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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
APRIL 20, 1999
REGISTRATION NO. 33-86500
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
Post-Effective Amendment No. 6
to
FORM S-6
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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)
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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
effective date.
It is proposed that this filing will become effective:
[ ] immediate upon filing pursuant to paragraph b
[ ] on pursuant to paragraph a of Rule 485
[X] on May 1, 1999 pursuant to paragraph b of Rule 485
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RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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<S> <C>
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; Additional Insurance Benefits
(Riders); 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
17 Summary; Policy Rights
18 The Funds; Vanguard Variable Insurance Fund; Neuberger
Berman Advisers Management Trust; Berger Institutional
Products 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
45 Not Applicable
46 The Funds; Accumulation Value; Surrender Charge
47 Not Applicable
48 State Regulation of Ameritas
49 Not Applicable
50 The Separate Account
</TABLE>
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<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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<S> <C>
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
</TABLE>
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PROSPECTUS
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
5900 "O" Street
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE P.O. Box 81889/Lincoln, Nebraska 68501
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This prospectus describes a flexible premium variable universal life insurance
policy ("Policy") offered by Ameritas Life Insurance Corp. ("Ameritas"). Like
traditional life insurance policies, the Policy provides Death Benefits to
Beneficiaries and gives you, the Policy Owner, the opportunity to increase the
Policy's Accumulation Value. Unlike traditional policies, this 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
payable as often as once each year. This flexibility lets you provide for your
changing insurance needs under a single insurance policy.
The 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 Accumulation 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 Vanguard Variable Insurance Fund ("Vanguard"), Neuberger Berman
Advisers Management Trust ("Neuberger Berman AMT"), Berger Institutional
Products Trust ("Berger IPT") 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, although lower amounts may be requested. The Policy is generally
available to cover individuals who are age 80 or less at their nearest birthday.
However, Ameritas may insure individuals above the age of 80, at its sole
discretion. 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 payments, as well as a detailed description of the Policy. The appendix
to the prospectus includes tables designed to illustrate how Accumulation 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, it is considered to
be a security. It is not a deposit with, an obligation of, or guaranteed or
endorsed by any banking institution through which it may be purchased, 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. The Policy Owner bears the entire
investment risk for monies placed in Separate Account LLVL under this Policy.
For this reason, the 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 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.
May 1, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DEFINITIONS................................................. 3
SUMMARY..................................................... 5
YEAR 2000................................................... 10
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS................ 11
Ameritas Life Insurance Corp.............................. 11
Ameritas Life Insurance Corp. Separate Account LLVL....... 11
The Funds................................................. 11
Investment Objectives and Policies Of The Funds'
Portfolios.............................................. 13
Addition, Deletion or Substitution of Investments......... 14
Fixed Account............................................. 15
POLICY BENEFITS............................................. 15
Purposes of the Policy.................................... 15
Death Benefit Proceeds.................................... 16
Death Benefit Options..................................... 16
Methods of Affecting Insurance Protection................. 18
Duration of the Policy.................................... 18
Accumulation Value........................................ 18
Benefits at Maturity...................................... 19
Payment of Policy Benefits................................ 19
POLICY RIGHTS............................................... 20
Loan Benefits............................................. 20
Surrenders................................................ 21
Partial Withdrawals....................................... 21
Transfers................................................. 21
Systematic Programs....................................... 22
Refund Privilege.......................................... 22
Exchange Privilege........................................ 23
PAYMENT AND ALLOCATION OF PREMIUMS........................ 23
Issuance of a Policy.................................... 23
Premiums................................................ 24
Allocation of Premiums and Accumulation Value........... 25
Policy Lapse and Reinstatement.......................... 25
CHARGES AND DEDUCTIONS.................................... 26
Deductions From Premium Payment......................... 26
Charges Deducted from Accumulation Value................ 26
Surrender Charge........................................ 27
Transfer Charge......................................... 27
Partial Withdrawal Charge............................... 27
Daily Charges Against the Separate Account.............. 27
Fund Management Fees.................................... 28
GENERAL PROVISIONS.......................................... 30
ADDITIONAL INSURANCE BENEFITS (RIDERS)...................... 31
DISTRIBUTION OF THE POLICIES................................ 32
FEDERAL TAX MATTERS......................................... 33
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 35
THIRD PARTY SERVICES........................................ 36
VOTING RIGHTS............................................... 36
STATE REGULATION OF AMERITAS................................ 36
EXECUTIVE OFFICERS AND DIRECTORS OF AMERITAS................ 37
LEGAL MATTERS............................................... 39
LEGAL PROCEEDINGS........................................... 39
EXPERTS..................................................... 39
ADDITIONAL INFORMATION...................................... 40
FINANCIAL STATEMENTS........................................ 40
AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL......... F-I-1
AMERITAS LIFE INSURANCE CORP................................ F-II-1
APPENDICES.................................................. A-1
</TABLE>
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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<PAGE> 6
DEFINITIONS
ACCUMULATION VALUE - The total amount that a 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 policy loans.
AMERITAS ("We, Us, Our") - Ameritas Life Insurance Corp., a stock life insurance
company.
ATTAINED AGE - The Issue Age of the Insured plus the number of complete Policy
Years that the policy has been in force.
BENEFICIARY - The person or persons designated in the application, unless later
changed, to receive the Death Benefit.
DEATH BENEFITS - The amount of insurance coverage provided under the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the beneficiary upon receipt by
Ameritas of Satisfactory Proof of Death of the Insured while the Policy is in
force. It is equal to: (l) the Death Benefit; plus (2) additional life insurance
proceeds provided by any riders; minus (3) any outstanding policy debt; minus
(4) any overdue monthly deduction, including the deduction for the month of
death.
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.
GUARANTEED DEATH BENEFIT PREMIUM - A specified optional premium amount for the
first three policy years which, if paid in advance on a monthly or yearly
cumulative basis, after adjustment for policy loans or Partial Withdrawals, will
keep the Policy in force during the first three policy years, so long as other
policy provisions are met, even if the Net Cash Surrender Value is insufficient
to cover monthly deductions. This benefit is provided without an additional
policy charge.
INSURED - The person whose life is insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
ISSUE AGE - The age of the Insured at the Insured's birthday nearest the Policy
Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MATURITY DATE - The date Ameritas pays any net cash surrender value, if the
Insured is still living.
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.
NET AMOUNT AT RISK - The amount by which the death benefit that would be payable
on a Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value on the date of surrender less
any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the premium charges.
OUTSTANDING POLICY DEBT - The sum of all unpaid policy loans and accrued
interest on policy loans.
