values and Death
Benefits would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual Policy Years, or if the Insured
were assigned to a different underwriting risk classification.
The second column of the tables shows the accumulated value of the premiums paid
at 5%. The following columns show the Net Cash Surrender Values and the Death
Benefits for uniform hypothetical rates of return shown in these tables. The
tables on pages A-2 and A-4 are based on the current Cost of Insurance Rates,
current expense deductions and the current percent of premium loads. These
reflect the basis on which Ameritas currently sells its Policies. The maximum
Cost of Insurance Rates allowable under the Policy are based upon the 1980
Commissioner's Standard Ordinary Smoker and Non-Smoker, Male and Female
Mortality Tables. Ameritas anticipates reflecting future improvements in actual
mortality experience through adjustments in the current Cost of Insurance Rates
actually applied. Ameritas also anticipates reflecting any future improvements
in expenses incurred by applying lower percent of premiums of loads and other
expense deductions. The Death Benefits and cash values shown in the tables on
pages A-3 and A-5 are based on the assumption that the maximum allowable Cost of
Insurance Rates as described above ("guaranteed cost") and maximum allowable
expense deductions are made throughout the life of the Policy.
The amounts shown for the Net Cash Surrender Values and Death Benefits reflect
the fact that the net investment return of the Subaccounts is lower than the
gross, after-tax return of the assets held in the Funds as a result of expenses
paid by the Fund and charges levied against the Subaccounts. The values shown
take into account an average of the daily expenses paid by each portfolio
available for investment (the equivalent to an annual rate of 1.50% of the
aggregate average daily net assets of the Fund), and the daily charge by
Ameritas to each Subaccount for assuming mortality and expense risks (which is
equivalent to a charge at an annual rate of 0.60% for Policy Years 1 - 15 and
.30% thereafter on pages A-2 and A-4 and at an annual rate of .60% for all years
on pages A-3 and A-5 of the average net assets of the Subaccounts). NBMI has
agreed to reimburse each Neuberger Berman Portfolio for its operating expenses
and its pro rata share of its corresponding series' operating expenses,
excluding the compensation of NBMI, taxes, interest, extraordinary expenses,
brokerage commissions, and transaction costs that exceed 1% of the portfolio's
average daily net asset value. Bankers Trust Company, as investment adviser to
the Bankers Trust Funds, has entered into agreements to waive and/or reimburse
operating expenses, including its fees, that exceed .30% of the Equity 500
Index, .45% of the Small Cap Index, and .65% of the EAFE(R) Index aggregate
average daily net asset values. PADCO Advisors II, Inc., investment advisor of
the Rydex Variable Trust, and PADCO Service Company, Inc., servicer to the Rydex
Variable Trust, have voluntarily agreed to waive fees and/or reimburse expenses
to ensure that expenses do not exceed the following totals: Nova Fund - 2.20%;
Ursa Fund - 2.30%; OTC Fund - 2.20%; Precious Metals Fund - 2.20%; U.S.
Government Bond Fund - 1.80%; Juno Fund - 2.30%. These agreements are expected
to continue in future years but may be terminated at any time. The illustrated
gross annual investment rates of return of 0%, 6%, and 12% were computed after
deducting these amounts and correspond to approximate net annual rates of
- -1.95%, 4.05%, and 10.05%, respectively.
The hypothetical values shown in the tables do not reflect any additional
charges for federal income tax burden attributable to Separate Account LLVL,
since Ameritas is not currently making such charges. However, such charges may
be made in the future and, in that event, the gross annual investment rate of
return would have to exceed 0 percent, 6 percent, or 12 percent by an amount
sufficient to cover the tax charges in order to produce the Death Benefits and
values illustrated. (See the section on Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all net premiums are allocated to Separate Account LLVL, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner has not requested an increase or decrease in the initial Specified Amount,
that no Partial Withdrawals have been made, and that no more than fifteen
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insured
were female, a smoker, in substandard risk classification, or were another age,
or if a higher or lower premium was illustrated.
Upon request, Ameritas will provide comparable illustrations based upon the
proposed Insured's age, sex and underwriting classification, the Specified
Amount, the Death Benefit option, and Planned Periodic Premium schedule
requested, and any available riders requested. In addition, upon client request,
illustrations may be furnished reflecting allocation of premiums to specified
Subaccounts. Such illustrations will reflect the expenses of the portfolio in
which the Subaccount invests.
LLSVUL
A-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 60 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $22,522
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.95% Net) (4.05% Net) (10.05% Net)
--------------------------------------------------------------------------------------------------
Accumulated
End Of Premiums At Cash Cash Cash
Policy 5% Interest Surrender Death Surrender Death Surrender Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
1 23648 20780 1000000 22070 1000000 23360 1000000
2 48478 41049 1000000 44924 1000000 48956 1000000
3 74549 60795 1000000 68575 1000000 76991 1000000
4 101924 80011 1000000 93035 1000000 107696 1000000
5 130668 98693 1000000 118329 1000000 141331 1000000
6 160849 117425 1000000 154084 1000000 178809 1000000
7 192539 135603 1000000 172743 1000000 219892 1000000
8 225813 153213 1000000 201327 1000000 264934 1000000
9 260752 170256 1000000 230871 1000000 314348 1000000
10 297437 186730 1000000 261412 1000000 368595 1000000
11 335956 202623 1000000 292983 1000000 428182 1000000
12 376401 217944 1000000 325642 1000000 493700 1000000
13 418869 232667 1000000 359421 1000000 565784 1000000
14 463460 246799 1000000 394386 1000000 645179 1000000
15 510281 260285 1000000 430561 1000000 732695 1000000
16 559442 273821 1000000 469267 1000000 831506 1000000
17 611062 286542 1000000 509382 1000000 940895 1063211
18 665263 298389 1000000 550995 1000000 1061574 1178347
19 722173 309290 1000000 594204 1000000 1194684 1302205
20 781930 318956 1000000 639020 1000000 1341534 1435441
25 1128630 342880 1000000 894588 1000000 2333948 2450645
30 1571118 291369 1000000 1219331 1280297 3930421 4126942
35 2135856 64441 1000000 1603248 1683411 6457507 6780382
</TABLE>
1) Assumes an annual $22,522 premium is paid at the beginning of each Policy
Year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no Policy loan has been made. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient cash value.
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, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT 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 CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AMERITAS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
LLSVUL
A-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 60 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $22,522
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.95% Net) (4.05% Net) (10.05% Net)
--------------------------------------------------------------------------------------------------
Accumulated
End Of Premiums At Cash Cash Cash
Policy 5% Interest Surrender Death Surrender Death Surrender Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
1 23648 20317 1000000 21592 1000000 22867 1000000
2 48478 40061 1000000 43876 1000000 47845 1000000
3 74549 59204 1000000 66841 1000000 75107 1000000
4 101924 77720 1000000 90480 1000000 104851 1000000
5 130668 95577 1000000 114779 1000000 137289 1000000
6 160849 112735 1000000 139717 1000000 172655 1000000
7 192539 129141 1000000 165264 1000000 211201 1000000
8 225813 144730 1000000 191379 1000000 253206 1000000
9 260752 159416 1000000 218005 1000000 298975 1000000
10 297437 173105 1000000 245081 1000000 348862 1000000
11 335956 185688 1000000 272542 1000000 403279 1000000
12 376401 197049 1000000 300322 1000000 462718 1000000
13 418869 207057 1000000 328356 1000000 527770 1000000
14 463460 215569 1000000 356581 1000000 599153 1000000
15 510281 222407 1000000 384930 1000000 677737 1000000
16 559442 228075 1000000 414538 1000000 766701 1000000
17 611062 231590 1000000 444261 1000000 865799 1000000
18 665263 232601 1000000 474012 1000000 976166 1083544
19 722173 230678 1000000 503707 1000000 1097811 1196614
20 781930 225313 1000000 533283 1000000 1231995 1318234
25 1128630 121976 1000000 680269 1000000 2133717 2240403
30 1571118 0 1000000 847426 1000000 3555966 3733765
35 2135856 0 0 1109210 1164671 5743290 6030455
</TABLE>
1) Assumes an annual $22,522 premium is paid at the beginning of each Policy
Year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no Policy loan has been made. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient cash value.
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, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT 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 CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AMERITAS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
LLSVUL
A-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 60 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $77,903
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.95% Net) (4.05% Net) (10.05% Net)
--------------------------------------------------------------------------------------------------
Accumulated
End Of Premiums At Cash Cash Cash
Policy 5% Interest Surrender Death Surrender Death Surrender Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
1 81798 73451 1073451 77964 1077964 82478 1082478
2 167686 145359 1145359 158971 1158971 173125 1173125
3 257868 215725 1215725 243115 1243115 272735 1272735
4 352559 284554 1284554 330496 1330496 382181 1382181
5 451985 351856 1351856 421225 1421225 502428 1502428
6 556382 418220 1418220 516016 1516016 635159 1635159
7 665999 483054 1483054 614402 1614402 780979 1780979
8 781097 546348 1546348 716489 1716489 941161 1941161
9 901950 608109 1608109 822401 1822401 1117124 2117124
10 1028845 668340 1668340 932267 1932267 1310424 2310424
11 1162085 727028 1727028 1046202 2046202 1522762 2522762
12 1301987 784188 1784188 1164358 2164358 1756033 2756033
13 1448885 839789 1839789 1286840 2286840 2012278 3012278
14 1603127 893838 1893838 1413801 2413801 2293781 3293781
15 1765081 946263 1946263 1545317 2545317 2602973 3602973
16 1935133 999914 1999914 1686181 2686181 2950413 3950413
17 2113688 1051751 2051751 1832217 2832217 3332836 4332836
18 2301170 1101678 2101678 1983521 2983521 3753730 4753730
19 2498026 1149569 2149569 2140160 3140160 4216915 5216915
20 2704726 1194983 2194983 2301879 3301879 4726271 5726271
25 3903976 1375624 2375624 3183247 4183247 8139188 9139188
30 5434558 1433340 2433340 4150663 5150663 13587049 14587049
35 7388011 1294955 2294955 5129432 6129432 22257676 23370560
</TABLE>
1) Assumes an annual $77,903 premium is paid at the beginning of each Policy
Year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no Policy loan has been made. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient cash value.
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, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT 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 CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AMERITAS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
LLSVUL
A-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 60 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $77,903
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: B
USING MAXIMUM ALLOWABLE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.95% Net) (4.05% Net) (10.05% Net)
--------------------------------------------------------------------------------------------------
Accumulated
End Of Premiums At Cash Cash Cash
Policy 5% Interest Surrender Death Surrender Death Surrender Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
1 81798 72988 1072988 77486 1077486 81984 1081984
2 167686 144368 1144368 157919 1157919 172011 1172011
3 257868 214121 1214121 241367 1241367 270835 1270835
4 352559 282229 1282229 327901 1327901 379289 1379289
5 451985 348664 1348664 417583 1417583 498274 1498274
6 556382 413386 1413386 510465 1510465 628773 1628773
7 665999 476336 1476336 606584 1606584 771845 1771845
8 781097 537438 1537438 705955 1705955 928636 1928636
9 901950 596586 1596586 808564 1808564 1100375 2100375
10 1028845 653658 1653658 914377 1914377 1288394 2288394
11 1162085 708513 1708513 1023337 2023337 1494137 2494137
12 1301987 760994 1760994 1135365 2135365 1719175 2719175
13 1448885 810925 1810925 1250356 2250356 1965211 2965211
14 1603127 858112 1858112 1368180 2368180 2234101 3234101
15 1765081 902323 1902323 1488659 2488659 2527842 3527842
16 1935133 946194 1946194 1616227 2616227 2856371 3856371
17 2113688 986544 1986544 1746466 2746466 3215955 4215955
18 2301170 1022947 2022947 1878995 2878995 3609305 4609305
19 2498026 1054914 2054914 2013344 3013344 4039338 5039338
20 2704726 1081907 2081907 2148967 3148967 4509221 5509221
25 3903976 1122616 2122616 2823811 3823811 7590772 8590772
30 5434558 947589 1947589 3416202 4416202 12362361 13362361
35 7388011 466803 1466803 3784056 4784056 19772763 20772763
</TABLE>
1) Assumes an annual $77,903 premium is paid at the beginning of each Policy
Year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no Policy loan has been made. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient cash value.
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, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT 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 CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AMERITAS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
LLSVUL
A-5
<PAGE>
INCORPORATION BY REFERENCE
The Registrant, Ameritas Separate Account LLVL, purchases or will purchase units
from the portfolios of three funds at the direction of its policyholders. The
prospectuses of these funds will be distributed with this prospectus and are
hereby incorporated by reference. The prospectuses incorporated by reference are
as follows:
Neuberger Berman Advisers Management Trust
Registration No. 2-88566
BT Insurance Funds Trust
Registration No. 333-00479
Rydex Variable Trust
Registration No. 333-57017
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
Registrant makes the following representation pursuant to the National
Securities Markets Improvements Act of 1996:
Ameritas Life Insurance Corp. represents that 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
insurance company.
RULE 484 UNDERTAKING
Ameritas' By-laws provide as follows:
The Company shall indemnify any person who was, or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, or employee of the Company or
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding to the full extent authorized by the laws of
Nebraska.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant 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.
REPRESENTATION PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Life Insurance Corp. Separate Account LLVL, certifies that it has duly
caused this Pre-Effective Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Lincoln, County of Lancaster, State of Nebraska on this 28th day of May, 1999.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT LLVL, Registrant
AMERITAS LIFE INSURANCE CORP., Depositor
Attest: /s/Donald R. Stading By: /s/Lawrence J. Arth
--------------------- ---------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Ameritas
Variable Life Insurance Company on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/Lawrence J. Arth Director, Chairman of the Board May 28, 1999
- -------------------- and Chief Executive Officer
Lawrence J. Arth
/s/Kenneth C. Louis Director, Executive Vice President May 28, 1999
- ---------------------
Kenneth C. Louis
/s/Donald R. Stading Senior Vice President, Secretary and May 28, 1999
- -------------------- Corprate General Counsel
Donald R. Stading
/s/William W. Lester Senior Vice President-Investments May 28, 1999
- ---------------------- and Treasurer
William W. Lester
/s/JoAnn M. Martin Senior Vice President and May 28, 1999
- ---------------------- Chief Financial Officer
JoAnn M. Martin
/s/James P. Abel Director May 28, 1999
- ----------------------
James P. Abel
/s/Duane W. Acklie Director May 28, 1999
- ----------------------
Duane W. Acklie
/s/Robert W. Clyde Director May 28, 1999
- ----------------------
Robert W. Clyde
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/William W. Cook, Jr. Director May 28, 1999
- -----------------------
William W. Cook, Jr.
/s/Bert A. Getz Director May 28, 1999
- ----------------------
Bert A. Getz
/s/James P. Knapp Director May 28, 1999
- ----------------------
James P. Knapp
/s/Robert F. Krohn Director May 28, 1999
- ---------------------
Robert F. Krohn
/s/Wilfred J. Maddux Director May 28, 1999
- ---------------------
Wilfred J. Maddux
/s/Charles T. Nason Director May 28, 1999
- ---------------------
Charles T. Nason
/s/Paul C. Schorr, III Director May 28, 1999
- ----------------------
Paul C. Schorr, III
/s/William C. Smith Director May 28, 1999
- ----------------------
William C. Smith
/s/Neal E. Tyner Director May 28, 1999
- ----------------------
Neal E. Tyner
/s/Winston J. Wade Director May 28, 1999
- ----------------------
Winston J. Wade
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 92 pages. The undertaking to file reports. The
undertaking pursuant to Rule 484. Representation pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a) Thomas P. McArdle
(b) Donald R. Stading
(c) Deloitte & Touche LLP Independent Auditors
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2.
(1) Resolution of the Board of Directors of Ameritas Authorizing
Establishment of the Account.*
(2) Not applicable.
(3) (a) Principal Underwriting Agreement.* (b) Proposed form of Selling
Agreement.**
(b) Proposed form of Selling Agreement.**
(c) Commission Schedule. - To be filed by later amendment
(4) Not applicable.
(5) (a) Form of Policy.
(b) Form of Policy Riders.
(6) (a) Articles of Incorporation of Ameritas.*
(b) Bylaws of Ameritas.***
(7) Not applicable.
(8) (a) Participation Agreement in the Neuberger Berman Advisers
Management Trust.**
(b) Participation Agreement(Bankers Trust). To be filed by later
amendment
(c) Participation Agreement (Rydex).
(9) Not applicable.
(10) Application for Policy. - To be filed by later amendment
2. (a)(b) Opinion and Consent of Donald R. Stading, Senior Vice President,
Secretary and Corporate General Counsel
3. No financial statements will be omitted from the final Prospectus pursuant
to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable
7. (a)(b) Opinion and Consent of Thomas P. McArdle
8. Consent of Independent Auditors
9. Form of Notice of Withdrawal Right and Refund pursuant to Rule 6e-3(T)(b)
(13)(viii) under the Investment Company Act of 1940.*
- -------------
* Incorporated by reference to Post-Effective Amendment No. 4 for Ameritas
Life Insurance Corp. Separate Account LLVL. File No. 33-86500, filed April 3,
1998.