PARTIAL WITHDRAWAL - A Policy Owner's means of accessing a portion of the
Accumulation Value without terminating coverage under the Policy. A Partial
Withdrawal has limitations, is irrevocable, and has several policy cost and
coverage implications.
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
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<PAGE> 7
Policy will remain in force unless the payments meet the requirements of the
Guaranteed Death Benefit Premium.
POLICY - The Flexible Premium Variable Universal Life Insurance Policy offered
by Ameritas and described in this Prospectus.
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 ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - As set forth in the Policy, 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) the
Issue Date is later because additional premiums or application amendments are
required at time of delivery.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date.
SATISFACTORY PROOF OF DEATH - Means all of the following must be submitted: (1)
A certified copy of the death certificate; (2) A Claimant Statement; (3) The
Policy; and (4) Any other information that Ameritas may reasonably require to
establish the validity of the claim.
SEPARATE ACCOUNT LLVL - Ameritas Life Insurance Corp. 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.
SPECIFIED AMOUNT - The minimum death benefit under the Policy, as selected by
the Policy Owner, which must be $100,000 or more at the Issue Date.
SUBACCOUNT - A subdivision of Separate Account LLVL. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - Occurs when the Policy is terminated before the maturity date during
the Insured's life for its Net Cash Surrender Value. Coverage under the Policy
will terminate as of the date of a surrender.
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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<PAGE> 8
SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read in conjunction with the detailed information appearing elsewhere in this
prospectus. Unless otherwise indicated, the description of the Policy contained
in this prospectus assumes that the Policy is in force, current charges were
used, and there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
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PREMIUM PAYMENTS
You can vary amount and frequency.
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DEDUCTIONS FROM PREMIUMS
Premium taxes and the expense of deferring the
tax deduction of policy acquisition costs -- 3.5%
This charge is guaranteed not to exceed 5%
There is no premium load to cover sales and distribution expenses.
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NET PREMIUM
You direct the net premium to be invested in the Fixed Account or in Separate
Account LLVL which offers 21 different Subaccounts. The 21 Subaccounts invest
in the corresponding portfolios of Vanguard, Neuberger Berman AMT, Berger IPT
or Rydex
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DEDUCTIONS FROM ASSETS
Monthly charge for cost of insurance and cost of any riders.
Monthly charge for administrative expenses ($9.00 per month the first policy
year and the 12-month period following an increase in specified amount, $4.50
per month currently thereafter). This charge is guaranteed not to exceed $9.00
per month.
Daily charge, at an annual rate of 0.75%, from the Subaccounts for mortality
and expense risks. This charge is guaranteed not to exceed .90%. This charge
is not deducted from Fixed Account assets.
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LIVING BENEFITS
Partial Withdrawals may be made (subject to certain restrictions). The death
benefit will be reduced by the amount of the Partial Withdrawal. Up to fifteen
free transfers may be made each year between the investment portfolios.
Accelerated payment of up to 50% of the lowest scheduled Death Benefit is
available under certain conditions for Insureds suffering from terminal
illness.
The Policy may be surrendered at any time for its Net Cash Surrender Value. The
policy has no surrender charge. However, there is a charge for Partial
Withdrawals.
RETIREMENT BENEFITS
Loans may be taken at a net zero interest rate after ten years or when the
Insured reaches 55 (whichever occurs later). Should the policy lapse while
loans are outstanding the portion of the loan attributable to earnings will
become taxable distributions. (See page 20).
Payments can be taken under one or more of five different payment options.
DEATH BENEFITS
Income tax free to Beneficiary. Available as lump sum or under the five
payment methods available as retirement benefits.
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This 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. As you review this
summary, note the italicized terms. Each is defined in the Definitions section
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.
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<PAGE> 9
WHO ISSUES THE 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 21 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 THE POLICY?
The primary purpose of the Policy is to provide life insurance protection on the
Insured named in the Policy. This means that, so long as the Policy is in force,
it will provide for:
- - life insurance coverage on the Insured up to age 100
- - an Accumulation Value
- - Surrender rights (including Partial Withdrawals and Surrender)
- - Policy loan privileges
- - a variety of optional benefits and riders that you may add to the Policy for
an additional charge or without charge if certain minimum premiums are paid
- - the payment of benefits to the Policy Owner, if living, on the Maturity Date
This Policy lets you choose, within limitations: (1) the amount and frequency of
premium payments; (2) how your Accumulation Values are invested; and (3) from
two death benefit options.
The 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 Premium will be invested. Thus, the value of a Policy will reflect
your investment choices over the life of the Policy.
WHAT PREMIUM MUST BE PAID TO KEEP A POLICY IN FORCE?
This Policy differs from a conventional life insurance policy in two important
ways. First, the failure to pay a Planned Periodic Premium will not in itself
cause the Policy to lapse. Second, a Policy can lapse even if Planned Periodic
Premiums have been paid unless the Guaranteed Death Benefit Premium requirements
have been met. (See the section on Payment and Allocation of Premiums.)
You must pay at least 25% of the total first year monthly deductions including
charges for riders, and any substandard risk adjustments in order to put the
Policy in force. This minimum initial premium is less than the Guaranteed Death
Benefit Premium. After the minimum initial premium is paid, you may pay
additional unscheduled premiums in any amount and at any frequency, subject only
to the maximum and minimum limitations set by Ameritas and the federal tax law
limits on total premiums paid. You may also choose a Planned Periodic Premium
which may include the minimum cumulative premiums necessary to keep in force the
Guaranteed Death Benefit Provision.
A Policy will lapse when its Net Cash Surrender Value is not sufficient to pay
the monthly deduction for insurance and administrative charges, unless the
Guaranteed Death Benefit Provision is in effect. A 61 day period from the date
written notice of lapse is mailed to the Policy Owner's last known address will
be allowed for the Policy Owner to make sufficient payment to keep the Policy in
force (grace period).
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, Lincoln, NE 68501. Your initial
premium will be allocated to the Money Market Subaccount for 13 days following
the Issue Date, and then will be allocated to the Subaccounts and/or the Fixed
Account, according to selections you made in your application. 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 Refund Privilege.)
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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. When
Ameritas receives your premium payment at its Home Office, the premium charge
for taxes will be deducted and the Net Premium will be allocated to the
Subaccounts and/or the Fixed Account according to your selections. (See the
sections on Allocation of Net Premiums and Deductions from Premium Payment.)
As already noted, the Policy 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 maximum
premium limits 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 sections on Premium Limitations and Planned Periodic Premiums.)
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 21 investment
portfolios, each of which is a separate series of a mutual fund from Vanguard,
Neuberger Berman AMT, Berger IPT and Rydex. These portfolios are:
- - VANGUARD:
Money Market
High-Grade Bond
High Yield Bond
Balanced
Equity Income
Equity Index
Growth
Small Company Growth
International
- - NEUBERGER BERMAN AMT:
Limited Maturity Bond
Growth
Partners
Balanced
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<PAGE> 11
- - BERGER IPT:
100 Fund
Small Company Growth Fund
- - RYDEX:
Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
Details about the investment objectives and policies of each of the available
investment portfolios, including management fees and expenses, appear in the
section on The Funds. 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 death of
the Insured. 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 of the
Insured -- will vary over the life of your Policy, depending on which of the two
available coverage options you select.
If you choose Option A, Death Benefit Proceeds 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, Death Benefit
Proceeds 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 date of death. In either case, the
applicable percentage is established based on the age of the Insured at the date
of death (See the section on Death Benefit Options.)
If the Extended Maturity Rider is in effect, the Death Benefit will be the
Accumulation Value.
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.
IS THE ACCUMULATION VALUE OF MY POLICY AVAILABLE BEFORE THE MATURITY DATE
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 Policy, after the first Policy anniversary. The
maximum amount you may borrow is 100% of the Net Cash Surrender Value after
adjustment for loan interest and guaranteed monthly deductions for the remainder
of the Policy Year. The maximum interest rate on any such loan is 6% annually;
the current rate is 5.5% annually. After the later of the Insured's age 55 or
the tenth Policy anniversary, you may borrow each year against a limited amount
of the Accumulation Value at a reduced rate. Any loan transaction will
permanently affect the values of the Policy. Further, a 10% penalty tax may
apply. (See the section on Federal Tax Matters.) If the Outstanding Policy Debt
exceeds the Policy's Accumulation Value and any accrued expenses, you must pay
the excess, or the Policy may terminate without value. If the Policy lapses
while policy loans are outstanding, the portion of the loans attributable to
earnings will become taxable. (See the section on Loan Benefits.)
You may also access the value of your Policy by making a partial withdrawal. A
partial withdrawal may not exceed the Net Cash Surrender Value, and the Net Cash
Surrender Value after a partial withdrawal
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must be the greater of $1,000 or an amount sufficient to keep the Policy in
force for the remainder of the Policy Year. Partial withdrawals will reduce both
the Accumulation Value and the Death Benefit payable under the Policy. Ameritas
may deduct a charge from each partial withdrawal (See the section on Partial
Withdrawals.)
You may, of course, surrender the Policy at any time and receive its Net Cash
Surrender Value. However, Surrender terminates your life insurance protection.
WHAT ARE THE CHARGES ASSOCIATED WITH OWNERSHIP OF A POLICY?
SALES CHARGE. There is no premium load to cover sales and distribution expenses.
PREMIUM CHARGES. Generally, a charge of no greater than 5% (currently 3.5%) of
each premium will be deducted to compensate Ameritas for premium tax charges
(currently 2.5%) and the expenses of deferring the tax deduction of policy
acquisition costs (currently 1.0%) before placing any amount in a Subaccount or
the Fixed Account. Ameritas does not expect to derive a profit from the premium
charges. (See the section on Deductions From Premium Payment.)
MONTHLY CHARGES AGAINST THE ACCUMULATION VALUE.
a) A monthly maintenance charge of up to $9.00 (currently Ameritas is charging
$9.00 per month during the first Policy Year and during any 12-month period
after an increase in specified amount, and $4.50 per month thereafter)to
compensate Ameritas for the continuing administrative costs of the Policy; plus
b) A monthly charge for the cost of insurance including the cost for any riders.
(See the section on Charges Deducted from Accumulation Value.)
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT. A daily charge will be imposed at an
annual rate not to exceed .90% (currently .75%) of the average daily net assets
of each Subaccount, but not the Fixed Account. This charge compensates Ameritas
for mortality and expense risks assumed in connection with the Policy. (See the
section on Daily Charges Against the Separate Account.).
No additional charges are currently made against Separate Account LLVL for
federal, state or local taxes. If there is a material change from the expected
treatment of Ameritas under federal, state or local tax laws, Ameritas may
determine to make deductions from Separate Account LLVL to pay those taxes. (See
the section on Taxes.)
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 Management Fees.)
SURRENDER CHARGE. This policy has no surrender charge. However, there is a
charge for Partial Withdrawals. (See below).
TRANSFER CHARGE. The first 15 transfers of Accumulation Value per policy year
are free of charge. Then a $10 administrative charge may be assessed for each
additional transfer. The transfer charge will be deducted from the amount
transferred. (See the section on Transfer Charge.)
PARTIAL WITHDRAWAL CHARGE. Ameritas may deduct a charge, not to exceed the
lesser of $50 or 2% of the amount withdrawn for each Partial Withdrawal.
(Currently, the charge is the lesser of $25 or 2%.) The charge will be deducted
from the amount paid as a result of the Partial Withdrawal and will compensate
Ameritas for the administrative costs of Partial Withdrawals. A Partial
Withdrawal charge is not assessed when a Policy is surrendered. (See the section
on Partial Withdrawal Charge.)
CAN I ADJUST DEATH BENEFITS?
Yes. After the first Policy anniversary you may adjust the Death Benefit by
changing the Death Benefit option. You may also adjust the Death Benefit by
decreasing the Specified Amount of the Policy after the first Policy Year. A
change in the Specified Amount and a change in the Death Benefit option may only
be made once per year, and are subject to certain limits. No change will be
allowed if the resulting Specified Amount is less than the minimum allowed. The
Specified Amount remaining in force after any requested
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decrease may not be less than $100,000 in the first three Policy Years and
$75,000 thereafter. A change in the Death Benefit option from Option A to Option
B will require satisfactory evidence of insurability. Finally, if, following the
decrease in Specified Amount, the Policy would not comply with the premium
limitations required by federal tax law, We may limit the decrease or return
Accumulation Value in order to meet the requirements of the federal tax law.
(See the section on Death Benefit Options.)
WHAT IS THE TAX TREATMENT OF THE POLICY?
Like death benefits payable under conventional life insurance policies, life
insurance proceeds payable under the Policy are excludable from the taxable
income of the Beneficiary. Should the Policy be deemed a modified endowment
contract (see the section on Federal Tax Matters-Tax Status of the Policy),
Partial Withdrawals or Surrenders, assignments, policy pledges, and loans under
the Policy will be taxable to the Policy Owner to the extent of any gain under
the Policy. Generally, a 10% penalty tax also applies to the taxable portion of
any distribution prior to the Owner reaching age 59 1/2. (For further detail
regarding taxation, see the section on Federal Tax Matters.)