** Incorporated by reference to the initial Registration Statement for
Ameritas Life Insurance Corp. Separate Account LLVA. File No. 333-5529, filed
June 7, 1996.
*** Incorporated by reference to Post-Effective Amendment No. 5 for Ameritas
Life Insurance Corp. Separate Account LLVL, file no. 33-86500, filed on
February 26, 1999.
<PAGE>
Exhibit Index
Exhibit Page
- ------- ----
1.(5)(a) Form of Policy
1.(5)(b) Form of Policy Riders
1.(8)(c) Participation Agreement (Rydex)
2.(a)(b) Opinion and Consent of Donald R. Stading
7.(a)(b) Opinion and Consent of Thomas P. McArdle
8. Consent of Deloitte & Touche LLP
-----------------------------------------------------------
INSUREDS FIELD(1
FIELD(158))
POLICY NUMBER FIELD(3)
POLICY TYPE SURVIVORSHIP VARIABLE UNIVERSAL LIFE
-----------------------------------------------------------
Survivorship Flexible Premium Variable Life Insurance Policy.
Death benefit proceeds payable upon the second death.
Flexible premiums payable until the second death.
Some benefits reflect investment results.
Non-participating.
THIS POLICY'S ACCUMULATION VALUE IN THE SEPARATE ACCOUNT IS BASED ON
THE INVESTMENT EXPERIENCE OF THAT ACCOUNT AND MAY INCREASE OR
DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE SECTION
7.
THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) MAY BE FIXED OR
MAY VARY UNDER THE CONDITIONS DESCRIBED IN SECTIONS 9 AND 10.
Ameritas Life Insurance Corp. agrees to pay the death benefit proceeds of
this policy to the beneficiary on receipt of satisfactory proof of death
of both Insureds while this policy is in force.
/s/Kenneth C. Louis /s/Donald R. Stading
President Secretary
"NOTICE OF TEN-DAY RIGHT TO EXAMINE POLICY"
You are urged to read this policy carefully. If, after examination, you
are dissatisfied with it for any reason, you may return it to the
selling agent or to Ameritas Life Insurance Corp. at P.O. Box 81889,
Lincoln, Nebraska 68501-1889, for a refund within (1) ten days from the
date of delivery of the policy, (2) ten days after mailing or delivery
of a cancellation notice, or (3) forty-five days after Part I of the
application is signed, whichever is later. If allowed by state law, the
amount of the refund will equal the sum of all charges deducted from
premiums paid, plus the net premiums allocated to the Fixed Account and
to the Separate Account adjusted by investment gains and losses.
Otherwise, the amount of the refund will equal the gross premiums paid.
Please read and carefully check the copy of the application attached to
this policy. This application is a part of your policy and this policy
was issued on the basis that the answers to all questions and the
information shown on this application are true and complete. If any
information shown on it is not true and complete, to the best of your
knowledge, or if any past medical history has been omitted, please
notify Ameritas Life Insurance Corp., a Nebraska domiciled life
insurance company, within ten days from the date of delivery of the
policy to you.
AMERITAS LIFE INSURANCE CORP. LOGO
Form 6065
<PAGE>
TABLE OF CONTENTS
POLICY SCHEDULE PAGES
SECTION 1. DEFINITIONS............................................3
SECTION 2. GENERAL PROVISIONS.....................................5
2.1 Meaning of In Force....................................5
2.2 When This Policy Terminates............................5
2.3 Guaranteed Death Benefit...............................6
2.4 Minimum Benefit........................................6
2.5 The Policy and its Parts...............................6
2.6 Representations and Contestability.....................6
2.7 Misstatement of Age or Sex.............................7
2.8 Suicide................................................7
2.9 The Owner..............................................7
2.10 The Beneficiary........................................7
2.11 Changing the Beneficiary...............................8
2.12 Assigning the Policy...................................8
2.13 Non-Participating......................................8
SECTION 3. PREMIUM PAYMENTS.......................................8
3.1 Guaranteed Death Benefit Premium.......................8
3.2 Minimum Premium........................................8
3.3 Planned Periodic Premium...............................8
3.4 Unscheduled Premiums...................................9
3.5 Premium Limits.........................................9
3.6 Where to Pay Premiums..................................9
3.7 Net Premium............................................9
3.8 Percent of Premium Charge for Taxes....................9
3.9 Allocation of Net Premiums.............................9
SECTION 4. GRACE PERIOD AND REINSTATEMENT........................10
4.1 Grace Period..........................................10
4.2 Continuation of Insurance.............................10
4.3 Reinstating the Policy................................10
SECTION 5. SEPARATE ACCOUNT......................................11
5.1 The Account...........................................11
5.2 The Subaccounts.......................................11
5.3 Valuation of Assets...................................11
5.4 Transfer Among Subaccounts............................11
5.5 The Funds.............................................12
5.6 Portfolio Changes.....................................12
SECTION 6. THE FIXED ACCOUNT.....................................12
6.1 The Fixed Account.....................................12
6.2 Transfers Among the Fixed Account
and the Subaccounts...................................12
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SECTION 7. ACCUMULATION VALUE....................................13
7.1 How Accumulation Value of the Policy is Determined....13
7.2 Accumulation Value of the Subaccounts.................13
7.3 Net Asset Value.......................................13
7.4 Subaccount Unit Value.................................14
7.5 Accumulation Value of the Fixed Account...............14
7.6 Interest Credits......................................14
7.7 Administrative Expense Charge.........................15
7.8 Cost of Insurance.....................................15
7.9 Cost of Insurance Rates...............................15
7.10 Monthly Deduction.....................................15
7.11 Annual Report.........................................16
7.12 Illustrative Reports..................................16
SECTION 8. POLICY SURRENDER
AND PARTIAL WITHDRAWALS...............................16
8.1 Surrender of the Policy...............................16
8.2 Net Cash Surrender Value..............................17
8.3 Partial Withdrawal....................................17
8.4 Postponement of Payments..............................17
SECTION 9. DEATH BENEFIT.........................................18
9.1 Death Benefit Proceeds................................18
9.2 Interest on Proceeds..................................18
9.3 Death Benefit.........................................18
9.4 Postponement of Payment...............................19
9.5 Death of the First Insured............................19
9.6 Simultaneous Death....................................19
SECTION 10. POLICY CHANGES
AND EXCHANGE OF POLICY................................20
10.1 Change in Death Benefit Options.......................20
10.2 Change in the Specified Amount........................20
10.3 Decreasing the Specified Amount.......................20
10.4 Increasing the Specified Amount.......................20
10.5 Time Period for Special Transfer......................21
SECTION 11. LOAN BENEFITS.........................................21
11.1 Making a Policy Loan..................................21
11.2 Loan Interest.........................................21
11.3 Reduced Loan Interest Rate............................21
11.4 Other Borrowing Rules.................................22
11.5 Repaying a Policy Debt................................22
SECTION 12. PAYMENT OPTIONS.......................................22
12.1 Payment Option Rules..................................22
12.2 Description of Options................................23
SECTION 13. NOTES ON OUR COMPUTATIONS.............................23
13.1 Basis of Computation..................................23
13.2 Methods of Computing Values...........................23
6065 2
<PAGE>
SECTION 1. DEFINITIONS
"ACCUMULATION VALUE" means the total amount of value held in your accounts at
any time. It is equal to the total of the accumulation value held in the
Account, the Fixed Account, and the accumulation value held in the general
account which secures outstanding policy debt.
"BENEFICIARY" means the person to whom the death benefit proceeds are payable
upon the second death. The beneficiary is named by the Owner in the application.
If changed, the beneficiary is as shown in the latest change filed and recorded
with us. If no beneficiary survives the second death, the Owner or the Owner's
estate will be the beneficiary. The interest of any beneficiary is subject to
that of any assignee.
"DEATH BENEFIT" means the total amount of insurance coverage provided under the
selected death benefit option of this policy.
"DEATH BENEFIT PROCEEDS" means the proceeds payable to the beneficiary upon
receipt by us of the satisfactory proof of the death of both Insureds while this
policy is in force. It is equal to: (1) the death benefit; plus (2) any
additional life insurance proceeds provided by any riders; minus (3) any
outstanding policy debt; minus (4) any overdue monthly deductions, including the
deduction for the month of the second death.
"GUARANTEED DEATH BENEFIT PERIOD" is the period during which the Guaranteed
Death Benefit is in effect and will end on the earliest of the following dates:
a. The expiration date shown on the schedule pages of this policy or any
revised schedule pages.
b. The date that the net policy funding is less than the Guaranteed Death
Benefit requirement. See Section 2.3.
c. The date on which this policy first terminates even if this policy
is reinstated.
"INSURED" AND "INSUREDS" mean the person or persons upon whose lives this policy
is issued.
"ISSUE DATE" means the date that all financial, contractual, and administrative
requirements have been completed and processed. The issue date will be shown in
a confirmation notice sent to you.
"MAXIMUM AVAILABLE LOAN AMOUNT" is equal to the net cash surrender value at the
time of the loan less the monthly deductions remaining for the balance of the
policy year, less interest on the policy debt including the requested loan to
the next policy anniversary date.
"MINIMUM BENEFIT PERIOD" is the period during which the Minimum Benefit is in
effect and will end on the earliest of the following dates:
a. The end of the sixtieth (60th) month after the policy date.
b. The date that the net policy funding is less than the Minimum Benefit
requirements. See Section 2.
c. The date on which this policy first terminates even if this policy
is reinstated.
6065 3
<PAGE>
"MINIMUM PREMIUM" is a monthly premium listed in this policy for the original
face amount and any increase made during the first sixty months that this policy
is in force. During the first sixty months that this policy is in force, the
policy is guaranteed not to lapse provided the net policy funding equals or
exceeds the sum of the scheduled Minimum Premiums since the policy date and any
increase date. Relying on the Minimum Benefit feature will reduce premium
flexibility.
"MONTHLY ACTIVITY DATE" means the same date in each succeeding month as the
policy date except that whenever the monthly activity date falls on a date other
than a valuation date, the monthly activity date will be deemed the next
valuation date.
"MONTHLY DEDUCTIONS" means the deductions taken from the accumulation value on
the monthly activity date. These deductions are equal to: 1) the current cost of
insurance for the basic policy plus the cost for any riders; and 2) the
administrative expense charge.
"NET CASH SURRENDER VALUE" means the accumulation value on any valuation date
less any outstanding policy debt.
"NET POLICY FUNDING" is the sum of all premiums paid, less any partial
withdrawals and less any outstanding policy debt.
"NET PREMIUM" means the premium paid less the percent of premium charge for
taxes.
"OUTSTANDING POLICY DEBT" means the sum of all unpaid policy loans and accrued
interest on policy loans.
"OWNER" means the Owner or owners (if joint ownership is elected) of this
policy, as designated in the application or as subsequently changed. If a policy
has been absolutely assigned, the assignee is the Owner. A collateral assignee
is not the Owner. See Section 2.9 for the rights and privileges of the Owner.
"PERCENT OF PREMIUM CHARGE FOR TAXES" is an amount deducted from each premium
received to cover certain expenses. This charge is a percentage of the premium.
The maximum applicable percentage can be found on the schedule pages.
"PLANNED PERIODIC PREMIUM" means a selected scheduled premium of a level amount
at a fixed interval. The initial planned periodic premium you selected is shown
on the schedule pages. See Section 3.3 of this policy.
"POLICY DATE" means the effective date for all coverage provided in the
application. The policy date is used to determine policy anniversary dates,
policy years and monthly activity dates. Policy anniversaries are measured from
the policy date. The policy date and the issue date will be the same unless: 1)
an earlier policy date is specifically requested, or 2) additional premiums or
application amendments are required at the time of delivery, in which case the
policy date will be earlier.
"POLICY YEAR" means the period from one policy anniversary date until the next
policy anniversary date.
"SEC" means the Securities and Exchange Commission.
6065 4
<PAGE>
"SATISFACTORY PROOF OF DEATH" means all of the following must be submitted:
a. Certified copy of the death certificates of both Insureds.
b. A Notice of Death Claim.
c. This policy.
d. Any other information that we may reasonably require to establish the
validity of the claim.
"SECOND DEATH" means the later of the dates of death of the Insureds. In the
event of simultaneous deaths, second death means the date of death of the
Insureds.
"SURVIVING INSURED" means the Insured who remains alive after one of the
Insureds has died.
"SPECIFIED AMOUNT" means the minimum death benefit under the policy while this
policy remains in force. The initial specified amount is shown on the schedule
pages. Adjustments and changes to the specified amount can occur as discussed in
Section 10.
"SURRENDER" means the termination of this policy while at least one Insured is
alive for its net cash surrender value. See Section 8 of this policy.
"VALUATION DATE" is any day on which the New York Stock Exchange is open for
trading.
"YOU" AND "YOUR" refer to the Owner of this policy. The Insureds may or may not
be the Owner.
"WE", "US" AND "OUR" refer to Ameritas Life Insurance Corp. Our Home Office
means our administrative office at P.O. Box 81889, Lincoln, Nebraska 68501-1889.
SECTION 2. GENERAL PROVISIONS
2.1 MEANING OF IN FORCE
This policy will remain in force as long as on each monthly activity date the
net cash surrender value is sufficient to cover monthly deductions.
However, this policy will remain in force if the requirements of either the
Minimum Benefit or Guaranteed Death Benefit provision is in effect on this
policy, even if the net cash surrender value is insufficient to cover monthly
deductions. See Sections 2.3 and 2.4.
2.2 WHEN THIS POLICY TERMINATES
This policy will terminate on the earliest of:
a. Any monthly activity date when the net cash surrender value is
insufficient to cover monthly deductions and the grace period ends
without sufficient premium being paid. However, this policy will not
terminate if the Minimum Benefit or Guaranteed Death Benefit is in
effect, even if the net cash surrender value is insufficient to cover
monthly deductions.
b. The second death.
c. You request the coverage be terminated and you return this policy.
6065 5
<PAGE>
2.3 GUARANTEED DEATH BENEFIT
The Guaranteed Death Benefit is a benefit which applies to this policy at issue.
This benefit will ensure that the policy will remain in force as long as the net
policy funding meets or exceeds the Guaranteed Death Benefit requirement and the
policy is within the Guaranteed Death Benefit Period. The Guaranteed Death
Benefit requirement is the cumulative Guaranteed Death Benefit Premium to the
monthly activity date. The Guaranteed Death Benefit Premium and the Guaranteed
Death Benefit Period are shown on the schedule page. Any changes in the
Guaranteed Death Benefit Premium due to increases in specified amount or
additions of riders will be reflected in the requirement from the effective date
of the change.
If the net policy funding is less than the Guaranteed Death Benefit requirement,
the benefit is no longer in effect. You will be notified by mail and will have
61 days from the date we mail the notice to meet the Guaranteed Death Benefit
requirement. The Guaranteed Death Benefit can not be reinstated once this policy
has lapsed.
2.4 MINIMUM BENEFIT
The Minimum Benefit is a benefit which applies to this policy at issue. This
benefit will ensure that the policy will remain in force during the first sixty
(60) months from the policy date as long as the net policy funding meets or
exceeds the Minimum Benefit requirement. The Minimum Benefit requirement is the
cumulative Minimum Premiums to the monthly activity date. The Minimum Premium is
shown in the schedule page. Any changes in the Minimum Premium due to increases
in specified amount or additions of rider will be reflected in the requirement
from the effective date of the change.
If the net policy funding is less than the Minimum Benefit requirement, the
benefit is no longer in effect. You will be notified by mail and will have 61
days from the date we mail the notice to meet the Minimum Benefit requirement.
The Minimum Benefit can not be reinstated once this policy has lapsed.
2.5 THE POLICY AND ITS PARTS
This policy is a legal contract between you and us. It is issued in return for
the application and payment of the initial premium as described in Section 3.1.
This policy, the application, any supplemental applications, riders,
endorsements, and amendments are the entire contract. No change in this policy
will be valid unless it is in writing, attached to this policy, and approved by
either the president or secretary of the company. No agent may change this
policy or waive any of its provisions.
2.6 REPRESENTATIONS AND CONTESTABILITY
We rely on statements made in the application. In the absence of fraud, they are
considered representations and not warranties. We can contest this policy for
any material misrepresentation of fact. The misrepresentation must have been
made in the application attached to this policy when issued or in a supplemental
application made a part of this policy when a change in coverage or
reinstatement went into effect.
We cannot contest this policy after it has been in force during the life time of
the Insureds for two years from the policy date. Nor can we contest any
increased benefits later than two years after the effective date of the
increased benefits during the lifetime
6065 6
<PAGE>
of the Insureds. Any increase or reinstatement will be contestable, within the
two year period, only with regard to statements made in the supplemental
application. This provision does not apply to riders with their own
contestability provision.
We may require evidence that both Insureds are living during the first two years
from the policy date or from the effective date of any increase in benefits.
2.7 MISSTATEMENT OF AGE OR SEX
If the age or sex of either Insured or any person insured by rider has been
misstated on the application, the death benefit and any additional benefits
provided will be those which would have been purchased by the most recent
deduction for the cost of insurance and the cost of any additional benefits at
the insured person(s) correct ages and/or sexes.