MAY I RETURN THE POLICY FOR A REFUND OR EXCHANGE IT FOR ANOTHER POLICY?
REFUND PRIVILEGE. You have a period of time (a "free look period") to examine a
Policy and return it for a refund. You may cancel the Policy within 45 days
after Part I of the application is signed, within 10 days after you receive the
Policy, or 10 days after Ameritas delivers a notice concerning cancellation,
whichever is later. The amount of the refund is the greater of the premium paid
or the premium paid adjusted by investment gains and losses. (See the section on
Refund Privilege.)
EXCHANGE PRIVILEGE. During the first 24 months after the Policy Date of the
Policy, subject to certain restrictions, you may exchange the Policy for a
flexible premium adjustable life insurance policy issued and made available for
exchange by Ameritas. The policy provisions and applicable charges for the new
policy will be based on the same policy date and issue age as under the Policy.
(See the section on Exchange Privilege.)
WHEN DOES MY POLICY TERMINATE?
You may terminate your Policy by Surrendering the Policy during the lifetime of
the Insured for its Net Cash Surrender Value. (See the section on Surrenders.)
As noted above, your Policy will terminate if you fail to maintain sufficient
Net Cash Surrender Value to cover Policy charges. (See the section on Duration
of the Policy.)
Finally, your Policy will terminate on its Maturity Date if the named Insured is
living on that date, unless you have elected the extended maturity rider. The
Maturity Date is the policy anniversary nearest to the Insured's 100th birthday.
On the Maturity Date, Ameritas will pay you an amount equal to the Accumulation
Value of your Policy, less any Outstanding Policy Debt. (See the section on
Benefits at Maturity.)
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 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
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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.
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.
AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL
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.
THE FUNDS
There are currently 21 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 Vanguard, Neuberger
Berman AMT, Berger IPT, or Rydex (collectively the "Funds"). Each Fund is
registered with the SEC under the 1940 Act as an open-end diversified management
investment company.
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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 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 Vanguard, Neuberger Berman AMT, Berger IPT 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;
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
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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 Vanguard
Money Market Subaccount.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
VANGUARD
MONEY MARKET PORTFOLIO seeks to provide a current income and a stable net asset
value of $1.00 per share. The Portfolio invests primarily in high-quality money
market instruments issued by financial institutions, nonfinancial corporations,
and the U.S. Government, state and municipal governments and their agencies or
instrumentalities, as well as repurchase agreements collateralized by such
securities. Although the Portfolio seeks to preserve the level of your
investment at $1.00 per share, it is possible to lose money by investing in the
Portfolio.
HIGH-GRADE BOND PORTFOLIO seeks to provide a high level of income by attempting
to parallel the investment results (income plus capital change) of a broad
market index of publicly-traded investment grade fixed-income securities. The
Portfolio invests in a diversified sample of fixed income and mortgage-backed
securities included in the Lehman Brothers Aggregate Bond Index.
HIGH YIELD BOND PORTFOLIO seeks to provide a high level of current income by
investing in a diversified portfolio of lower quality, high-yielding corporate
debt securities (commonly referred to as "junk bonds").
BALANCED PORTFOLIO seeks to conserve capital, while providing moderate income
and moderate long-term growth of capital and income. The Portfolio invests in a
diversified portfolio of common stocks and bonds.
EQUITY INCOME PORTFOLIO seeks to provide a relatively high level of current
income and the potential for long-term growth of capital and income by investing
principally in dividend-paying stocks.
EQUITY INDEX PORTFOLIO seeks to provide long-term growth of capital and income
by attempting to parallel the investment results of the Standard & Poor's 500
Composite Stock Price Index (the "S & P 500"). The Portfolio invests primarily
in common stocks included in the S & P 500.
GROWTH PORTFOLIO seeks to provide long-term growth of capital by investing
primarily in large capitalization stocks of seasoned U.S. companies with
above-average prospects for growth.
SMALL COMPANY GROWTH PORTFOLIO seeks to provide long-term growth of capital by
investing primarily in equity securities of small companies deemed to have
favorable prospects for growth.
INTERNATIONAL PORTFOLIO seeks to provide long-term growth of capital by
investing primarily in equity securities of seasoned companies located outside
the United States.
NEUBERGER BERMAN AMT
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.
GROWTH PORTFOLIO seeks growth of capital. Principal series investments are
common stocks.
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PARTNERS PORTFOLIO seeks capital growth. Principal series investments are common
stocks of mid- to large-cap companies.
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.
BERGER IPT
BERGER IPT-100 FUND seeks long-term capital appreciation. Current income is not
an investment objective. The Fund places primary emphasis on established
companies which it believes to have favorable growth prospects, regardless of
the company's size. Common stock usually constitutes all or most of the Fund's
investment portfolio, but the Fund remains free to invest in securities other
than common stocks.
BERGER IPT-SMALL COMPANY GROWTH FUND seeks capital appreciation. It invests
principally in a diversified group of equity securities of small growth
companies whose market capitalization, at the time of initial purchase, is less
than the 12-month average of the maximum market capitalization for companies
included in the Russel 2000 Index. This average is updated monthly.
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.
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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.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium 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 the
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 and interest
credited thereto, less any deduction for charges and expenses. The Policy Owner
bears the investment risk that the declared rate described below, may fall to a
lower rate after the expiration of a declared rate period. Because of exemptive
and exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 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,
disclosures regarding the Fixed Account portion of the Policy 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%. Amounts allocated to the Fixed Account receive an interest rate declared
effective for the month of issue. The declared interest rate is guaranteed for
the remainder of the Policy Year. During later Policy Years, all amounts in the
Fixed Account will earn the interest rate that was declared in the month of the
last Policy anniversary. Declared interest rates may increase or decrease from
previous periods.
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 you with both lifetime insurance protection to
the policy anniversary nearest the Insured's 100th birthday and flexibility in
connection with 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 a Policy in force, but
may, subject to certain limitations, vary the frequency and amount of premium
payments. Moreover, the Policy allows you to adjust the level of death benefits
payable under the Policy without having to purchase a new Policy. You can
accomplish this by increasing (with evidence of insurability) or decreasing the
Specified Amount. An increase in the Specified Amount will increase the optional
Guaranteed Death Benefit Premium required. 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 you benefit
from any appreciation in value of the underlying assets, but bear the investment
risk of any depreciation in value. As a result, whether or not a Policy
continues in force may depend in part upon the investment experience of the
chosen Subaccounts.