2.8 SUICIDE
If either Insured commits suicide while sane or insane, within two years from
the policy date, we will limit the proceeds. The limited amount will equal all
premiums paid for this policy, less outstanding policy debt, partial
withdrawals, and the cost for riders.
If either Insured commits suicide, while sane or insane, within two years from
the effective date of any increase in the specified amount, we will limit the
proceeds payable with respect to the increase. The proceeds thus limited will
equal the total cost of insurance applicable to the increase. This provision
does not apply to riders with their own suicide provision.
2.9 THE OWNER
While either Insured is living you have all the benefits, rights and privileges
under this policy. These include naming a successor-owner, changing the
beneficiary, assigning this policy, enjoying all policy benefits, and exercising
all policy options. If there is more than one Owner at a given time, all must
exercise the right of ownership.
If you are not one of the Insureds, you should name a successor-owner who will
become the Owner if you die before the second death. If you die before the
second death and there is no successor-owner, ownership will pass to your
estate.
Unless otherwise designated in the application or subsequently changed under a
successor-owner designation, joint ownership will be joint tenants with rights
of survivorship. If a successor-owner has been named to be effective on the
first Owner's death, then any death benefit proceeds payable by rider attached
to this policy will be paid in accordance with rider provisions prior to any
ownership change. If no successor-owner has been named or is no longer living,
then the ownership will pass to the Executor or Administrator of the last
Owner's estate unless otherwise indicated.
2.10 THE BENEFICIARY
You can name primary and contingent beneficiaries. Your original beneficiary
choice is shown in the attached application.
Unless a payment plan is chosen, the proceeds payable at the second death will
be paid in a lump sum to the primary beneficiary. If the primary beneficiary
dies before the second death, the proceeds will be paid to the contingent
beneficiary. If no beneficiary survives the second death, the proceeds will be
paid to your estate.
6065 7
<PAGE>
2.11 CHANGING THE BENEFICIARY
You may change the beneficiary during either Insured's lifetime. We do not limit
the number of changes that may be made. To make the change, we must receive a
completed Change of Beneficiary form and any other forms required by our Home
Office. The change will take effect as of the date we record it at our Home
Office, even if the second death occurs before we do so. Each change will be
subject to any payment we made or any other action we took before the change is
recorded.
2.12 ASSIGNING THE POLICY
You may assign this policy. For an assignment to bind us, we must receive a
signed copy in our Home Office. We are not responsible for the validity of any
assignment.
An assignment is subject to any policy debt. Policy debt is discussed in Section
11.
2.13 NON-PARTICIPATING
This policy is non-participating. In other words, no dividends will be paid
under this policy.
SECTION 3. PREMIUM PAYMENTS
3.1 GUARANTEED DEATH BENEFIT PREMIUM
You have the option to pay a planned premium based on the Guaranteed Death
Benefit Premium. The monthly premium is shown on the schedule pages.
During the Guaranteed Death Benefit Period, also shown on the schedule pages, if
net policy funding meets or exceeds the Guaranteed Death Benefit requirement,
this policy will remain in force, even if the net cash surrender value is
insufficient to cover monthly deductions.
3.2 MINIMUM PREMIUM
You have the option to pay a planned premium based on the Minimum Premium. The
monthly premium is shown on the schedule pages.
During the first sixty months from the policy date shown on the schedule page,
when net policy funding meets or exceeds the Minimum Benefit requirement, the
policy will remain in force, even if the net cash surrender value is
insufficient to cover monthly deductions.
3.3 PLANNED PERIODIC PREMIUM
This is a flexible premium policy. You may choose to pay planned periodic
premiums, and as indicated in Sections 3.1 and 3.2, you may elect to base your
planned periodic premiums on the Guaranteed Death Benefit Premium or the Minimum
Premium. However, planned periodic premiums are not required. The amount and
frequency of the planned periodic premiums you selected when this policy was
issued is shown on the schedule pages. You may change the frequency of the
payments or the amount by sending a written request to our Home Office. We
reserve the right to limit the amount and frequency of the planned periodic
premiums you choose to pay.
6065 8
<PAGE>
3.4 UNSCHEDULED PREMIUMS
Any premium we receive under this policy in an amount different from the planned
periodic premium will be considered an unscheduled premium. Unscheduled premiums
can be made at any time while this policy is in force, subject to the premium
limits provision below.
3.5 PREMIUM LIMITS
We reserve the right to limit the amount and frequency of premium payments. We
will not accept that portion of a premium payment which affects the tax
qualifications of this policy as described in Section 7702 of the Internal
Revenue Code, as amended. This excess amount will be returned to you.
3.6 WHERE TO PAY PREMIUMS
Each premium after the first one is payable at our Home Office. Upon request, a
receipt signed by our Secretary or an Assistant Secretary will be given for any
premium payment.
3.7 NET PREMIUM
Before the premiums paid are allocated to the Subaccounts and/or Fixed Account,
a percent of premium charge for taxes is deducted. The amount of premium then
allocated is called the net premium.
3.8 PERCENT OF PREMIUM CHARGE FOR TAXES
The percent of premium charge for taxes is deducted from each premium payment
received. The percent of premium charge for taxes is shown on the schedule
pages.
3.9 ALLOCATION OF NET PREMIUMS
The initial net premium will be allocated on the issue date to a money market
Subaccount, unless you have allocated 100% to the Fixed Account. Then, on the
13th day after the issue date, the accumulation value will be reallocated to the
Subaccounts and/or the Fixed Account as you have selected on the application. If
you have allocated 100% to the Fixed Account, the accumulation value is
immediately allocated to the Fixed Account on the issue date. Any additional
premium received will be allocated in accordance with your instructions. You may
change the allocation of later net premiums without charge. The allocation will
apply to future net premiums after we receive the change. The Subaccounts and
the Fixed Account are discussed in Sections 5 and 6.
6065 9
<PAGE>
SECTION 4. GRACE PERIOD
AND REINSTATEMENT
4.1 GRACE PERIOD
This policy will begin a 61 day grace period when:
a. the net cash surrender value on any monthly activity date is not
sufficient to cover monthly deductions; and
b. the Guaranteed Death Benefit is no longer in effect; and
c. the Minimum Benefit is no longer in effect.
The 61 day grace period will begin on the day we mail a notice of the premium
necessary to keep this policy in force. We will mail this notice to you at your
last known address and to any assignee of record. If sufficient premium is not
paid by the end of the grace period, this policy will terminate without value.
If the second death occurs during the grace period, the overdue monthly
deductions will be deducted from the death proceeds.
4.2 CONTINUATION OF INSURANCE
Insurance coverage under this policy and any benefits provided by any rider(s)
will be continued through the grace period.
4.3 REINSTATING THE POLICY
If both Insureds are living and application is made within five years from the
beginning of any grace period, this policy can be considered for reinstatement
if it terminated because a grace period ended without sufficient premium being
paid.
To qualify for reinstatement, you must send evidence satisfactory to us that
both Insureds are insurable in the same rating classes that were in effect when
the grace period expired. The effective date of the reinstatement will be the
first monthly activity date on or next following the date the application for
reinstatement is approved.
To reinstate the policy, you will have to pay a premium equal to the greater of:
a. a premium sufficient to bring the net cash surrender value as of the date
of reinstatement to an amount above zero; or
b. three times the current month's monthly deduction, adjusted for the
percent of premium charge for taxes.
We will accept a premium larger than the applicable amount described above.
This policy cannot be reinstated if it has been surrendered for its net cash
surrender value. Any policy debt will be reinstated. The Guaranteed Death
Benefit and Minimum Benefit provisions cannot be reinstated.
6065 10
<PAGE>
SECTION 5. SEPARATE ACCOUNT
5.1 THE ACCOUNT
The word Account, where we use it in this policy without qualification, means
the Ameritas Life Insurance Corp. Separate Account LLVL. This is a unit
investment trust registered with the SEC under the Investment Company Act of
1940. It is also subject to the laws of Nebraska. We own the assets of the
Account and keep them separate from the assets of our general account.
The Account is used only to fund the variable benefits provided under this
policy and any other variable life policies supported by the Account.
The assets of the Account will be available to cover the liabilities of our
general account only to the extent that the assets of the Account exceed the
liabilities of the Account arising under the variable life policies supported by
the Account.
5.2 THE SUBACCOUNTS
The Account has a number of Subaccounts. We list those available on the policy
date on the schedule pages. The available Subaccounts may change after the
policy date. Any changes will be disclosed by the prospectus. You determine,
using whole percentages, how the net premium will be allocated among the
Subaccounts. You may choose to allocate nothing to a particular Subaccount. The
allocations to the Subaccounts along with allocations to the Fixed Account must
total 100%. The assets of each Subaccount will be used to buy shares in a
corresponding portfolio of the funding vehicles designated on the schedule
pages. See Section 5.5. Income and realized and unrealized gains or losses from
the assets of each Subaccount are credited to or charged against that Subaccount
without regard to income, gains or losses in the other Subaccounts, our general
account or any other separate accounts.
5.3 VALUATION OF ASSETS
The value of the assets of each Subaccount will be determined at the end of each
valuation date.
5.4 TRANSFER AMONG SUBACCOUNTS
You may transfer amounts among Subaccounts as often as you wish in a policy
year. The transfer will take effect on the later of the date designated in the
request or on the valuation date following receipt of the written request at our
Home Office.
Each transfer must be for a minimum of $100 or the balance in the Subaccount, if
less. The minimum amount which can remain in a Subaccount and/or in the Fixed
Account as a result of a transfer is $100. Any amount below this minimum must be
included in the amount transferred.
Transfers may be subject to additional restrictions by the Funds.
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<PAGE>
5.5 THE FUNDS
The word Funds, where we use it in this policy without qualification, means the
funding vehicles designated on the schedule pages. The available Funds may
change. Any changes will be disclosed in the prospectus. The Funds are
registered with the SEC under the Investment Company Act of 1940 as diversified
open-end management investment companies. The Funds bear their own expenses. The
Funds have several portfolios; there is a portfolio that corresponds to each of
the Subaccounts. We list those available on the policy date on the schedule
pages.
5.6 PORTFOLIO CHANGES
A portfolio of the Funds might, in our judgment, become unsuitable for
investment by a Subaccount. This might happen because of a change in investment
policy, because of a change in laws or regulations, because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the Funds, or to invest in
another fund. We would first notify and receive approval from the SEC and the
Nebraska Insurance Department. This approval process is on file with the
insurance commissioner of the state where this policy is delivered. Any
portfolio changes will be disclosed in the prospectus. If the SEC requires that
such action receive approval from a majority of the policyholders in the
Account, then you will be notified of your right to vote. You will be notified
of any material change in the investment policy of any portfolio in which you
have an interest. If you are dissatisfied with any change, you always have the
option to transfer all or a portion of your accumulation value to the Fixed
Account (See Section 6.2) or to one of the other available Subaccounts (See
Section 5.4).
SECTION 6. THE FIXED ACCOUNT
6.1 THE FIXED ACCOUNT
Net premiums allocated to and transfers to the Fixed Account under this policy
become part of the general account assets of Ameritas Life Insurance Corp. which
support annuity and insurance obligations. The Fixed Account includes all of
Ameritas Life Insurance Corp.'s assets, except those assets segregated in
separate accounts. Ameritas Life Insurance Corp. maintains the sole discretion
to invest the assets of the Fixed Account, subject to applicable law.
You determine, using whole percentages, how the premium will be allocated to the
Fixed Account. You may choose to allocate nothing to the Fixed Account. The
allocations to the Fixed Account along with allocations to the Subaccounts must
total 100%.
6.2 TRANSFERS AMONG THE FIXED ACCOUNT AND THE SUBACCOUNTS
You may transfer amounts into the Fixed Account from the Subaccounts at any time
during the policy year.
You may make one transfer out of the Fixed Account to any of the other
Subaccounts only during the 30 day period following each policy anniversary.
The allowable transfer amount out of the Fixed Account is limited to the greater
of:
a. 25% of the accumulation value in the Fixed Account; or
b. any Fixed Account transfer which occurred during the prior 13 months; or
c. $1,000.
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<PAGE>
SECTION 7. ACCUMULATION VALUE
7.1 HOW ACCUMULATION VALUE OF THE POLICY IS DETERMINED
The accumulation value of this policy on the issue date is:
a. The net premiums received by us on or before the issue date; minus
b. Any monthly deductions due on or before the issue date.
The accumulation value of this policy on a valuation date is equal to the total
of the values in each Subaccount and the Fixed Account, plus the accumulation
value impaired by policy debt which is held in the general account, plus any net
premium received on that valuation date but not yet allocated.
7.2 ACCUMULATION VALUE OF THE SUBACCOUNTS
To compute the accumulation value held in the Subaccounts on any valuation date,
we multiply each Subaccount's unit value (defined in Section 7.4 below) by the
number of Subaccount units allocated to this policy.
The number of Subaccount units will increase when:
a. Net premiums are credited to that Subaccount;
b. Transfers from other Subaccounts or the Fixed Account are credited to
that Subaccount;
c. Policy debt (principal or interest) is repaid and allocated to the
Subaccount, or interest is credited from the amount held in the general
account to secure the policy debt.
The number of Subaccount units will decrease when:
a. A policy loan is taken from that Subaccount;
b. A partial withdrawal is taken from that Subaccount;
c. A portion of the monthly deduction is taken from that Subaccount;
d. A transfer is made from that Subaccount to other Subaccounts or the
Fixed Account;
e. Policy loan interest not paid when due is taken from that Subaccount; or
f. A portion of any transfer charge is taken from that Subaccount.
Each transaction above will increase or decrease the number of Subaccount units
allocated to this policy by an amount equal to the dollar value of the
transaction divided by the current unit value on the valuation date for that
transaction.
7.3 NET ASSET VALUE
The net asset value of the shares of each portfolio of the Fund is determined
once daily as of the close of business of the New York Stock Exchange on days
when the Exchange is open for business. The net asset value is determined by
adding the values of all securities and other assets of the portfolio,
subtracting liabilities and expenses and dividing by the number of outstanding
shares of the portfolio. Expenses, including the investment advisory fee, are
accrued daily.
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<PAGE>
7.4 SUBACCOUNT UNIT VALUE
For each Subaccount, the value of an accumulation unit (unit value) was set when
the Subaccount was established. The unit value of each Subaccount reflects the
investment performance of that Subaccount. The unit value may increase or
decrease from one valuation date to the next.
The unit value of each Subaccount on any valuation date shall be calculated as
follows:
a. The per share net asset value of the corresponding Fund portfolio on the
valuation date times the number of shares held by the Subaccount, before
the purchase or redemption of any shares on that date; minus
b. A daily charge for administrative expenses, called the asset-based
administrative expense charge, shown on the schedule page; minus
c. A daily charge for mortality and expense risk shown on the schedule
page; minus
d. Any taxes payable by the Separate Account; divided by
e. The total number of units held in the Subaccount on the valuation date
before the purchase or redemption of any units on that date.
When transactions are made, the actual dollar amounts are converted to
accumulation units. The number of accumulation units for a transaction is found
by dividing the dollar amount of the transaction by the current unit value on
the valuation date for that transaction.
7.5 ACCUMULATION VALUE OF THE FIXED ACCOUNT
The accumulation value of the Fixed Account on a valuation date is equal to:
a. The net premiums credited to the Fixed Account; plus
b. Any transfers from the Subaccounts credited to the Fixed Account; plus
c. Any policy debt (principal or interest) repaid and allocated to the Fixed
Account, or interest credited from the amount held in the general account
to secure the policy debt; minus
d. Any policy loan taken from the Fixed Account; minus
e. Any partial withdrawal and its charge taken from the Fixed Account; minus
f. The portion of the monthly deduction taken from the Fixed Account; minus
g. Any transfer made from the Fixed Account; minus
h. The portion of any transfer charge taken from the Fixed Account; minus
i. Any policy loan interest not paid when due taken from the Fixed Account;
plus
j. Interest credits.
7.6 Interest Credits
We guarantee that the accumulation value in the Fixed Account will be credited
with an effective annual interest rate of at least 3.5%. We may, at our
discretion, credit a higher current rate of interest.
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<PAGE>
7.7 ADMINISTRATIVE EXPENSE CHARGE
On each monthly activity date, one-twelfth of the annual administrative expense
charges will be deducted from the accumulation value. The maximum administrative
expense charge is shown on the schedule pages. We have the option of charging a
current administrative expense charge which can be less than the maximum. Any
current administrative expense charge will apply to all policies having the same
specified amount, policy year and policy month as this policy and whose Insureds
are the same issue age, sex and risk class as the Insureds covered by this
policy. The actual charges will be shown on your annual report.
7.8 COST OF INSURANCE
The cost of insurance will be figured each month. It is the cost of insurance
for the basic policy (including any increases in the specified amount) plus the
cost for any riders. The cost for this policy is equal to:
a. the death benefit on the monthly activity date, discounted at the
guaranteed rate of interest for the Fixed Account for one month;
b. less the accumulation value on the monthly activity date, after all
monthly deductions have been taken except for the cost of insurance;
c. the above result multiplied by the monthly cost per $1,000 of insurance
(as described below in the Cost of Insurance Rates section);
d. divided by $1,000.
The charges made during the policy year will be shown on the annual report.
7.9 COST OF INSURANCE RATES
For the initial specified amount, the cost of insurance rates will not exceed
those shown on the SCHEDULE OF GUARANTEED ANNUAL COST OF INSURANCE RATES in the
schedule pages. To calculate the monthly rates, divide by 12 and round to the
nearest six decimal places.
The guaranteed rates shown on the schedule page have been adjusted for any table
rating and/or flat extra rating.
Each year, the annual cost of insurance rates will be declared for the next
policy year. These rates will be based on the issue age, sex, tobacco usage and
risk class of each Insured and the policy duration. The rates will be adjusted
for any table rating and/or flat extra rating.
Any change in the current cost of insurance rates will apply to all Insureds of
the same issue age, sex, tobacco usage and risk class and whose policies have
been in effect for the same length of time.
7.10 MONTHLY DEDUCTION
The monthly deduction is made each policy month against the accumulation value
allocated to the Account and to the Fixed Account. Monthly deductions will be
deducted
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<PAGE>
from the Subaccounts and the Fixed Account in the same proportion as the
balances held in the Subaccounts and the Fixed Account. The monthly deduction is
equal to:
a. The monthly administrative expense charge for the current policy month;
plus
b. The cost of insurance for the current policy month, including the cost
for any rider.
Refer to the SCHEDULE OF GUARANTEED ANNUAL COST OF INSURANCE RATES and the
SCHEDULE OF MAXIMUM CHARGES on the schedule pages for further details.
7.11 ANNUAL REPORT
Each year the Owner will be mailed an annual report that shows the progress of
this policy. This report will show for the last policy year:
a. premiums paid;
b. expense charges;
c. investment gains/losses; and
d. cost of insurance.
As of the date of the report, the following values will be shown:
a. accumulation value;
b. specified amount of insurance;
c. death benefit; and
d. outstanding debt, if any.
7.12 ILLUSTRATIVE REPORTS
We will send you an illustration of projected future death benefits under both
guaranteed and current assumptions at any time if you send us a written request
for the illustration. If allowed by state law, a reasonable fee not to exceed
$50 may be charged for each report. The fee will be one that is in effect for
this service at the time you make the request.
The illustration will be based on assumptions as to:
a. Specified amount;
b. Type of death benefit option;
c. Future premium payments; and
d. Other necessary items.
SECTION 8. POLICY SURRENDER AND
PARTIAL WITHDRAWALS
8.1 SURRENDER OF THE POLICY
This policy may be surrendered for its net cash surrender value at any time
during the lifetimes of either Insured.
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8.2 NET CASH SURRENDER VALUE
The amount payable upon surrender is the accumulation value on the valuation
date we receive your written request less any outstanding policy debt. The net
cash surrender value is payable in one lump sum or under one of the payment
options. See Section 12.
8.3 PARTIAL WITHDRAWAL
A partial withdrawal of this policy may be made for any amount of at least $500
subject to the following rules:
a. The net cash surrender value remaining after a partial withdrawal must be
at least $1,000 or an amount sufficient to maintain this policy in force
for the remainder of the policy year.
b. A partial withdrawal is irrevocable.
c. The request must be made to us in writing on a form approved by us.
d. A withdrawal charge will be deducted from the amount withdrawn. The
charge will not exceed the lesser of $50 or 2% of the amount withdrawn.
Partial withdrawals will affect other policy values. The accumulation value will
be reduced by the amount of the partial withdrawal. If Death Benefit Option A is
in effect on the date of a partial withdrawal, the specified amount will be
reduced by the amount of the partial withdrawal. These reductions will also
reduce the death benefits. See Section 9. The withdrawal will affect the net
policy funding used to determine if the Guaranteed Death Benefit or Minimum
Benefit is to remain in effect. See Sections 2.3 and 2.4.
You may tell us how to allocate the partial withdrawal among the Subaccounts
and/or the Fixed Account, provided that the minimum amount remaining in a
Subaccount and/or the Fixed Account as a result of the allocation is $100. If
you do not, or if there is not enough value in any Subaccount or in the Fixed
Account, the partial withdrawal will be allocated among the Subaccounts and the
Fixed Account in the same proportion as the balances held in each Subaccount and
the Fixed Account on the date we receive the request in our Home Office.
8.4 POSTPONEMENT OF PAYMENTS
We will usually pay any amounts payable from the Subaccounts as a result of
surrender, partial withdrawal or policy loan within seven (7) days after we
receive written request in our Home Office on a form satisfactory to us. We can
postpone such payments or any transfers of amounts between Subaccounts if:
a. The New York Stock Exchange is closed other than customary weekend and
holiday closings or trading on the New York Stock Exchange is restricted
as determined by the SEC; or
b. The SEC by order permits the postponement for the protection of
policyowners; or
c. An emergency exists as determined by the SEC, as a result of which
disposal of securities is not reasonable, practicable, or it is not
reasonable or practicable to determine the value of the net assets of the
Account.
We may defer the payment of a full surrender, partial withdrawal or policy loan
from the Fixed Account for up to six months from the date we receive your
written request.
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SECTION 9. DEATH BENEFIT
9.1 DEATH BENEFIT PROCEEDS
The death benefit proceeds payable to the beneficiary upon our receipt of
satisfactory proof of the death of both Insureds while this policy is in force
will equal:
a. The death benefit; plus
b. Any additional life insurance proceeds provided by any rider; minus
c. Any outstanding policy debt; minus
d. Any overdue monthly deductions including the deduction for the month of
the second death.
9.2 INTEREST ON PROCEEDS
Death benefit proceeds that are paid in one lump sum will include interest if we
do not pay the proceeds within 30 days of receiving satisfactory proof of death
of both Insureds. The rate of interest will be the greater of:
a. 3% per annum.
b. the current rate of interest payable on death benefit proceeds.
c. the rate required by state law.
Interest will accrue from the date we receive satisfactory proof of death of
both Insureds to the date of payment of the death benefit proceeds.
9.3 DEATH BENEFIT
Subject to the provisions of this policy, the death benefit option at any time
shall be either Option A or Option B. The initial death benefit option is shown
on the schedule pages. It may be changed as described in Section 10.1.
Option A: Basic Coverage
The death benefit will be the greater of:
a. The current specified amount; or
b. A percentage of the accumulation value on the second death, where the
applicable percentage is determined from the table shown below.
Option B: Basic Coverage Plus Accumulation Value
The death benefit will be the greater of:
a. The current specified amount plus the accumulation value on the second
death; or
b. A percentage of the accumulation value on the second death, where the
applicable percentage is determined from the table shown below.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Younger Younger
Insured's Applicable Insured's Applicable
Age * Percentage Age * Percentage
40 or less 250% 60 130%
41 243 61 128
42 236 62 126
43 229 63 124
44 222 64 122
45 215 65 120
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75-90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 or older 101
</TABLE>
*Younger Insured's Age means age of the younger Insured on the issue date plus
the number of complete policy years this policy has been in effect.
9.4 POSTPONEMENT OF PAYMENT
We will usually pay any death benefit proceeds within seven (7) days after we
receive satisfactory proof of death of both Insureds.
9.5 DEATH OF FIRST INSURED
During the period following the death of one of the Insureds but prior to the
second death, this policy will remain in force subject to the grace period. The
death of the first Insured will have no effect on the cost of insurance rates
for this policy. Satisfactory proof of death of the first Insured should be
submitted to our Home Office within one year of the date of death.
9.6 SIMULTANEOUS DEATH
If a simultaneous death occurs, only one death benefit is payable.
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SECTION 10. POLICY CHANGES
AND EXCHANGE OF POLICY
10.1 CHANGE IN DEATH BENEFIT OPTIONS
You may change the death benefit option which is shown on the schedule pages and
is referred to in Section 9. The death benefit option may not be changed in the
first policy year and may only be changed once a year thereafter. The change
will become effective on the first monthly activity date on or next following
the date we approve your requested change.
If you change from Option A to Option B, the specified amount after the change
will equal the death benefit prior to the change, less the accumulation value as
of the date of change. A change from Option B to Option A will change the
specified amount to an amount equal to the death benefit as of the date of
change.
10.2 CHANGE IN THE SPECIFIED AMOUNT
After this policy has been in effect for one year, you can increase or decrease
the specified amount while both Insureds are living. To make a change, send a
written request to our Home Office. Any change will be effective on the monthly
activity date on or next following the date we approve the request, unless you
specify a later date. You may only change the specified amount once a year.
10.3 DECREASING THE SPECIFIED AMOUNT
A decrease in the specified amount is subject to the following conditions:
a. A decrease may not be made during the first policy year nor during the
first 12 policy months following an increase in specified amount except
for a decrease which was the result of a partial withdrawal.
b. The specified amount in effect after any decrease may not be less
than $100,000.
c. No decrease is permitted which affects the tax qualifications of this
policy as described in Section 7702 of the Internal Revenue Code, as
amended.
10.4 INCREASING THE SPECIFIED AMOUNT
Any increase of the specified amount is subject to the following conditions:
a. An increase may not be made in the first policy year.
b. A supplemental application for the increase and satisfactory evidence of
insurability that both Insureds are insurable in the same rating classes
currently in effect for this policy.
c. The minimum amount of any increase is $50,000.
d. An increase cannot be made if either Insured was over age 85 on the most
recent policy anniversary.
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e. If an increase occurs during the first five policy years the Minimum
Premium will be increased on the date of change. The Minimum Benefit
requirement will reflect the change in the Minimum Premium from the date
of change.
f. If an increase occurs during the Guaranteed Death Benefit Period, the
Guaranteed Death Benefit Premium will be increased on the date of change.
The Guaranteed Death Benefit requirement will reflect the change in the
Guaranteed Death Benefit Premium from the date of change.
g. At the time of the increase, the accumulation value less any outstanding
policy debt must be at least equal to 12 times the current month's
monthly deduction reflecting the increase in specified amount. If this
value is not sufficient to support these monthly deductions for at least
one year beyond the effective date of the increase, additional premiums
may be required. You will be notified of any additional premium due.
10.5 TIME PERIOD FOR SPECIAL TRANSFER
At any time within 24 months of the policy date shown on the schedule pages you
may request a transfer of the entire accumulation value in the Subaccounts to
the Fixed Account.
SECTION 11. LOAN BENEFITS
This policy has loan benefits that are described below. The amount of
outstanding loans plus accrued interest is called outstanding policy debt. Any
outstanding policy debt will be deducted from proceeds payable at the second
death, or on surrender.
11.1 MAKING A POLICY LOAN
After the first policy anniversary, you may obtain a policy loan from us. This
policy is the only security required. The Maximum Available Loan Amount is equal
to the net cash surrender value at the time of the loan less the monthly
deductions remaining for the balance of the policy year, less interest on the
policy debt including the requested loan to the next policy anniversary date.
11.2 LOAN INTEREST
The maximum interest rate on any loan is 6% per year. We have the option of
charging less. Interest accrues daily and becomes a part of the policy debt.
Interest payments are due on each anniversary date. If interest is not paid when
due, it will be added to the policy debt and will bear interest at the rate
charged on the loan.
11.3 REDUCED LOAN INTEREST RATE
The loan interest rate will be reduced to a maximum of 4% for eligible loan
amounts. This reduced loan interest rate is available on and after the 10th
policy anniversary. The eligible loan amount for a reduced loan interest rate
will be equal to the accumulation value plus any previous withdrawals, minus
total premiums paid and minus any outstanding policy debt held at a reduced
interest rate. However, the total reduced loan amount cannot exceed the Maximum
Available Loan Amount. If a regular loan is in effect on the policy anniversary,
it will be converted to a loan with the reduced loan interest rate up to the
eligible amount. Interest on loans with a reduced interest rate will accrue at
the reduced loan rate.
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11.4 OTHER BORROWING RULES
When a policy loan is made, or when interest is not paid when due, an amount
sufficient to secure the policy debt is transferred out of the Subaccounts and
the Fixed Account and into our general account. You may tell us how to allocate
that accumulation value among the Subaccounts and/or the Fixed Account provided
that the amount remaining in a Subaccount or the Fixed Account as a result of
the allocation is $100. Without specific direction, the accumulation value will
be allocated among the Subaccounts and/or the Fixed Account in the same
proportion that the policy's accumulation value in each Subaccount and the Fixed
Account bears to the total accumulation value in all Subaccounts and the Fixed
Account on the date we make the loan.
Accumulation value transferred into the general account to secure policy debt
will be credited with 3.5% interest annually. The interest earned will be
allocated to the Subaccounts and/or the Fixed Account in the same manner as net
premiums.
On any monthly activity date, if the policy debt exceeds the accumulation value
less any accrued expense charges, you must pay the excess. Unless the Minimum
Benefit or Guaranteed Death Benefit is in effect, we will send you a notice of
the amount you must pay. If you do not pay this amount within 61 days after we
send notice, this policy will terminate without value. We will send the notice
to you and to any assignee of record at our Home Office. See Section 4.1.
Any loan transaction will permanently affect the values of this policy.
11.5 REPAYING A POLICY DEBT
You can repay a policy debt in part or in full anytime during the life of either
Insured while this policy is in force. Repayment must be specifically identified
as such by you. When a loan repayment is made, accumulation value in the general
account related to that payment will be transferred into the Subaccounts and/or
the Fixed Account in the same proportion that net premiums are being allocated.
SECTION 12. PAYMENT OPTIONS
Death benefit proceeds or the net cash surrender value will be paid in one lump
sum if no option is chosen. Subject to the rules stated below, all or part of
the proceeds can be paid under a payment option. During the lifetime of either
Insured you can choose a payment option. A beneficiary can choose a payment
option if you have not chosen one at the second death.
12.1 PAYMENT OPTION RULES
There are several important payment option rules:
a. An association, corporation, partnership or fiduciary can only receive a
lump sum payment or a payment under Option b.
b. If this policy is assigned, any amount due to the assignee will first be
paid in one sum. The balance, if any, may be applied under any payment
option.
c. If the payments under any option come to less than $100 each, we have the
right to make payments at less frequent intervals.
d. The rate of interest payable under Options ai, aii and b is guaranteed at
3% compounded annually. Payments under Option c and d are based on the
1983 Individual Annuity Tables projected 17 years with an interest rate
of 3%.
To choose an option, you must send a written request satisfactory to us to our
Home Office.
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<PAGE>
12.2 DESCRIPTION OF OPTIONS
Option ai
Interest Payment Option. We will hold any amount applied under this option.
Interest on the unpaid balance will be paid or credited each month at a rate
determined by us.
Option aii
Fixed Amount Payable Option. Each payment will be for an agreed fixed amount.
Payments continue until the amount we hold runs out.
Option b
Fixed Period Payment Option. Equal payments will be made for any period selected
up to 20 years.
Option c
Lifetime Payment Option. Equal monthly payments are based on the life of a named
person. Payments will continue for the lifetime of that person. Variations
provide for guaranteed payments for a period of time or a lump sum refund.
Option d
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
two named persons. While both are living, one payment will be made each month.
When one dies, payments will continue for the lifetime of the other. Variations
provide for a reduced amount of payment during the lifetime of the surviving
person.
SECTION 13. NOTES ON OUR
COMPUTATIONS
13.1 BASIS OF COMPUTATION
In our computations, we assume that the minimum values and reserves held for
benefits guaranteed in the Fixed Account will earn interest at an annual rate of
3.5%. We use mortality rates from the Commissioners 1980 Standard Ordinary
Smoker and Nonsmoker, Male and Female Continuous Function Mortality Tables in
computing minimum values and reserves for this policy. The nonsmoker values from
these Tables are used for Insureds who are non-tobacco users and the smoker
values from these Tables are used for Insureds who are tobacco users. The male
values from these Tables are used for male Insureds. The female values from
these Tables are used for female Insureds.
13.2 METHODS OF COMPUTING VALUES
We have filed a detailed statement of the method we use to compute policy values
and benefits with the state where this policy was delivered. All these values
and benefits are not less than those required by the laws of that state.
Reserves are calculated in accordance with the Standard Non-Forfeiture Law and
Valuation Law of the state in which this policy is delivered. In no instance
will reserves be less than the net cash surrender values.
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<PAGE>
<TABLE>
<CAPTION>
TABLES OF SETTLEMENT OPTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TABLE B (OPTION B) TABLE D (OPTION D)
Monthly Installments for Monthly Installments for each $1,000 of Net Proceeds
each $1,000 of Net Proceeds
MALE & MALE & MALE & MALE & MALE &
YEARS MONTHLY YEARS MONTHLY AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE
- ----------------------------- --------------------------------------------------------------------
1 84.47 11 5.86 40 3.16 50 3.50 60 4.05 70 5.07 80 7.08
2 42.86 12 8.24 41 3.19 51 3.54 61 4.13 71 5.21 81 7.37
3 28.99 13 7.71 42 3.22 52 3.59 62 4.21 72 5.36 82 7.69
4 22.06 14 7.26 43 3.25 53 3.63 63 4.29 73 5.53 83 8.03
5 17.91 15 6.87 44 3.28 54 3.68 64 4.38 74 5.70 84 8.40
---------------------------- -------------------------------------------------------------------
6 15.14 16 6.53 45 3.31 55 3.74 65 4.48 75 5.89 85 8.79
7 13.16 17 6.23 46 3.34 56 3.79 66 4.58 76 6.10
8 11.68 18 5.96 47 3.38 57 3.85 67 4.69 77 6.32
9 10.53 19 5.73 48 3.42 58 3.92 68 4.81 78 6.55
10 9.61 20 5.51 49 3.46 59 3.98 69 4.93 79 6.81
- ----------------------------- -------------------------------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by our Home Office
upon request.