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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. Ameritas agrees to keep the Policy in force during the first three years
and provide a Guaranteed Death Benefit during that period so long as the
cumulative monthly Guaranteed Death Benefit Premium is paid even though the
Guaranteed Death Benefit Premium allowed by contract may not, after the payment
of monthly insurance and administrative charges, generate positive Net Cash
Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, Ameritas will, upon satisfactory proof
of the Insured's death, pay the Death Benefit Proceeds of a Policy in accordance
with the death benefit option in effect at the time of the Insured's death. The
amount of the death benefits payable will be determined at the end of the
Valuation Period during which the Insured's death occurred. 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 Policy
Owner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options, unless the Extended Maturity
Rider is in effect. If the Extended Maturity Rider is in effect the Death
Benefit will be the Accumulation Value. Extension of the Maturity Date may
result in adverse tax consequences. (See the section on Additional Insurance
Benefits (Riders) -- Extended Maturity Rider.)The Policy Owner 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 generally $100,000. Lower Specified Amounts
may be requested. The following graphs illustrate the differences in the two
Death Benefit options.
OPTION A.
(OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.) [GRAPH]
Death Benefit Option A. Pays a Face Amount of Death Benefit equal to the
Specified Amount or the Accumulation Value multiplied by the Death Benefit Ratio
(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 on the date of
death. The applicable percentage is 250% for Insureds with an attained age 40 or
younger on the policy anniversary prior to the date of death. For Insureds with
an Attained Age over 40 on that policy anniversary, 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 95 is 100%. 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.
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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.) [GRAPH]
Death Benefit Option B. Pays a Face Amount of Death Benefit equal to the
Specified Amount plus the Policy's Accumulation Value or the Accumulation Value
multiplied by the Death Benefit Ratio, 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 on the date of death. The applicable percentage is the
same as under Option A: 250% for Insureds with an Attained Age 40 or younger on
the policy anniversary prior to the date of death, and for Insureds with an
Attained Age over 40 on that policy anniversary 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 Death
Benefit after the change will equal the Specified Amount before the change plus
the Accumulation Value on the effective date of the change. Ameritas will
require evidence of insurability before the change is made. 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 monthly cost of insurance charge since this charge varies with the
Net Amount at Risk, which is the amount by which the Death Benefit that would be
payable on a monthly activity date exceeds the Accumulation Value on that date.
Changing from Option B to Option A will generally decrease, in the future, the
Net Amount at Risk, and therefore the cost of insurance charges. Changing from
Option A to Option B will increase the Net Amount at Risk. Such a change will
result in an immediate increase in the cost of insurance charges because of the
increased coverage. (See the sections on Charges and Deductions, and Federal Tax
Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, you may increase or decrease the Specified Amount of a Policy. A
change in Specified Amount may affect the cost of insurance rate and the Net
Amount at Risk, both of which may affect your cost of insurance charge and 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 next 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 the first three Policy Years and $75,000 thereafter. In
addition, if following the decrease in Specified Amount, the Policy would not
comply with the maximum premium limitations required by federal tax law (See the
section on Premiums), the decrease may be limited or Accumulation Value may be
returned to the Policy Owner at the Policy Owner's election, to the extent
necessary to meet these requirements.
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Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, a written supplemental application must
be submitted. 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 effect the
requested increase. (See the section on Premiums Upon Increases in Specified
Amount.) The minimum amount of any increase is $25,000, and an increase cannot
be made if the Insured's Attained Age is over 80. An increase in the Specified
Amount will result in certain increased charges, which will be deducted from the
Accumulation Value of the Policy on each Monthly Activity Date. An increase in
the Specified Amount during the time the Guaranteed Death Benefit provision is
in effect will increase the premium requirements for that provision. (See the
section on Charges and Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION. You may increase or decrease the pure
insurance protection (Net Amount at Risk) provided by a Policy -- the difference
between the Death Benefit and the Accumulation Value -- in several ways as
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.
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. (See the section on
Charges Deducted from Accumulation Value.) Where, however, 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.) Ameritas agrees to keep the policy in force during the first
three years and provide a Guaranteed Death Benefit so long as the cumulative
Guaranteed Death Benefit premium is paid. (See the section on Additional
Insurance Benefits.)
ACCUMULATION VALUE. The Policy's Accumulation Value in Separate Account LLVL or
the Fixed Account will reflect the investment performance of the chosen
Subaccounts of Separate Account LLVL or the Fixed Account, the net premiums
paid, any Partial Withdrawals, and the charges assessed in connection with the
Policy. You may at any time surrender the Policy and receive the Policy's Net
Cash Surrender Value. (See the section on Surrenders.) There is no guaranteed
minimum Accumulation Value.
DETERMINATION OF ACCUMULATION VALUE. Accumulation Value is determined on each
Valuation Date. On the policy Issue Date, the Accumulation Value in a Subaccount
will equal the portion of any Net Premium allocated to the Subaccount, reduced
by the portion of the first monthly deductions allocated to that Subaccount.
(See the section on Allocation of Premiums and Accumulation Value.) Thereafter,
on each Valuation Date, the Accumulation Value of a Policy will equal:
(1) The aggregate of the values attributable to the Policy in each of the
Subaccounts on the Valuation Date, determined for each Subaccount by
multiplying the Subaccount's unit value by the number of Subaccount units
allocated to the Policy; plus
(2) The value of the Fixed Account; plus
(3) Any Accumulation Value impaired by 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, the number of Subaccount units
allocated to the Policy is determined after any transfers among Subaccounts, or
the Fixed Account, (and deduction of transfer charges) but before any other
Policy transactions, such as receipt of Net Premiums and Partial Withdrawals, on
the Valuation Date. Because the Accumulation Value is dependent upon a number of
variables, a Policy's Accumulation Value cannot be predetermined.
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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
not exceeding an annual rate of .90% for mortality and expense risk; and (3)
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. 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.
BENEFITS AT MATURITY
If the Insured is living, We will pay the Net Cash Surrender Value of the Policy
on the Maturity Date to the Policy Owner. The Policy will mature on the policy
anniversary nearest the Insured's 100th birthday, if living, unless the maturity
has been extended by election of the Extended Maturity Rider. The Policy may be
subject to certain adverse tax consequences when continued beyond the original
scheduled Maturity Date. (See the section on Additional Insurance Benefits
(Riders) -- Extended Maturity Rider.)
PAYMENT OF POLICY BENEFITS
We will usually pay Death Benefit Proceeds under the Policy within seven days
after We receive Satisfactory Proof of Death. Accumulation Value benefits will
ordinarily be paid within seven days of receipt of a written request. Payments
may be postponed in certain circumstances. (See the section on Postponement of
Payments.) You may decide the form in which the benefits will be paid. During
the Insured's lifetime, you 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.