Table D values for combinations of ages not shown and values for 2 males or
2 females will be furnished by our Home Office upon request.
TABLE C (OPTION C) Monthly Installments for each $1,000 of Net proceeds
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEMALE MALE
------------------------------ ---------------------------------
LIFE MONTHS CERTAIN CASH LIFE MONTHS CERTAIN CASH
AGE ONLY 60 120 180 240 REF. AGE ONLY 60 120 180 240 REF.
- --------------------------------------------- ------------------------------------------------
40 3.54 3.54 3.53 3.52 3.50 3.46 40 3.33 3.33 3.33 3.32 3.31 3.29
41 3.58 3.58 3.57 3.56 3.54 3.50 41 3.36 3.36 3.36 3.36 3.35 3.32
42 3.63 3.63 3.62 3.60 3.57 3.54 42 3.40 3.40 3.40 3.39 3.38 3.36
43 3.68 3.67 3.66 3.64 3.62 3.58 43 3.44 3.44 3.43 3.43 3.41 3.39
44 3.73 3.72 3.71 3.69 3.66 3.62 44 3.48 3.48 3.47 3.46 3.45 3.42
- ---------------------------------------------- -----------------------------------------------
45 3.78 3.77 3.76 3.74 3.70 3.66 45 3.52 3.52 3.51 3.50 3.49 3.46
46 3.83 3.83 3.81 3.79 3.75 3.70 46 3.56 3.56 3.55 3.54 3.53 3.50
47 3.89 3.89 3.87 3.84 3.80 3.75 47 3.61 3.60 3.60 3.59 3.57 3.54
48 3.95 3.94 3.93 3.89 3.85 3.80 48 3.65 3.65 3.65 3.63 3.61 3.58
49 4.01 4.01 3.99 3.95 3.90 3.85 49 3.70 3.70 3.69 3.68 3.66 3.62
- ---------------------------------------------- -----------------------------------------------
50 4.08 4.07 4.05 4.01 3.95 3.90 50 3.76 3.75 3.75 3.73 3.70 3.67
51 4.15 4.14 4.11 4.07 4.00 3.96 51 3.81 3.81 3.80 3.78 3.75 3.72
52 4.22 4.21 4.18 4.13 4.06 4.02 52 3.87 3.87 3.86 3.83 3.80 3.76
53 4.30 4.29 4.26 4.20 4.12 4.08 53 3.93 3.93 3.91 3.89 3.85 3.82
54 4.38 4.37 4.33 4.27 4.18 4.14 54 4.00 3.99 3.98 3.95 3.91 3.87
- ---------------------------------------------- -----------------------------------------------
55 4.47 4.45 4.41 4.34 4.24 4.21 55 4.06 4.06 4.04 4.01 3.96 3.93
56 4.56 4.54 4.50 4.42 4.30 4.28 56 4.14 4.13 4.11 4.08 4.02 3.99
57 4.65 4.64 4.59 4.50 4.36 4.35 57 4.21 4.21 4.19 4.14 4.08 4.05
58 4.75 4.74 4.68 4.58 4.43 4.42 58 4.29 4.29 4.26 4.22 4.14 4.12
59 4.86 4.84 4.78 4.66 4.49 3.40 59 4.38 4.37 4.34 4.29 4.21 4.18
- ---------------------------------------------- -----------------------------------------------
60 4.98 4.96 4.88 4.75 4.56 4.59 60 4.47 4.46 4.43 4.37 4.28 4.26
61 5.10 5.08 4.99 4.84 4.62 4.67 61 4.57 4.56 4.52 4.45 4.34 4.33
62 5.23 5.20 5.11 4.93 4.69 4.77 62 4.67 4.66 4.62 4.54 4.41 4.41
63 5.38 5.34 5.23 5.03 4.76 4.86 63 4.78 4.77 4.72 4.63 4.48 4.50
64 5.53 5.49 5.35 5.13 4.82 4.96 64 4.90 4.88 4.82 4.72 4.55 4.58
- ---------------------------------------------- -----------------------------------------------
65 5.69 5.64 5.49 5.23 4.88 5.07 65 5.02 5.00 4.94 4.82 4.63 4.68
66 5.86 5.80 5.63 5.33 4.95 5.18 66 5.16 5.13 5.06 4.92 4.70 4.78
67 6.04 5.98 5.77 5.43 5.01 5.29 67 5.30 5.27 5.18 5.02 4.77 4.88
68 6.24 6.16 5.92 5.53 5.06 5.41 68 5.45 5.42 5.32 5.13 4.85 4.99
69 6.45 6.36 6.07 5.64 5.12 5.54 69 5.61 5.58 5.46 5.23 4.92 5.10
- ---------------------------------------------- -----------------------------------------------
70 6.67 6.56 6.23 5.74 5.17 5.67 70 5.79 5.75 5.60 5.35 4.98 5.22
71 6.91 6.78 6.40 5.84 5.21 5.81 71 5.98 5.93 5.76 5.46 5.05 5.35
72 7.16 7.01 6.57 5.93 5.26 5.96 72 6.19 6.13 5.92 5.57 5.11 5.49
73 7.43 7.25 6.74 6.03 5.30 6.11 73 6.41 6.34 6.10 5.69 5.17 5.63
74 7.72 7.51 6.91 6.12 5.33 6.27 74 6.66 6.56 6.27 5.80 5.22 5.78
- ---------------------------------------------- -----------------------------------------------
75 8.03 7.77 7.09 6.20 5.36 6.44 75 6.92 6.81 6.46 5.91 5.27 5.94
76 8.36 8.06 7.26 6.28 5.39 6.62 76 7.20 7.06 6.65 6.02 5.31 6.11
77 8.71 8.35 7.44 6.36 5.42 6.81 77 7.50 7.34 6.85 6.12 5.35 6.29
78 9.09 8.67 7.62 6.43 5.44 7.00 78 7.83 7.63 7.04 6.22 5.38 6.48
79 9.50 8.99 7.79 6.50 5.45 7.21 79 8.18 7.94 7.25 6.31 5.41 6.67
- ---------------------------------------------- -----------------------------------------------
80 9.93 9.33 7.96 6.56 5.47 7.43 80 8.56 8.27 7.45 6.39 5.43 6.88
81 10.40 9.68 8.12 6.61 5.48 7.65 81 8.98 8.62 7.65 6.47 5.45 7.11
82 10.89 10.05 8.28 6.66 5.49 7.89 82 9.43 8.99 7.85 6.54 5.47 7.34
83 11.42 10.42 8.43 6.70 5.50 8.15 83 9.92 9.37 8.04 6.60 5.48 7.58
84 11.98 10.80 8.58 6.74 5.50 8.41 84 10.45 9.78 8.22 6.65 5.49 7.84
85 12.58 11.19 8.71 6.77 5.51 8.69 85 11.02 10.20 8.39 8.70 5.50 8.12
- ---------------------------------------------- -----------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by our Home Office
upon request.
Table C values for ages below 40 and above 85, and values for 300 and 360
months certain will be furnished by our Home Office upon request.
6065 25
<PAGE>
This page left intentionally blank.
<PAGE>
POLICY SCHEDULE
INSUREDS: John E Specimen POLICY NUMBER: 1100006065
Issue Age: 35 Sex: Male
POLICY DATE: May 1, 1999
Mary E Specimen
Issue Age: 35 Sex: Female *PLANNED ANNUAL
PERIODIC PREMIUM: $1,715.04
INITIAL SPECIFIED Initial Premium: $1,715.04
AMOUNT OF INSURANCE: $500,000
OWNER: John E Specimen
INITIAL DEATH BENEFIT OPTION: A
MINIMUM PREMIUM: Monthly $ 52.27
GUARANTEED DEATH BENEFIT PREMIUM: Monthly $142.92
GUARANTEED DEATH BENEFIT PERIOD:
The Guaranteed Death Benefit Period will expire on May 1, 2049.
RATING CLASS: John E Specimen
Preferred, No Tobacco Use
Mary E Specimen
Preferred, No Tobacco Use
LOANS:
The maximum loan interest rate is 6.00%. The interest credited on any
loaned part of the values will be no less than 3.50%.
MODES OF PAYMENT FOR PLANNED PERIODIC PREMIUMS:
Annual Semi-Annual Quarterly Monthly
$1,715.04 $857.52 $428.76 $142.92
* This reflects the planned premium and mode you selected at issue. For
further information, see policy Section 3. PREMIUM PAYMENTS.
6065 1-PS
<PAGE>
SCHEDULE OF BENEFITS
INSUREDS: John E Specimen POLICY NUMBER: 1100006065
Mary E Specimen
INITIAL
SPECIFIED AMOUNT MATURITY OR
BENEFIT OF INSURANCE EXPIRATION DATE*
- ------- ------------ ----------------
Survivorship Flexible Premium $500,000 Second Death
Variable Life
Form 6065**
* NOTE: It is possible that coverage may not continue to the second death if
premium payments are not sufficient.
** Form number corresponds to form number in the lower left hand corner of
each benefit description.
6065 1.1-SB
<PAGE>
SCHEDULE OF BENEFITS
(Continued)
INSUREDS: John E Specimen POLICY NUMBER: 1100006065
Mary E Specimen
INITIAL
SPECIFIED AMOUNT ANNUAL
BENEFIT OF INSURANCE PREMIUM COST*
- ------- ------------ -------------
(This page is used to show any riders that are a part of the policy.)
* For any rider, this is the annual rider cost of insurance at issue. (NOTE:
These amounts shown are not additional premiums due but are the amounts
deducted from the accumulation value.) See each rider for further
information.
** Form number corresponds to form number in the lower left hand corner of
each benefit description.
6065 1.2-SB
<PAGE>
<TABLE>
<CAPTION>
LIST OF SUBACCOUNTS AND PORTFOLIOS
Each subaccount of the Ameritas Life Insurance Corp. (ALIC) Separate Account
LLVL invests in a specific portfolio of the following funds:
Neuberger Berman Advisors Management Trust ("Neuberger Berman AMT")
Rydex Variable Trust ("Rydex")
BT Insurance Funds Trust ("Bankers Trust")
<S> <C> <C> <C>
INITIAL
CORRESPONDING ALLOCATION OF
FUND PORTFOLIO SUBACCOUNT NET PREMIUMS
Neuberger Berman Liquid Asset Liquid Asset Subaccount 0%
AMT Limited Maturity Bond Limited Maturity Bond Subaccount 0%
Balanced Balanced Subaccount 0%
Partners Partners Subaccount 50%
Growth Growth Subaccount 0%
Rydex Nova Fund Nova Fund Subaccount 0%
Ursa Fund Ursa Fund Subaccount 0%
OTC Fund OTC Fund Subaccount 0%
Precious Metals Fund Precious Metals Fund Subaccount 0%
U.S. Government Bond Fund U.S. Government Bond Fund Subaccount 0%
Juno Fund Juno Fund Subaccount 0%
Bankers Trust Equity 500 Index Equity 500 Index Subaccount 50%
Small Cap Index Small Cap Index Subaccount 0%
EAFE Equity Index EAFE Equity Index Subaccount 0%
Net premiums may also be allocated to the ALIC Fixed Account.
INITIAL
ALLOCATION OF
NET PREMIUMS
ALIC Fixed Account 0%
</TABLE>
6065 1-LSP
<PAGE>
SCHEDULE OF MAXIMUM CHARGES
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE:
The maximum daily asset-based administrative expense charge is .000546%
(.20% annually).
MORTALITY AND EXPENSE RISK CHARGE:
The maximum daily mortality and expense risk charge is .001093% (.40%
annually) for years 1-15 and .000274% (.10% annually) for years 16 and
over.
ADMINISTRATIVE EXPENSE CHARGE:
The maximum annual administrative expense charge is $108 plus $1.20 per
$1000 of Specified Amount.
PERCENT OF PREMIUM CHARGE FOR TAXES:
The maximum percent of premium charge for taxes is 3% of premiums
received.
TRANSFER CHARGE:
The first 15 transfers between Subaccounts and/or the Fixed Account per
policy year are free. Thereafter, the maximum charge for each transfer is
$10.00
PARTIAL WITHDRAWAL CHARGE:
The maximum charge for each partial withdrawal is the lesser of $50 or 2%
of the amount withdrawn.
SURRENDER CHARGE:
There are no Surrender Charges on this policy.
6065 1-SC
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF GUARANTEED ANNUAL
COST OF INSURANCE RATES*
INSURED: John E Specimen POLICY NUMBER: 1100006065
ISSUE AGE - SEX: 35 Male
POLICY DATE: May 1, 1999
INSURED: Mary E Specimen
ISSUE AGE - SEX 35 Female
<S> <C> <C> <C>
POICY YEAR RATE PER $1,000 POICY YEAR RATE PER $1,000
BEGINNING OF AMOUNT BEGINNING OF AMOUNT
MAY 1 AT RISK MAY 1 AT RISK
----- ------- ----- -------
1999 0.002550 2032 8.617181
2000 0.008379 2033 10.096144
2001 0.015407 2034 11.854523
2002 0.023848 2035 13.982464
2003 0.033935 2036 16.585187
2004 0.046379 2037 19.735962
2005 0.061287 2038 23.462341
2006 0.078827 2039 27.767980
2007 0.099432 2040 32.637921
2008 0.123471 2041 38.068816
2009 0.152095 2042 44.111370
2010 0.185551 2043 50.913181
2011 0.224785 2044 58.682210
2012 0.270573 2045 67.625490
2013 0.324602 2046 77.940066
2014 0.388968 2047 89.634942
2015 0.465843 2048 102.590276
2016 0.558910 2049 116.623334
2017 0.671000 2050 131.580191
2018 0.802654 2051 147.321578
2019 0.958487 2052 163.771527
2020 1.138720 2053 181.013310
2021 1.343382 2054 199.155246
2022 1.579127 2055 218.543189
2023 1.857247 2056 239.830634
2024 2.188113 2057 264.566071
2025 2.586999 2058 296.255483
2026 3.077971 2059 341.746492
2027 3.681623 2060 414.234856
2028 4.404184 2061 537.310477
2029 5.253551 2062 743.944811
2030 6.232875 2063 or 899.956253
2031 7.347192 later
</TABLE>
* The rates shown are annual rates per $1000 of amount at risk. To calculate
the monthly rate, the annual rate is divided by 12 and rounded to the
nearest six decimal places. These rates apply to the basic policy and do
not include the cost for riders. The rates shown have been adjusted if
this policy was issued with a tabular and/or flat rating as shown on the
schedule page.
6065 1-COI
<PAGE>
Survivorship Flexible Premium Variable Life Insurance Policy.
Death benefit proceeds payable upon the second death.
Flexible premiums payable until the second death.
Some benefits reflect investment results.
Non-participating.
Form 6065
AMERITAS LIFE INSURANCE CORP. LOGO
NOTICE: As of the effective date of this rider, it is uncertain what effect the
receipt of benefits under this rider will have on your tax status. Please
consult your personal tax advisor prior to requesting such benefits.
ACCELERATED BENEFIT RIDER
FOR TERMINAL ILLNESS
ON SURVIVING INSURED
CONSIDERATION
This rider is attached to and made a part of your policy and is issued in
consideration of the application. A copy of the application is attached to the
policy.
PREMIUMS
There are no additional premiums or cost of insurance deductions for this rider.
BENEFITS
We will pay an accelerated benefit to you if the Surviving Insured is terminally
ill, subject to the provisions of this rider. This amount will be paid as a lump
sum. Payments other than as a lump sum may be made at your request, subject to
our approval.
DEFINITIONS
ELIGIBLE COVERAGES: Eligible Coverages under this rider will be the base policy
and any life insurance riders attached to the policy which provide coverage on
the Surviving Insured.
Eligible Coverages will be determined as of the date we receive satisfactory
proof of terminal illness at the Home Office. Coverage will only be considered
"eligible" when it is outside its two year contestable period and has more than
two years until its maturity or final expiration date.
ELIGIBLE AMOUNT: Eligible Amount is that portion of the current specified amount
of the base policy considered "eligible" under Eligible Coverages. For any
Eligible Coverages which are provided by life insurance riders, the Eligible
Amount will be the lowest scheduled death benefit within two years after
satisfactory proof of terminal illness is received at the Home Office.
MAXIMUM ACCELERATED BENEFIT: The maximum benefit is 50% of the Eligible Amount,
less an amount up to two guideline level premiums for the base policy and any
riders. This maximum benefit is subject to the limitations described in the
Total Accelerated Benefit provision.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider will be
the policy date of the base policy to which this rider is attached.
TIRSL 6099
<PAGE>
"SURVIVING INSURED" means the Insured who remains alive after one of the
Insureds has died.
TERMINAL ILLNESS: A non-correctable medical condition that, with a reasonable
degree of medical certainty, will result in the death of the Surviving Insured
in less than 12 months from the date of the physician's statement and that was
first diagnosed while the policy was in force.
"YOU" AND "YOUR" refer to the owner of the policy to which this rider is
attached. The Owner may also be the Surviving Insured.
"WE", "US" OR "OUR" refer to Ameritas Life Insurance Corp. Our Home Office
means our Administrative Office at P.O. Box 81889, Lincoln, Nebraska 68501-1889.
SATISFACTORY PROOF OF TERMINAL ILLNESS
Before payment of any accelerated benefit, we will require you to provide us
with proof, satisfactory to us, that the Surviving Insured has a terminal
illness. Satisfactory proof will include a properly completed claim form and a
written statement from a duly licensed physician who is licensed in the United
States and who is not yourself or the Surviving Insured, nor related to either
the Surviving Insured or yourself. We reserve the right to obtain a second
medical opinion at our expense.
EFFECT ON YOUR POLICY
The accelerated benefit first will be used to repay any outstanding policy loans
and unpaid loan interest. The accelerated benefit will be treated as a lien
against your policy values.
Death proceeds which are payable on the death of the Surviving Insured will be
reduced by the amount of the lien and any policy loans, plus accrued interest.
After payment of the accelerated benefit, and if sufficient premium to keep the
policy in force is not paid by the end of the grace period, premiums will be
paid by an addition to the lien for up to two years from the date we receive
satisfactory proof of terminal illness. After this two year period, you are
required to pay premiums when due to keep the policy in force. If the policy
lapses, the lien, any policy loans, and accrued interest will be deducted from
any accumulation values.
Your access to the net cash surrender value of your policy and to the net cash
surrender value of any riders through policy loans, partial withdrawals, if
permitted, or full surrender is limited to any excess of the net cash surrender
value over the lien including any accrued interest.
INTEREST
We will charge interest on the amount of the lien. The interest accrues daily at
the same interest rate as the policy's loan interest rate.
TIRSL 6099
<PAGE>
Accrued interest will be added to the lien on the policy anniversary. Interest
does not continue to accrue on the lien when the lien and any policy loans, plus
accrued interest, equals the death benefit (prior to the deduction of the lien,
policy loans and accrued interest) of the policy and any riders.
CONDITIONS
The payment of any accelerated benefit is subject to the following conditions:
1. Any Eligible Coverages must be in force on the date we receive
satisfactory proof of terminal illness.
2. Any accumulation value less any applicable surrender charge must be less
than the maximum accelerated benefit.
3. We will not make payment of any accelerated benefit if that payment would
be less than $4,000.
4. The release of any collateral assignees, the release of all parties to
any "split dollar" agreements and the approval of any irrevocable
beneficiaries is required.
5. The policy must be collaterally assigned to us for an amount equal to the
lien and accrued interest. No changes to the policy are permitted without
our consent.
6. This rider allows for the accelerated payment of death benefit proceeds,
which would otherwise be payable to your beneficiary. This is not meant
to cause you to be required to access and exhaust these benefits
involuntarily. Therefore, you are not eligible for this benefit:
a. If you are required by law to us this benefit to meet the claims
of creditors, whether in bankruptcy or otherwise; or
b. If you are required by a government agency to use this benefit in
order to apply for, obtain, or otherwise keep a government benefit
or entitlement.
ADDITIONAL BENEFIT
If the maximum accelerated benefit is not paid initially, an additional
accelerated benefit may be paid up to the difference as long as this amount is
at least $4,000. This additional benefit is only available if it has been less
than 12 months from the date we received satisfactory proof of terminal illness.
We may require additional satisfactory proof of terminal illness at this time.
TOTAL ACCELERATED BENEFIT
The total amount we will pay as an accelerated benefit due to the terminal
illness of the Surviving Insured will not exceed $250,000 even if there is more
than one policy with us or one of our affiliates which provides coverage on the
Surviving Insured.
TIRSL 6099
<PAGE>
ADMINISTRATIVE CHARGE
We may charge a one-time administrative charge which will be deducted from the
accelerated benefit. This charge will not exceed $50.
GENERAL PROVISIONS
INCONTESTABILITY: The validity of this rider cannot be contested after it has
been in force while either Insured is alive for a period of two years from the
effective date of the rider.
REINSTATEMENT: This rider may be reinstated with the policy. It will be
reinstated if you meet the requirements for policy reinstatement. If you have
received benefits under this rider, the lien with accrued interest may be paid
or it will be reinstated as if the policy had never terminated.
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On surrender of this rider to us; or
2. On termination of the policy to which this rider is attached.
NONPARTICIPATING: This rider is nonparticipating.
INCORPORATION OF POLICY PROVISIONS INTO RIDER:
The provisions of the policy are hereby referred to and made a part of this
rider unless otherwise specified in this rider.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /s/Kenneth C. Louis
Secretary President
TIRSL 6099
<PAGE>
AMERITAS LIFE INSURANCE CORP. LOGO
DISABILITY BENEFIT RIDER ON
DISABILITY OF A COVERED INSURED
CONSIDERATION
This rider is issued in consideration of the application and payment of its cost
of insurance. A copy of the application is attached to the policy. The cost of
insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
DEFINITIONS
COVERED INSURED: Covered Insured means the person so named in the original
application and as shown on the schedule pages.
DISABILITY BENEFIT: For purposes of this rider, the disability benefit is an
amount shown on the schedule pages, selected by you on the application.
RIDER EFFECTIVE DATE: The effective date of all coverage under this rider shall
be as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any rider issued after the policy date, the effective date shall be
the date shown on a supplement to the schedule pages.
3. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown on the schedule pages. It is the
date on which this rider is no longer effective.
TOTAL DISABILITY: Total disability must begin after the effective date of this
rider as shown in the schedule pages and before the policy anniversary nearest
the Covered Insured's 60th birthday. It must result from bodily injury which
occurs or sickness which first manifests itself while this rider is in force.
Total Disability means:
1. Total loss of the sight of both eyes. This loss must be irrecoverable; or
2. Total loss of the use of both hands, both feet, or one hand and one foot.
This loss must be irrecoverable; or
3. The incapacity of the Covered Insured to engage in any substantial duties
of his or her occupation for at least six consecutive months.
(Substantial duties includes managerial or supervisory functions.)
DBRSL 6099
<PAGE>
During the first 24 months of total disability, occupation means the
usual work, employment, business or profession in which the Covered
Insured was engaged immediately before the date of disability. This
includes attendance at school or college as a full-time student. After 24
months of total disability a Covered Insured who is engaged in any
occupation for remuneration or profit will not be considered totally
disabled.
BENEFITS
While the Covered Insured is totally disabled, the disability benefit will be
applied as premium. The premium will be credited as of the last monthly activity
date, prior to the approval date of the claim and will be credited annually
thereafter, during continuance of total disability. In addition, while the
Covered Insured is totally disabled, the cost of insurance for this rider will
not be deducted from the accumulation value. All other monthly deductions will
apply.
You may choose to continue to pay your planned periodic premiums or make any
unscheduled premium payments while you are receiving a disability benefit.
If total disability begins after the grace period, no benefits under this rider
will be paid. If any portion of a disability benefit would affect the tax
qualifications of this policy as described in Section 7702 of the Internal
Revenue Code, as amended, the benefit payable will be reduced by that portion
considered to be excess premium.
GENERAL PROVISION
NOTICE OF DISABILITY: To receive this benefit, written notice of claim must be
received at the Home Office. It must be received: (a) while the Covered Insured
is living; (b) while the Covered Insured is totally disabled; and (c) not later
than 9 months after the Covered Insured has become totally disabled.
If such notice is not furnished in the required time limit, the claim will not
be accepted. But a late claim will be accepted if it can be shown that it was
not reasonably possible to meet the requirements and that notice was given as
soon as was reasonably possible. In no event, however, will the Covered Insured
receive any benefit under this rider for a period prior to one year before the
date on which notice was received.
PROOF OF TOTAL DISABILITY: Approval of the initial notice of claim will be
granted after we receive satisfactory written proof that the Covered Insured is
totally disabled. Proof must be presented at the Home Office: (a) while the
Covered Insured is living; (b) before total disability has ended or been
interrupted; and (c) within 12 months after we receive the notice of total
disability. Forms approved by us must be used.
Similar proof that the total disability is continuing may be required at
reasonable intervals. If the Covered Insured fails to furnish such proof, the
disability benefit will cease.
INCONTESTABILITY: While the Covered Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
DBRSL 6099
<PAGE>
REINSTATEMENT: Coverage under this rider may be reinstated with the policy if no
more than 3 years have passed since the date of termination. Reinstatement must
occur before the rider expiration date. Such reinstatement may occur any time
before the policy anniversary nearest the Covered Insured's 60th birthday. The
requirements for reinstatement are:
1. Receipt of evidence of insurability satisfactory to us.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
EXCLUSIONS: The Covered Insured will not be eligible for the disability benefit
if the total disability on which the claim is based results from:
1. Self-inflicted bodily injury while sane or insane, other than accidental
injury; or
2. War or any act of war, whether declared or not, regardless of whether the
Covered Insured is in the armed forces.
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us; or
4. On termination of the policy to which this rider is attached.
CHANGE OF POLICY: Once the disability benefit commences, you cannot change the
specified amount of insurance, the death benefit option, the mode of the planned
periodic premium payments, or change the policy to another form of insurance.
COST OF INSURANCE DEDUCTIONS AFTER THE RIDER HAS TERMINATED: We will not be
liable for the cost of insurance deductions on this rider after it terminates
except to return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider.
NONPARTICIPATING: This rider is nonparticipating.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /s/Kenneth C. Louis
Secretary President
DBRSL 6099
<PAGE>
This page intentionally left blank.
<PAGE>
AMERITAS LIFE INSURANCE CORP.LOGO
ESTATE PROTECTION RIDER
LAST SURVIVOR FOUR YEAR TERM INSURANCE
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of both Insureds. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
DEFINITIONS
SURVIVING INSURED: Surviving Insured means the Insured who remains alive after
one of the Insureds has died.
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
the base policy.
While each Insured is living, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will
ESP 6099
<PAGE>
be based on the issue age, sex, tobacco usage and risk class of each Insured and
the rider duration. The rates will be adjusted for any table rating and/or flat
extra rating. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
shown in the policy schedule. We have the option of charging less than the
maximum. Each year, the current annual cost of insurance rates for this rider
will be declared for the next policy year. Any change in the current cost of
insurance rates will apply to Insureds covered under this rider having the same
issue age, sex, tobacco usage and risk class and whose riders have been in
effect for the same length of time. We cannot increase rates because of a change
in status of either Insured's health.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of the Surviving Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of the Surviving Insured:
1) A certified copy of the death certificate for both Insureds;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
ESP 6099
<PAGE>
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /s/Kenneth C. Louis
Secretary President
ESP 6099
<PAGE>
This page left intentionally blank.
<PAGE>
AMERITAS LIFE INSURANCE CORP. LOGO
FIRST-TO-DIE TERM RIDER
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of either Insured. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
DEFINITIONS
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
this rider.
While both Insureds are alive, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will be based on the issue age, sex, tobacco usage and risk class of each
Insured and the rider duration. The rates will be adjusted for any table rating
and/or flat extra rating. The Maximum Guaranteed Cost of Insurance Rates per
$1,000 are shown in the policy schedule. We have the option of charging less
than the maximum. Each year,
FTD 6099
<PAGE>
the current annual cost of insurance rates for this rider will be declared for
the next policy year. Any change in the current cost of insurance rates will
apply to Insureds covered under this rider having the same issue age, sex,
tobacco usage and risk class and whose riders have been in effect for the same
length of time. We cannot increase rates because of a change in status of either
Insured's health.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of either Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of either Insured:
1) A certified copy of the death certificate;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
FTD 6099
<PAGE>
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /s/Kenneth C. Louis
Secretary President
FTD 6099
<PAGE>
This page left intentionally blank.
<PAGE>
AMERITAS LIFE INSURANCE CORP. LOGO
SECOND-TO-DIE TERM RIDER
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of both Insureds. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
CONVERSION OF THIS RIDER
While the policy and this rider are in force, you may convert this rider as an
increase in the specified amount of the policy. It may not be converted to
another policy. You may do this at any time after the rider conversion option
date. Evidence of insurability will not be required, except for additional
benefits.
DEFINITIONS
SURVIVING INSURED: Surviving Insured means the Insured who remains alive after
one of the Insureds has died.
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
the base policy.
While each Insured is living, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
RIDER CONVERSION OPTION DATE: The date shown on the schedule pages.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
STD 6099
<PAGE>
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will be based on the issue age, sex, tobacco usage and risk class of each
Insured and the rider duration. The rates will be adjusted for any table rating
and/or flat extra rating. The Maximum Guaranteed Cost of Insurance Rates per
$1,000 are shown in the policy schedule. We have the option of charging less
than the maximum. Each year, the current annual cost of insurance rates for this
rider will be declared for the next policy year. Any change in the current cost
of insurance rates will apply to Insureds covered under this rider having the
same issue age, sex, tobacco usage and risk class and whose riders have been in
effect for the same length of time. We cannot increase rates because of a change
in status of either Insured's health.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of the Second Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of the Second Insured:
1) A certified copy of the death certificate for both Insureds;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
STD 6099
<PAGE>
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /S/Kenneth C. Louis
Secretary President
STD 6099
<PAGE>
This page left intentionally blank.
<PAGE>
AMERITAS LIFE INSRUANCE CORP. LOGO
TERM RIDER FOR COVERED INSURED
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
DEFINITIONS
BENEFICIARY: The term "beneficiary" in this rider means only the beneficiary for
the benefit payable at the Covered Insured's death. The term "beneficiary" in
other provisions of the policy means only the beneficiary for the benefits
payable under the policy.
Unless otherwise changed, the beneficiary for the benefit payable under this
rider will be the named beneficiary as shown in the application for this rider.
While the Covered Insured is living, you may change the beneficiary by written
request in a form satisfactory to us. The change will take effect on the date we
record it in the Home Office.
COVERED INSURED: Covered Insured means each person so named in an application
or supplemental application, if approved by us, and shown on the schedule pages.
RIDER CONVERSION OPTION EXPIRATION DATE: The date shown on the schedule pages.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any rider issued after the policy date or for any coverage on another
Covered Insured, the effective date shall be the date shown on a
supplement to the schedule pages.
3. For any insurance that has been reinstated, the effective date shall be
the monthly activity date that falls on or next follows the date we
approve the reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance for
a Covered Insured is shown for that Covered Insured on the schedule pages.
TRCI 6099
<PAGE>
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of any Covered Insured. Death must
occur while this rider is in force with respect to the Covered Insured. Payment
is subject to the provisions of the policy and this rider.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
CONVERSION OF THIS RIDER
While the policy and this rider are in force, you may convert it for a permanent
policy on the life of the Covered Insured. You may do this at any time prior to
attained age 70 of the Covered Insured. Evidence of insurability will not be
required, except for additional benefits.
If the policy terminates prior to the rider conversion option expiration date
due to the death of the insured(s) under the basic policy, the Covered Insured
may still convert within 60 days of the date of termination.
The new policy will have a specified amount of insurance no more than the rider
specified amount of insurance in effect on the date of conversion for that
Covered Insured.
The policy date of the new policy will be the date of conversion. The new policy
will be subject to our then current rules as to the amount and the kind of
policy issued. The rates for the new policy will be adjusted for any table
rating and/or flat extra rating that was being charged for this rider. Any
restrictions found in this rider will also be found in the new policy.
Application must be made and the first premium for the new policy paid to us
before this rider terminates for the Covered Insured on whom coverage is being
converted. In addition, the Covered Insured on whom coverage is being converted
must be alive on the policy date of the new policy.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate for each Covered
Insured on the earliest of these conditions:
1. On the rider expiration date for each Covered Insured;
TRCI 6099
<PAGE>
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us; or
4. On termination of this policy.
REINSTATEMENT: This rider may be reinstated with the policy if no more than 3
years have passed since the date of termination. Reinstatement must occur before
the expiration date of this rider. The requirements for reinstatement are:
1. Receipt by us of evidence of insurability of the Covered Insured for whom
coverage is being reinstated. This evidence must be satisfactory to us.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE: If the Covered Insured commits suicide, while sane or insane within 2
years from the rider effective date with respect to that Covered Insured, the
total liability shall be the cost of insurance for that Covered Insured.
INCONTESTABILITY: While the Covered Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
COST OF INSURANCE DEDUCTIONS AFTER RIDER EXPIRATION DATE: We will not be liable
for the cost of insurance deductions on this rider for any Covered Insured after
it terminates except to return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NONPARTICIPATING: This rider is nonparticipating.
AMERITAS LIFE INSURANCE CORP.
/s/Donald R. Stading /s/Kenneth C. Louis
Secretary President
TRCI 6099
<PAGE>
This page intentionally left blank.