These choices are also available if the Policy is surrendered or matures. If no
election is made, We will pay the benefits in a lump sum. When death benefits
are payable in a lump sum and no election for an optional method of payment is
in force at the death of the Insured, 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 be paid first 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. The minimum amount of each payment is $100. If a payment would
be less than $100 We have 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, the
proceeds will be transferred to Ameritas' General Account. We 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. 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.
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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, the proceeds may be paid in any
other manner approved by Us.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. After the first policy anniversary, you may borrow up to 100%
of the Net Cash Surrender Value after adjustment for loan interest and
guaranteed monthly deductions for the remainder of the Policy Year. The loans
will be made at regular and, as described below, reduced loan interest rates.
Loans usually are funded within seven days after receipt of a written request.
The loan may be repaid at any time while the Insured is living, prior to the
Maturity Date. Loans may have a tax consequence. (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. Ameritas is currently charging 5.5% on regular loans. If unpaid when
due, interest will be added to the amount of the loan and bear interest at the
same rate. After the later of Insured's age 55 or the tenth policy anniversary,
the Policy Owner may borrow each year a limited amount of the Accumulation 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. Ameritas is currently charging 3.5%
interest on reduced rate loans. The amount available at the reduced rate is 10%
of the Accumulation Value as of the later of Insured's age 55 or the 10th policy
anniversary (the start date) times the number of years since the start date,
increased by the accrued interest charges on the reduced loan amount.
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 Policy Owner earns 3.5% interest
on the Accumulation Values securing the loans. 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 of a Policy, and may permanently affect the amount
of the Death Benefit Proceeds, even if the loan is repaid.
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 indebtedness, the portion of the repayment allocated in accordance
with the repayment of indebtedness 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, and any accrued expenses, the Policy Owner
must pay the excess. Ameritas will send a notice of the amount which must be
paid. If the Policy Owner does 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 various 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 a substantial reduction be experienced, you may need to lower
anticipated Partial 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.)
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REPAYMENT OF INDEBTEDNESS. Unscheduled premiums paid while a policy loan is
outstanding are treated as repayment of indebtedness only if the Policy Owner so
requests. As indebtedness is repaid, the Accumulation Value in the General
Account securing the indebtedness repaid 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 during the lifetime of the Insured and prior to the Maturity Date,
the Policy Owner may 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 during which the Surrender request is received
at Ameritas's Home Office. 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. (See the section on Tax
Treatment of Policy Proceeds.)
If the Policy is being Surrendered, 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 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 exceed the Net Cash Surrender Value on the date the
request is received and may not be less than $500. The Net Cash Surrender Value
after a Partial Withdrawal must be the greater of $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 Subaccounts or the Fixed Account
according to your instructions when you request the Partial Withdrawal. However,
the minimum amount that can remain 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 in which the cost of insurance charge is calculated and the
Net Amount at Risk 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.
The Specified Amount remaining in force after a Partial Withdrawal may not be
less than $100,000 during the first three Policy Years and $75,000 thereafter.
Any request for a Partial Withdrawal that would reduce the Specified Amount
below this amount will not be implemented.
A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from each Partial Withdrawal amount paid. Currently, the charge is the
lesser of $25 or 2% of the amount withdrawn. (See the section on Partial
Withdrawal Charge.)
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 only make
transfers out of the Fixed Account during the 30-day period following each
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. 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.) Transfers may be subject to additional restrictions
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 15 free transfers per Policy Year. Ameritas may at any time
revoke or modify the transfer privilege, including the minimum amount
transferable.
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We will only allow transfers with regard to Rydex according to administrative
rules We have set.
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 the provision, by
Ameritas, of written confirmation of telephone transactions.
The Policy's transfer privilege is not intended to afford Policy Owners a way to
speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the transfer privilege that may potentially disrupt the
management of Separate Account LLVL and increase transaction costs, Separate
Account LLVL has established a policy of limiting excessive transfer activity.
You may make two substantive transfers from each Portfolio (at least 30 days
apart) during any calendar year. A substantive transfer is a transfer from a
Subaccount which exceeds the lesser of: 1) 51% of the Accumulation Value or 2)
$100,000. This restriction does not limit non-substantive transfers and does not
apply to transfers from the Money Market portfolio or the Rydex Portfolios.
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 the transfer fee applies. Lower minimum amounts
may be allowed to transfer as part of a systematic program. No other separate
fee is assessed when you choose one of these programs. All other normal transfer
restrictions, as described above, apply.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
Ameritas to allocate Accumulation Value among the Subaccounts of Separate
Account LLVL on a systematic basis, in accordance with your allocation
instructions. The Fixed Account can not be used in this program.
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 Money Market
Subaccount to any other Subaccount(s). Dollar cost averaging is permitted from
the Fixed Account, if no more than 1/36th of the value of the Fixed Account at
the time dollar cost averaging is established is transferred each month.
EARNING SWEEP. Permits systematic redistribution of earnings among Subaccounts.
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. Participation in any
systematic program will automatically terminate upon death of the Insured. Use
of systematic programs may not be advantageous, and does not guarantee success.
REFUND 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. If a Policy is
canceled within this time period the refund will be the greater of the premium
paid or the premium paid adjusted by investment gains or losses.
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To cancel the Policy, the Policy Owner must mail or deliver the policy and the
notice of cancellation 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
the Policy Owner's bank. (See the section on Postponement of Payments.)
EXCHANGE PRIVILEGE
During the first 24 policy months after the Policy Date of the Policy, the
Policy Owner may exchange the Policy for a flexible premium adjustable life
insurance policy approved for exchange and issued by Ameritas. No new evidence
of insurability will be required.
The Policy Date, Issue Age and risk classification for the Insured will be the
same under the new Policy as under the old. In addition, the policy provisions
and applicable charges for the new policy and its riders will be based on the
same Policy Date and Issue Age as under the Policy. Accumulation Values for the
exchange and payments will be established after making adjustments for
investment gains or losses and after recognizing variance, if any, between
payment or charges, dividends or Accumulation Values under the flexible contract
and under the new policy. The Policy Owner may elect either the same Specified
Amount or the same net amount at risk for the new policy as under the old.
To make the change, the Policy, a completed application for exchange and any
required payment must be received by Ameritas. The exchange will be effective on
the Valuation Date when all financial and contractual arrangements for the new
policy have been completed.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
The policy is available for individuals and for corporations and other
institutions who wish to provide coverage and benefits for key employees.