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM GUARANTEED ANNUAL COST OF INSURANCE RATES
PER $1000 APPLICABLE UPON RENEWAL
<S> <C> <C> <C> <C> <C> <C>
MALE MALE MALE FEMALE FEMALE FEMALE
AGE PREFERRED NON-TOBACCO TOBACCO PREFERRED NON-TOBACCO TOBACCO
- -------------------------------------------------------------------------------------------------------------------
20 1.68 1.68 2.32 1.01 1.01 1.17
21 1.66 1.66 2.32 1.03 1.03 1.19
22 1.63 1.63 2.28 1.04 1.04 1.22
23 1.59 1.59 2.24 1.06 1.06 1.25
24 1.55 1.55 2.18 1.08 1.08 1.28
25 1.50 1.50 2.11 1.10 1.10 1.31
26 1.47 1.47 2.07 1.13 1.13 1.36
27 1.45 1.45 2.05 1.15 1.15 1.40
28 1.44 1.44 2.05 1.18 1.18 1.45
29 1.44 1.44 2.08 1.22 1.22 1.51
30 1.45 1.45 2.13 1.25 1.25 1.58
31 1.48 1.48 2.20 1.29 1.29 1.64
32 1.52 1.52 2.29 1.33 1.33 1.71
33 1.58 1.58 2.41 1.38 1.38 1.80
34 1.65 1.65 2.55 1.44 1.44 1.90
35 1.73 1.73 2.72 1.51 1.51 2.01
36 1.82 1.82 2.92 1.61 1.61 2.18
37 1.94 1.94 3.17 1.73 1.73 2.38
38 2.07 2.07 3.45 1.86 1.86 2.61
39 2.21 2.21 3.77 2.00 2.00 2.86
40 2.38 2.38 4.14 2.17 2.17 3.16
41 2.56 2.56 4.54 2.35 2.35 3.48
42 2.75 2.75 4.98 2.53 2.53 3.80
43 2.96 2.96 5.46 2.71 2.71 4.12
44 3.19 3.19 5.99 2.89 2.89 4.44
45 3.45 3.45 6.55 3.09 3.09 4.78
46 3.73 3.73 7.13 3.30 3.30 5.13
47 4.03 4.03 7.76 3.53 3.53 5.49
48 4.36 4.36 8.44 3.77 3.77 5.88
49 4.72 4.72 9.18 4.04 4.04 6.31
50 5.13 5.13 10.00 4.34 4.34 6.77
51 5.60 5.60 10.93 4.67 4.67 7.26
52 6.14 6.14 11.98 5.05 5.05 7.82
53 6.76 6.76 13.17 5.47 5.47 8.44
54 7.45 7.45 14.47 5.90 5.90 9.07
55 8.22 8.22 15.86 6.36 6.36 9.72
56 9.06 9.06 17.33 6.82 6.82 10.36
57 9.95 9.95 18.88 7.27 7.27 10.96
58 10.94 10.94 20.51 7.72 7.72 11.55
59 12.05 12.05 22.26 8.23 8.23 12.18
</TABLE>
(Continued on next page)
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
TRCI 6099
<PAGE>
<TABLE>
<CAPTION>
(Continued from previous page)
MAXIMUM GUARANTEED ANNUAL COST OF INSURANCE RATES
PER $1000 APPLICABLE UPON RENEWAL
<S> <C> <C> <C> <C> <C> <C>
MALE MALE MALE FEMALE FEMALE FEMALE
AGE PREFERRED NON-TOBACCO TOBACCO PREFERRED NON-TOBACCO TOBACCO
- -------------------------------------------------------------------------------------------------------------------
60 13.29 13.29 24.21 8.83 8.83 12.93
61 14.67 14.67 26.41 9.57 9.57 13.87
62 16.26 16.26 28.89 10.49 10.49 15.08
63 18.06 18.06 31.66 11.62 11.62 16.55
64 20.06 20.06 34.69 12.89 12.89 18.19
65 22.25 22.25 37.90 14.26 14.26 19.92
66 24.62 24.62 41.26 15.68 15.68 21.68
67 27.16 27.16 44.74 17.13 17.13 23.38
68 29.92 29.92 48.39 18.63 18.63 25.10
69 32.98 32.98 52.35 20.30 20.30 26.97
70 36.44 36.44 56.72 22.26 22.26 29.18
71 40.39 40.39 61.63 24.65 24.65 31.98
72 44.95 44.95 67.18 27.58 27.58 35.41
73 50.11 50.11 73.33 31.09 31.09 39.49
74 55.78 55.78 80.07 35.13 35.13 44.14
75 61.84 61.84 87.27 39.64 39.64 49.22
76 68.24 68.24 94.63 44.52 44.52 54.62
77 74.93 74.93 102.02 49.75 49.75 60.26
78 81.95 81.95 109.49 55.41 55.41 66.22
79 89.52 89.52 117.30 61.68 61.68 72.71
80 97.88 97.88 125.71 68.81 68.81 79.98
81 107.25 107.25 134.96 77.01 77.01 88.23
82 117.82 117.82 145.21 86.46 86.46 97.61
83 129.54 129.54 156.29 97.12 97.12 108.44
84 142.18 142.18 167.83 108.87 108.87 120.18
85 155.45 155.45 179.44 121.58 121.58 132.65
86 169.18 169.18 190.84 135.16 135.16 145.75
87 183.16 183.16 202.54 149.59 149.59 159.35
88 197.33 197.33 214.73 164.88 164.88 173.52
89 211.89 211.89 226.85 181.15 181.15 188.25
90 227.05 227.05 239.08 198.53 198.53 204.58
91 243.16 243.16 251.80 217.42 217.42 222.16
92 260.82 260.82 266.55 238.53 238.53 241.66
93 281.75 281.75 285.47 263.35 263.35 264.56
94 309.83 309.83 311.27 295.23 295.23 295.23
95 351.86 351.86 351.86 341.02 341.02 341.02
96 420.99 420.99 420.99 413.88 413.88 413.88
97 541.00 541.00 541.00 537.24 537.24 537.24
98 745.15 745.15 745.15 743.96 743.96 743.96
99 900.00 900.00 900.00 900.00 900.00 900.00
</TABLE>
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
TRCI 6099
PARTICIPATION AGREEMENT
AMONG
RYDEX VARIABLE TRUST,
PADCO FINANCIAL SERVICES, INC.
AND
AMERITAS LIFE INSURANCE CORP.
DATED AS OF
APRIL 30, 1999
1-PH/360848.3
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TABLE OF CONTENTS
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Page
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ARTICLE I Purchase of Trust Shares.......................................2
ARTICLE II Representations and Warranties.................................4
ARTICLE III Prospectuses, Reports to Shareholders
and Proxy Statements, Voting...................................6
ARTICLE IV Sales Material and Information.................................8
ARTICLE V Fees and Expenses..............................................9
ARTICLE VI Diversification...............................................10
ARTICLE VII Potential Conflicts...........................................10
ARTICLE VIII Indemnification...............................................12
ARTICLE IX Applicable Law................................................17
ARTICLE X Termination...................................................17
ARTICLE XI Notices.......................................................19
ARTICLE XII Miscellaneous.................................................19
SCHEDULE A Separate Accounts and Contracts...............................23
SCHEDULE B Proxy Voting Procedures.......................................24
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THIS AGREEMENT, made and entered into as of the 30th day of April, 1999
by and among AMERITAS LIFE INSURANCE CORP. (hereinafter the "Company"), a
Nebraska corporation, on its own behalf and on behalf of each separate account
of the Company set forth on Schedule A hereto as may be amended from time to
time (each such account hereinafter referred to as the "Account"), RYDEX
VARIABLE TRUST (hereinafter the "Trust"), a Delaware business trust, and PADCO
FINANCIAL SERVICES, INC. (hereinafter the "Underwriter"), a Maryland
corporation.
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and individual and group annuity contracts with variable
accumulation and/or pay-out provisions (hereinafter referred to individually
and/or collectively as "Variable Insurance Products") and (ii) the investment
vehicle for certain qualified pension and retirement plans (hereinafter
"Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Trust as an
investment vehicle under their Variable Insurance Products enter into
participation agreements with the Trust and the Underwriter (the "Participating
Insurance Companies");
WHEREAS, beneficial interests in the Trust are divided into several
series of interests or shares, each representing the interest in a particular
managed portfolio of securities and other assets, any one or more of which may
be made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series is hereinafter referred
to as a "Fund"); and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "SEC"), dated February 25, 1999 (File No. 812-11344),
granting Participating Insurance Companies and Variable Insurance Product
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a),
and 15(b) of the Investment Company Act of 1940, as amended (hereinafter the
"1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of a Fund to be sold to and held by Variable
Insurance Product separate accounts of both affiliated and unaffiliated life
insurance companies and Qualified Plans (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Trust; and
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WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforementioned
Variable Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforementioned Variable Insurance Products
and the Underwriter is authorized to sell such shares to each such Account at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust and each Underwriter agree as follows:
ARTICLE I. PURCHASE OF TRUST SHARES
I.1. The Trust agrees to make available for purchase by the Company
shares of the Trust and shall execute orders placed for each Account on a daily
basis at the net asset value next computed after receipt by the Trust or its
designee of such order, provided that such orders were received by the Company
by 2:30 p.m. Eastern time. The Trust acknowledges that it has directed the
Company that all orders received by the Company after 2:30 p.m. Eastern time
will be executed at the net asset value that is computed at the end of the next
Business Day after receipt. For purposes of this Section 1.1, the Company shall
be the designee of the Trust for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Trust; provided that
the Trust receives notice of such order by 8:30 a.m. Eastern time on the next
Business Day after receipt (or such later time up to 10:30 a.m. Eastern time on
such next Business Day, in the discretion of the Trust), and provided further
that the Trust timely made the net asset value available to the Company,
pursuant to Section 1.10. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
In situations involving late delivery of net asset value by the Trust, Section
1.11 governs.
I.2. The Trust, so long as this Agreement is in effect, agrees to make
its shares available indefinitely for purchase at the applicable net asset value
per share by the Company and its Accounts on those days on which the Trust
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission and the Trust shall use reasonable efforts to calculate such net
asset value on each day which the New York Stock Exchange is open for trading.
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Notwithstanding the foregoing, the Board of Trustees of the Trust (hereinafter
the "Board") may refuse to permit the Trust to sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Fund if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Fund.
I.3. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of any Fund will be sold to the general public.
I.4. The Trust will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as in Section 1.3 of Article I, Section 3.5 of Article
III, Article VI and Article VII of this Agreement is in effect to govern such
sales.
I.5. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional shares of a Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption, provided that such
orders were received by the Company by 2:30 p.m. Eastern Time. The Trust
acknowledges that it has directed the Company that all requests the Company
receives after 2:30 p.m. Eastern Time each Business Day will be executed at the
net asset value that is computed at the end of the next Business Day. Subject to
and in accordance with applicable laws, and subject to written consent of the
Company, the Trust may redeem shares for assets other than cash. For purposes of
this Section 1.5, the Company shall be the designee of the Trust for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
order by 8:30 a.m. Eastern time on the next Business Day after receipt (or such
later time up to 10:30 a.m. Eastern time on such next Business Day, as
determined by the Trust), and provided further that the Trust timely made the
net asset value available to the Company, pursuant to Section 1.10. In
situations involving late delivery of net asset value by the Trust, Section 1.11
governs.
I.6. The Company agrees that purchases and redemptions of Fund shares
offered by the then current prospectus of the Trust shall be made in accordance
with the provisions of such prospectus. The Variable Insurance Products issued
by the Company, under which amounts may be invested in the Trust (hereinafter
the "Contracts"), are listed on Schedule A attached hereto and incorporated
herein by reference, as such Schedule A may be amended from time to time by
mutual written agreement of all of the parties hereto. The Company will give the
Trust and the Underwriter reasonable notice of its intention to make available
in the future, as a funding vehicle under the Contracts, any other investment
company.
I.7. The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment
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shall be in federal funds transmitted by wire. The Trust shall pay for
redemption of Trust shares on the next Business Day after an order to redeem
Trust shares is made in accordance with the provisions of Section 1.5. Payment
shall be made in federal funds transmitted by wire. Purchases and redemptions
may be netted for purposes of determining payments to be made by the Company and
the Trust, provided that all purchases and redemptions are properly accounted
for and recorded. For purposes of Section 2.9 and 2.10, upon receipt by the
Trust or the Company of the federal funds so wired, such funds shall cease to be
the responsibility of the Company or the Trust, as applicable, and shall become
the responsibility of the Trust or the Company, as applicable.
I.8. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
I.9. The Trust shall furnish one day advance notice (by electronic
means, wire or telephone, followed by written confirmation) to the Company of
any income, dividends or capital gain distributions (other than those which
occur through daily mil rates) payable on Fund shares. The Company hereby elects
to receive all such income dividends and capital gain distributions as are
payable on the Fund shares in additional shares of that Fund. The Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
I.10. The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time. In the event the Trust makes such net asset value
available to the Company later than 7:00 p.m., but before 9:00 p.m. Eastern
time, the additional time taken by the Trust shall also be allowed to the
Company in providing order information required under Sections 1.1 and 1.5.
I.11 In the event the Trust fails to make such net asset value
available by 9:00 p.m. Eastern time, the Trust acknowledges that its delivery of
net asset value is late. The Company will execute estimated trades in lieu of
actual trades. The following day (T+2), the Company will true-up, trading the
difference between the prior day's estimated trades and the prior day's actual
trades, including any gain/loss on the difference. The Trust and the Underwriter
agree to reimburse the Company for any market exposure it incurs to its
detriment on the true-up of actual trades due to the net asset values having
been provided late.
I.12 If the Trust provides the Company with materially incorrect share
net asset value information (as determined under SEC guidelines), the Company,
on behalf of the Account, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct
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share net asset value and to reimbursement to the extent necessary to cover
losses of the Company resulting from such incorrect net asset value information.
Any material error in the calculation of net asset value per share, dividend or
capital gain information shall be reported promptly upon discovery to the
Company. Furthermore, the Underwriter shall be liable for the reasonable
administrative costs incurred by the Company in relation to the correction of
any material error.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
II.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section Neb. Rev. St. section 44-402.01 and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
II.2. The Trust represents and warrants that Trust shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Trust is and shall
remain registered under the 1940 Act. The Trust shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The
Trust shall register and qualify the shares for sale in accordance with the
laws of the various states, to the extent required by applicable state law.
II.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
II.4. The Company represents that the Contracts are currently treated
as life insurance policies or annuity contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Trust immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
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II.5. The Trust represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, it will
have a board of trustees, a majority of whom are not interested persons of the
Trust, formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
II.6. The Trust represents that the Trust's investment policies, fees
and expenses are and shall at all times remain in compliance with the laws of
the State of Delaware and the Trust represents that their respective operations
are and shall at all times remain in material compliance with the laws of the
State of Delaware to the extent required to perform this Agreement.
II.7. The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
II.8. The Underwriter represents and warrants that it is registered
with the SEC under the 1934 Act, as a broker/dealer and is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"), and
that it shall remain duly registered in all material respects to the extent
required under all applicable federal and state securities laws and that it will
perform its obligations for the Trust in compliance in all material respects
with the laws of its state of domicile and any applicable state and federal
securities laws, including the 1933 Act, the 1934 Act and the 1940 Act.
II.9. The Trust represents and warrants that its directors, officers,
employees, and other individuals/entities dealing with the money and/or
securities of the Trust are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimum coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
II.10. The Company represents and warrants that all of its directors,
officers, employees, investment Underwriter, and other individuals/entities
dealing with the money and/or securities of the Trust are covered by a blanket
fidelity bond or similar coverage, in an amount not less $5 million. The
aforesaid includes coverage for larceny and embezzlement and is issued by a
reputable bonding company. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Underwriter in the event that
such coverage no longer applies.
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ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
III.1. The Trust or its designee shall provide the Company with as many
printed copies of the Trust's current prospectus and statement of additional
information as the Company may reasonably request. If requested by the Company,
in lieu of providing printed copies the Trust shall provide camera-ready film or
computer diskettes containing the Trust's prospectus and statement of additional
information, and such other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus and/or
statement of additional information for the Trust is amended during the year) to
have the prospectus for the Contracts and the Trust's prospectus printed
together in one document, and to have the statement of additional information
for the Trust and the statement of additional information for the Contracts
printed together in one document. Alternatively, the Company may print the
Trust's prospectus and/or its statement of additional information in combination
with other trust companies' prospectuses and statements of additional
information.
III.2. Except as provided in this Section 3.2., all expenses of
printing and distributing the Trust's prospectuses and statements of additional
information shall be the expense of the Company. For prospectuses and statements
of additional information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing and distributing the Trust's prospectuses
and statement of additional information shall be borne by the Trust. If the
Company chooses to receive camera-ready film or computer diskettes in lieu of
receiving printed copies of the Trust's prospectus, the Trust will reimburse the
Company in an amount equal to the product of x and y where x is the number of
such prospectuses distributed to owners of the Contracts, and y is the Trust's
per unit cost of typesetting and printing the Trust's prospectus. The same
procedures shall be followed with respect to the Trust's statement of additional
information. The Company agrees to provide the Trust or its designee with such
information as may be reasonably requested by the Trust to assure that the
Trust's expenses do not include the cost of printing any prospectuses or
statements of additional information other than those actually distributed to
existing owners of the Contracts.