Individuals wishing to purchase a Policy must complete an application and submit
it to Ameritas. A Policy will generally be issued only to individuals 80 years
of age or less on their nearest birthday who supply satisfactory evidence of
insurability to Ameritas. Ameritas may, at its sole discretion, issue a Policy
to an individual above the age of 80. Acceptance is subject to Ameritas'
underwriting rules, and ALIC reserves the right to reject an application for any
reason.
The Policy Date is the effective date of coverage for all coverage applied for
in the original application. The Policy Date is used to determine Policy
Anniversary Dates, Policy Years and Policy months. The Policy Date and the Issue
Date will be the same unless: 1) an earlier Policy Date is specifically
requested, or 2) the Issue Date is later because additional premiums or
application amendments were needed. When there are additional requirements
before issue (see below) the Policy Date will be the date it is sent for
delivery and the Issue Date will be the date the requirements are met.
The Issue Date is the date that all financial, contractual and administrative
requirements have been met and processed for the Policy. 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 the Policy Owner
or sent to the agent for delivery to the Policy Owner. 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 are
received; and the application amendments are received and reviewed in Ameritas'
Home Office (federal funds are monies of member banks within the Federal Reserve
System which are held on deposit at a Federal Reserve Bank). The initial premium
payment will be allocated to the Money Market Portfolio of the Vanguard Variable
Insurance Fund as of the issue date, for 13 days. Then, the Accumulation Value
will be allocated to the Subaccounts or the Fixed Account as selected by the
Policy Owner.
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 the Insured's lower Issue Age 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.
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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 amount at the time of the application, the
amount of the interim coverage is limited to the smaller of: (1) the amount of
insurance applied for, (2) $100,000, or (3) $25,000 if the proposed Insured is
under age 10 or over age 60 at nearest birthday.
PREMIUMS
No insurance will take effect before an amount equal to or greater than the
minimum initial premium is received by Ameritas in federal funds. The minimum
initial premium is 25% of the total first year charges and deductions including
charges for riders and any substandard risk adjustments. The minimum initial
premium is less than the Guaranteed Death Benefit Premium. Subsequent premiums
are payable at Ameritas' Home Office.
Subject to certain limitations, a Policy Owner has flexibility in determining
the frequency and amount of premiums. However, unless the Policy Owner has paid
sufficient premiums to pay the cost of insurance, the monthly maintenance and
mortality and expense risk charges, the Policy may have a zero Net Cash
Surrender Value and lapse. Ameritas agrees to keep the Policy in force during
the first three years and provide a Guaranteed Death Benefit so long as the
cumulative monthly Guaranteed Death Benefit Premium is paid even though, in
certain instances, these premiums may not, after the payment of monthly
insurance and administrative charges, generate positive Net Cash Surrender
Values. (See the section on Additional Insurance Benefits (Riders).)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued each Policy Owner
may determine a Planned Periodic Premium schedule that provides for the payment
of level premiums at selected intervals. The Planned Periodic Premium schedule
may include the Guaranteed Death Benefit Premium. The Policy Owner is not
required to pay premiums in accordance with this schedule. The Policy Owner has
considerable flexibility to alter the amount and frequency of premiums paid.
Ameritas does reserve the right to limit the number and amount of additional or
unscheduled premium payments.
Policy Owners can 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 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 Guaranteed Death Benefit provision is in effect, even if Planned
Periodic Premiums are paid by the Policy Owner, the Policy will lapse any time
the Net Cash Surrender Value is insufficient to pay certain monthly charges, and
a grace period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
planned and unscheduled, exceed the current maximum premium limitations
established by federal tax laws.
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limitation, 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 limitations prescribed 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 Policy Owner, an additional
premium payment may be required. Ameritas will notify the Policy Owner of any
premium required to fund the increase. This required premium must be made as a
single payment. The Accumulation Value of the Policy will immediately be
increased by the amount of the payment, less the applicable premium charge.
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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 of Separate Account LLVL or to
the Fixed Account. Allocations must be whole number percentages and must total
100%. The allocation for future net premiums may be changed without charge by
providing proper notification to the Home Office. If there is any Outstanding
Policy Debt at the time of a payment, Ameritas will treat the payment as a
premium payment unless otherwise instructed in proper written notice.
The initial premium payment will be allocated to the Money Market portfolio of
the Vanguard Variable Insurance Fund as of the Issue Date, for 13 days. Then,
the Accumulation Value will be allocated to the Subaccounts or the Fixed Account
as selected by the Policy Owner. 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 that are available to
Ameritas. In no event will interest be credited prior to the Policy Date.
ACCUMULATION VALUE. The value of the Subaccounts of Separate Account LLVL will
vary with the investment performance of these Subaccounts and the Policy Owner
bears the entire investment risk. This will affect the Policy's Accumulation
Value, and may affect the Death Benefit as well. Policy Owners should
periodically review their allocations of premiums and values in light of market
conditions and overall financial planning requirements.
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 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 the Policy Owner at the beginning of the grace period by mail
addressed to the last known address on file with Ameritas. The notice will
specify the premium required to keep the Policy in force. Failure to pay the
required amount within the grace period will result in lapse of the Policy. If
the Insured dies during the grace period, any overdue monthly deductions and
outstanding policy debt will be deducted from the proceeds.
If the Net Cash Surrender Value is insufficient to cover the monthly deduction,
the Policy Owner must pay a premium during the grace period sufficient to cover
the monthly deductions and premium charges for the three policy months after
commencement of the grace period to avoid lapse. (See the section on Charges and
Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) from the beginning of the grace period, but before the
Maturity Date. We will reinstate your Policy based on the Insured's underwriting
classification at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of the Insured satisfactory to Ameritas
(including evidence of insurability of any person covered by a rider
to reinstate the rider);
(2) Any policy debt 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 payment of a premium sufficient to pay monthly and other policy
deductions for the three months following reinstatement and to pay
premium charges on the premiums paid; and
(5) If the reinstatement occurs during the first three Policy Years, you
may pay premiums in the amount necessary to meet the cumulative
monthly requirements of the Guaranteed Death Benefit Premium as of
the date of reinstatement.
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The amount of Accumulation Value on the date of reinstatement will be equal to
the amount of the Net Cash Surrender Value on the date of lapse, increased by
the premium paid at reinstatement, less the premium charges and the amounts
stated above. If any policy debt was 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; (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 PAYMENT
SALES CHARGE. There is no premium load to cover sales and distribution expenses.
PREMIUM CHARGES. A deduction of up to 5% (currently 3.5%) of the premium will be
made from each premium payment to pay state premium taxes (currently 2.5%) and
the expense of deferring the tax deduction of policy acquisition costs
(currently 1.0%). The deduction represents an amount Ameritas considers
necessary to pay all premium taxes imposed by the states and their subdivisions
and to defray the cost of capitalizing certain policy acquisition expenses as
required by Internal Revenue Code Section 848. Ameritas does not expect to
derive a profit from the premium charges.