III.3. The Trust's statement of additional information shall be
obtainable from the Trust, the Company or such other person as the Trust may
designate, as agreed upon by the parties.
III.4. The Trust, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and statements of additional information addressed in
Section 3.2) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners, and shall bear the cost of
distributing such documents to Contract owners.
III.5. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
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(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Trust shares of
such Fund for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any Account in its own right, to the extent permitted by law. The Trust
and the Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule B attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in a Fund calculates
voting privileges in a manner consistent with the standards set forth on
Schedule B, which standards will also be provided to the other Participating
Insurance Companies.
III.6. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the Commission may promulgate
with respect thereto.
III.7. The Trust shall use reasonable efforts to provide the Trust's
prospectuses, reports to shareholders, proxy materials and other Trust
communications (or camera-ready equivalents) to the Company sufficiently in
advance of the Company's mailing dates to enable the Company to complete, at
reasonable cost, the printing, assembling and distribution of the communications
in accordance with applicable laws and regulations.
ARTICLE IV. SALES MATERIAL AND INFORMATION
IV.1. The Company shall furnish, or shall cause to be furnished, to the
Underwriter, each piece of sales literature or other promotional material in
which the Trust or the Underwriter is named, at least five Business Days prior
to its use. No such material shall be used if the Trust or its designee
reasonably objects to such use within five Business Days after receipt of such
material on account of a material inaccuracy or omission in such material.
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IV.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee, except with the permission of the Trust.
IV.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account(s) or
Contracts are named at least five Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within five Business Days after receipt of such material on account of a
material inaccuracy or omission in such material.
IV.4. The Trust and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
IV.5. The Trust will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Trust or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
IV.6. The Company will provide to the Trust at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
investment in the Trust under the Contracts, contemporaneously with the filing
of such document with the Securities and Exchange Commission or other regulatory
authorities.
IV.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Trust or any affiliate of the Trust: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature
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(i.e., any written communication distributed or made generally available to
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customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
V.1. The Trust shall pay no fee or other compensation to the Company
under this Agreement, except that if the Trust or any Fund adopts and implements
a plan pursuant to Rule 12b-1 to finance distribution expenses, then the
Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.
V.2. All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Trust, in
accordance with applicable state laws prior to their sale. The Trust shall bear
the expenses for the cost of registration and qualification of Fund shares,
preparation and filing of the Trust's prospectus and registration statement,
proxy materials and reports, setting the prospectus in type, setting in type and
printing the proxy materials and reports to shareholders (including the costs of
printing a prospectus that constitutes an annual report), the preparation of all
statements and notices required by any federal or state law, and all taxes on
the issuance or transfer of Fund shares.
V.3. The Company shall bear the expenses of distributing the Trust's
prospectuses and statements of additional information to prospective owners of
Contracts.
ARTICLE VI. DIVERSIFICATION
VI.1. The Trust will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Trust will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by a Fund, the Trust
will take all reasonable steps (a) to notify the Company of such breach and (b)
to adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
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ARTICLE VII. POTENTIAL CONFLICTS
VII.1. The Board will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Trust. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by Variable Insurance Product owners; or (f) a decision by a
Participating Insurance Company to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
VII.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
VII.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another Fund of the Trust, or submitting
the question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance policy owners,
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or variable contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
VII.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect
to such Account (at the Company's expense); provided, however that such
withdrawal and termination shall be limited to circumstances where material
irreconcilable conflict is
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determined by a majority of the disinterested members of the Board, as
aforementioned. Any such withdrawal and termination must take place in
accordance with the Trust's Mixed and Shared Exemptive Order. During the period
any such withdrawal and termination are being implemented, the Distributor and
the Trust will, to the extent permitted by law and the Mixed and Shared
Exemptive Order, continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
VII.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the position of the majority of other state regulators, then the
Company will withdraw the affected Account's investment in the Trust and
terminate this Agreement with respect to such Account within six months after
the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and the Trust shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Trust.
VII.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Trust be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
VII.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
1-PH/360848.3 -12-
<PAGE>
ARTICLE VIII. INDEMNIFICATION
VIII.1. Indemnification By The Company
------------------------------
8.1(a) The Company agrees to indemnify and hold harmless the Trust and
each member of the Board and each officer of the Trust, the Underwriter and each
director and officer of the Underwriter, and each person, if any, who controls
the Trust, or the Underwriter within the meaning of Section 15 of the 1933 Act
(collectively, an "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities, or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of Fund shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus or statement of additional information for the
Contracts or contained in the Contracts or sales literature for the
Contracts or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Trust for use in the registration statement
or prospectus or statement of additional information for the Contracts or
in the Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus, statement of additional information or sales
literature of the Trust not supplied by the Company, or persons under
its control and other than statements or representations authorized by
the Trust or the Underwriter) or unlawful conduct of the Company or
persons under its control, with respect to the sale or d istribution of
the Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature of
the Trust or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make
1-PH/360848.3 -13-
<PAGE>
the statements therein not misleading if such a statement or omission was
made in reliance upon and in conformity with information furnished to the
Trust by or on behalf of the Company; or
(iv) arise as a result of any failure by the company to provide
the services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation or warranty made by the Company in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Company, as limited by and in accordance with the provisions of Sections
8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
1-PH/360848.3 -14-
<PAGE>
VIII.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors, officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, an "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of shares of a Fund or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus, statement of additional information or sales
literature of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the Trust
by or on behalf of the Company for use in the registration statement,
prospectus, statement of additional information for the Trust or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus, statement of additional information or sales
literature for the Contracts not supplied by the Trust or persons under
its control and other than statements or representations authorized by the
Company) or unlawful conduct of the Trust, Underwriter(s) or Underwriter
or persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature
covering the Contracts, or any amendment thereof or
1-PH/360848.3 -15-
<PAGE>
supplement thereto, or the omission or alleged o mission to state
therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by
or on behalf of the Trust; or
(iv) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement, or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained
by it, and the Underwriter will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
1-PH/360848.3 -16-
<PAGE>
VIII.3. Indemnification by the Trust
----------------------------
8.3(a). The Trust agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Trust) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, and are related
to the operations of the Trust and:
(i) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this Agreement; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Trust;
8.3(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
8.3(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Trust to such party of the Trust's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Trust will not be
liable to such party under this
1-PH/360848.3 -17-
<PAGE>
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.3(d). The Company agrees promptly to notify the Trust of the
commencement of any material litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Trust.
ARTICLE IX. APPLICABLE LAW
IX.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the substantive laws of the State of
Delaware.
IX.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
X.1. This Agreement shall continue in full force and effect with
respect to each Fund until the first to occur of:
(a) termination by any party for any reason by 180 days advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund based upon the Company's determination
that shares of such Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Trust and
the Underwriter with respect to any Fund in the event any of the Fund's
shares are not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to be issued
by the Company; or
(d) termination by the Company by written notice to the Trust and
the Underwriter with respect to any Fund in the event that such Fund
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any
1-PH/360848.3 -18-
<PAGE>
successor or similar provision, or if the Company reasonably believes that
the Trust may fail to so qualify; or
(e) termination by the Company by written notice to the Trust and
the Underwriter with respect to any Fund in the event that such Fund fails
to meet the diversification requirements specified in Article VI hereof; or
(f) termination by either the Trust by written notice to the Company if
the Trust shall determine, in its sole judgment exercised in good faith,
that the Company and/or its affiliated companies has suffered a material
adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity, such that the material change will have material
adverse effect on the Trust or Underwriter; or
(g) termination by the Company by written notice to the Trust and
the Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Trust or the Underwriter has
suffered a material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(h) termination by the Trust or the Underwriter by written notice to
the Company, if the Company gives the Trust and the Underwriter the
written notice specified in Section I.6 hereof and at the time such
notice was given there was no notice of termination outstanding under
any other provision of this Agreement; provided, however any termination
under this Section X.1(h) shall be effective 120 days after the notice
specified in Section I.6 was given.
(i) At the option of the Trust, in the event that formal
administrative proceedings are instituted against the Company by NASD,
the SEC, the insurance commissioner or any other regulatory body regarding
the Company's duties under this Agreement or related to the sale of the
Contracts, with respect to the operation of any Account, or the
purchase of the Fund shares, provided, however, that the Trust determines
in its sole judgement exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or at the option
of the Company, in the event that formal administrative proceedings are
instituted against the Trust or Underwriter by the NASD, the SEC, any
state securities or insurance department, or any other regulatory body,
provided, however, that the Company determines in its sole judgement
exercised in good faith, that any such administrative proceedings will have
material adverse effect upon the ability of the Trust or Underwriter to
perform its obligations under the Agreement.
1-PH/360848.3 -19-
<PAGE>
X.2. Notwithstanding any termination of this Agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Trust pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to direct
reallocation of investments in the Trust, redemption of investments in the Trust
and investment in the Trust upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section X.2 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
X.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Trust the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Fund that was otherwise
available under the Contracts without first giving the Trust 90 days prior
written notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Rydex Variable Trust
6116 Executive Boulevard, Suite 400
Rockville, MD 20852
If to Underwriter:
PADCO Financial Services, Inc.
6116 Executive Boulevard, Suite 400
Rockville, MD 20852
1-PH/360848.3 -20-
<PAGE>
If to the Company:
Ameritas Life Insurance Corp.
5900 O Street
Lincoln, NE 68510
ARTICLE XII. MISCELLANEOUS
XII.1. All persons dealing with the Trust must look solely to the
property of the Trust for the enforcement of any claims against the Trust as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust.
XII.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come
into the public domain without the express written consent of the affected
party.
XII.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
XII.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
XII.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
XII.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable California law or regulation.
1-PH/360848.3 -21-
<PAGE>
XII.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to under
state and federal laws.
XII.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that upon 30 days advance written notice a
party may assign this Agreement or any rights or obligations hereunder to its
affiliate or a company under common control with the party, if such assignee is
duly licensed and registered to perform the obligations under this Agreement.
XII.9. Upon reasonable request by the Trust or the Underwriter, the
Company shall furnish, or shall cause to be furnished, to the Trust or the
Underwriter, or their designee, copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any), as
soon as practical and in any event within 45 days after the
end of each quarterly period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
XII.10 Like other insurance companies and their separate accounts, the
Company and the Separate Account could be adversely affected if the computer
systems they rely upon do not properly process date-related information and data
involving the years 2000 and after. The Company has taken steps it believes are
reasonable to timely address this issue in its own computer system, and to
obtain assurances that its major service providers are taking comparable steps.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Company and the Separate Account.
1-PH/360848.3 -22-
<PAGE>
XII.11 No party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the extent such
default or delay is caused, directly or indirectly, by (i) fire, flood, elements
of nature or other acts of God, (ii) any outbreak or escalation of hostilities,
war, riots or civil disorders in any country, (iii) any act of omission of the
other party or any governmental authority; (iv) any labor disputes (whether or
not the employees' demands are reasonable or within the party's power to
satisfy); or (v) widespread failures in telecommunications or other equipment
including equipment which Trust relies upon for net asset value pricing.
In these events, the non-performing party shall be temporarily excused
from performance and observance of the obligations so affected only for so long
as such circumstances prevail and such party uses commercially reasonable
efforts to recommence performance or observance as soon as practicable.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
AMERITAS LIFE INSURANCE CORP.
/s/Kenneth C. Louis
By: ______________________________
RYDEX VARIABLE TRUST
/s/A.P. Viragh Jr.
By: ______________________________
PADCO FINANCIAL SERVICES, INC.
/s/A.P. Viragh Jr.
By: ______________________________
1-PH/360848.3 -23-
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
------------------------------------------
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
<S> <C>
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF CONTRACT
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
- -------------------------------------- --------------------------------
Ameritas Life Insurance Corp. Form 4055 (Flexible Premium Variable Life
Separate Account LLVL (Est. 8/24/94) Insurance Policy).
Ameritas Life Insurance Corp. Form 4080 (Flexible Premium Deferred
Separate Account LLVA (Est. 10/26/95) Variable Annuity Policy).
</TABLE>
1-PH/360848.3 -24-
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURES
-----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1 The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2 Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Trust, as soon as possible, but no later
than two weeks after the Record Date.
3 The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the Agreement
to which this Schedule relates.
4 The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Trust. The Company, at the Trust's expense,
shall produce and personalize the Voting Instruction Cards. The Trust or
its affiliate must approve the Card before it is printed. Allow
approximately 2-4 business days for printing information on the Cards.
Information commonly found on the Cards includes:
a name (legal name as found on account registration)
b address
c Trust or account number
d coding to state number of units
1-PH/360848.3 -25-
<PAGE>
e individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5 During this time, the Trust will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes (the
cost of envelopes and return envelopes will be borne by the Trust).
Contents of envelope sent to Customers by the Company will include:
a Voting Instruction Card(s)
b one proxy notice and statement (one document)
c return envelope (postage pre-paid by the Company, to be
billed to and paid by the Trust following the proxy) addressed
to the Company or its tabulation agent
d "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Trust.)
e cover letter - optional, supplied by the Company and reviewed and
approved in advance by the Trust
6 The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at the Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7 Package mailed by the Company.
* The Trust must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
---
including,) the meeting, counting backwards.
8 Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Trust in the past.
9 Signatures on Card checked against legal name on account registration which
was printed on the Card.
1-PH/360848.3 -26-
<PAGE>
Note: For Example, if the account registration is under "John A. Smith,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10 If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer, at the Trust's reasonable
expense, with an explanatory letter and a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to be not
---
received for purposes of vote tabulation. Any Cards that have been "kicked
--------
out" (e.g. mutilated, illegible) of the procedure are "hand verified,"
i.e., examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
11 There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount. The reasonable
costs of any such internal audit and/or recount will be borne by the Trust.
12 The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of shares.) The Trust must
------
review and approve tabulation format.
13 Final tabulation in shares is verbally given by the Company to the Trust on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14 A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Trust will provide a standard form for each Certification.
15 The Company will be required to box and archive the Cards received from the
Customers for a period of six years. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or accounting
purposes, the Trust will be permitted reasonable access to such Cards.
16 All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
1-PH/360848.3 -27- 10/96
June 11, 1999
Ameritas Life Insurance Corp.
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to the Pre-Effective Amendment No. 1 to Registration Statement
No. 333-76359 on Form S-6 filed by Ameritas Life Insurance Corp. and Ameritas
Life Insurance Corp. Separate Account LLVL with the Securities & Exchange
Commission covering flexible premium life insurance policies, I have examined
such documents and such laws as I considered necessary and appropriate, and on
the basis of such examination, it is my opinion that:
1. Ameritas Life Insurance Corp. is duly organized and validly existing
under the laws of the State of Nebraska and has been duly authorized to
issue individual flexible premium variable life policies by the
Insurance Department of the State of Nebraska.
2. Ameritas Life Insurance Corp. Separate Account LLVL is a duly
authorized and existing separate account established pursuant to the
provisions of Section 44-402.01 of the Statutes of the State of
Nebraska.
3. The survivorship flexible premium variable universal life policies,
when issued as contemplated by said Form S-6 Registration Statement,
will constitute legal, validly issued and binding obligations of
Ameritas Life Insurance Corp.
I hereby consent to the filing of this opinion as an exhibit to the
Pre-Effective Amendment No. 1 to said Form S-6 Registration Statement and to the
use of my name under the caption "Legal Matters" in the Prospectus contained in
the Registration Statement.
Sincerely,
/s/Donald R. Stading
Donald R. Stading
Senior Vice President,
Secretary and Corporate General Counsel
June 11, 1999
Ameritas Life Insurance Corp.
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
This opinion is furnished in connection with the registration by Ameritas Life
Insurance Corp., of a survivorship flexible premium variable universal life
insurance policy ("Contract") under the Securities Act of 1933. The prospectus
included in Pre-Effective Amendment No. 1 to Registration Statement No.
333-76359 on Form S-6 describes the Contract. The form of Contract was prepared
under my direction and I am familiar with the Registration Statement and
Exhibits thereto. This contract was developed and filed under Securities and
Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff.
In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 60 and a female age 55, than to prospective purchasers of the Contract
for other ages or for two males or two females.
I hereby consent to the use of this opinion as an exhibit to the Pre-Effective
Amendment No. 1 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Very truly yours,
/s/Thomas P. McArdle
Thomas P. McArdle
Assistant Vice President and
Associate Actuary
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement No. 333-76359 of Ameritas Life Insurance Corp. Separate Account LLVL
of our reports dated February 5, 1999, on the financial statements of Ameritas
Life Insurance Corp. and Ameritas Life Insurance Corp. Separate Account LLVL
appearing in the Prospectus, which is part of such Registration Statement, and
to the reference to us under the heading "Experts" in such Prospectus.
/s/Deloitte & Touche LLP
Lincoln, Nebraska
June 8, 1999