As to state premium taxes, these vary from state to state and currently range
from .75 percent to 3.5 percent. Therefore, the deduction Ameritas makes from
each premium payment may be higher or lower than the actual premium tax imposed
by a particular jurisdiction. The rate of tax imposed is subject to change by
governmental entity.
CHARGES DEDUCTED FROM ACCUMULATION VALUE
MONTHLY DEDUCTION. 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 on a pro rata basis. Each
of these charges is described in more detail below.
MAINTENANCE CHARGE. To compensate Ameritas for the ordinary administrative
expenses expected to be incurred in connection with a Policy, the monthly
deduction includes a $9.00 per policy charge (currently $9.00 the first policy
year and the first 12 months following an increase in Specified Amount and $4.50
during all other months). This maintenance charge is levied throughout the life
of the Policy and is guaranteed not to increase above $9.00 per month. Ameritas
does not expect to make any profit from the monthly maintenance 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 charges by multiplying the applicable
cost of insurance rate by the Net Amount at Risk for each policy month. The Net
Amount at Risk on any Monthly Activity Date is the amount by which the Death
Benefit which would have been payable on that Monthly Activity Date exceeds the
Accumulation Value on that date.
The annual cost of insurance rate is based on the Insured's sex, Attained Age,
policy duration, Specified Amount, and risk class. The rate will vary if the
Insured is a smoker, non-smoker, a preferred non-smoker or is considered a
substandard risk and rated with a tabular extra rating. For the initial
Specified Amount, the cost of insurance rate will not exceed those shown in the
Table of Policy Charges shown in the schedule pages of the Policy. These
guaranteed rates are based on the Insured's age nearest birthday and are equal
to the 1980 Commissioners Standard Ordinary Smoker and Non-Smoker, Male and
Female Mortality Tables. The current rates range between 40% and 100% of the
rates based on the 1980
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Commissioners Standard Ordinary Tables, based on Ameritas' own mortality
experience. Policies issued on a unisex basis are based upon the 1980
Commissioners Standard Ordinary Table B assuming 80% male and 20% female lives.
The cost of insurance rates, and payment options for policies issued in Montana
and certain other states, or issued in connection with certain employer
sponsored arrangements are on a sex-neutral (unisex) basis. The unisex rates
will be higher than those applicable to females and lower than those applicable
to males. Any change in the cost of insurance rates will apply to all persons of
the same age, sex, Specified Amount and risk class and whose policies have been
in effect for the same length of time.
If the underwriting class for any increase in the Specified Amount or for any
increase in Death Benefit resulting from a change in Death Benefit option from A
to B is not the same as the underwriting class at issue, the cost of insurance
rate for the increase will reflect the underwriting class which would apply for
such increase. Decreases will also be reflected in the cost of insurance rate as
discussed earlier.
The actual charges made during the Policy Year will be shown in the annual
report delivered to Policy Owners.
The rate class of an Insured will affect the cost of insurance rate. Ameritas
currently places Insureds into both standard rate classes and substandard
classes that involve a higher mortality risk. In an otherwise identical policy,
an Insured in the standard rate class will have a lower cost of insurance rate
than an Insured in a rate class with higher mortality risks. If a Policy is
rated at issue with a tabular extra rating, the guaranteed rate is a multiple of
the guaranteed rate for a standard issue. This multiple factor is shown in the
Schedule of Benefits in the Policy, and may be from 1.37 to 4 times the
guaranteed rate for a standard issue.
Insureds may also be assigned a flat extra rating to reflect certain additional
risks. The cost of insurance rate will be increased by the flat extra rating.
SURRENDER CHARGE
The Policy has no surrender charge and may be surrendered at any time during the
Insured's lifetime for the policy's Net Cash Surrender Value. There is a charge,
however, for Partial Withdrawals. (See the section on Partial Withdrawal
Charge.)
TRANSFER CHARGE
A charge of $10.00 (guaranteed not to increase) for each transfer among the
Investment Options in excess of 15 per Policy Year may be imposed to compensate
Ameritas for the costs of processing the transfer. Since the charge reimburses
Ameritas for the cost of processing the transfer only, Ameritas does not expect
to make any profit from the transfer charge. This charge will be deducted pro
rata from each Investment option 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). A Partial
Withdrawal charge is not assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily 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
currently at the rate of 0.002049% (equivalent to an annual rate of 0.75%) and
will not exceed 0.002459% (equivalent to an annual rate of .90%) of the average
daily net assets of Separate Account LLVL. 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
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by the number of days since the last Valuation Date. No mortality and expense
charges will be deducted from the amounts in the Fixed Account.
Ameritas believes that this level of charge is within the range of industry
practice for comparable flexible premium variable universal life policies.
The mortality risk assumed by Ameritas is that Insureds may live for a shorter
time than assumed, and that an 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.
FUND MANAGEMENT FEES
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.
Vanguard's Fixed Income Group provides advisory services to the Money Market and
High-Grade Bond Portfolios. Vanguard's Core Management Group provides advisory
services to the Equity Index Portfolio. Newell Associates, Lincoln Capital
Management Company, and Granahan Investment Management, Inc., serve as
independent investment advisors to the Equity Income, Growth, and Small Company
Growth Portfolios, respectively. Wellington Management Company serves as
investment advisor to the Balanced and High Yield Bond Portfolios. The
International Portfolio employs Schroder Capital Management International, Inc.
as the adviser. Each portfolio reimburses Vanguard for the costs of providing
corporate management, administrative, distribution and shareholder accounting
services.
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 voluntarily undertaken to limit the listed Portfolio's expenses by
reimbursing each 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, in the aggregate, 1% per annum of the
Portfolio's average daily net asset value. This undertaking is subject to
termination on 60 days' prior written notice to the Portfolio.
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.
Berger Associates provides investment advisory services to the Berger IPT Funds
available in Separate Account LLVL. Berger Associates has agreed to waive its
advisory fee and reimburse the Funds for additional expenses to the extent that
normal operating expenses in any fiscal year, including the management fee but
excluding brokerage commissions, interest, taxes and extraordinary expenses, of
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Berger IPT-100 Fund exceed 1.00%, and the normal operating expenses in any
fiscal year of the Berger IPT-Small Company Growth Fund exceed 1.15%, of the
respective Fund's average daily net assets.
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%.
EXPENSES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
PORTFOLIO INVESTMENT ADVISORY & OTHER EXPENSES TOTAL TOTAL
- -------------------------------- MANAGEMENT
(Reflecting waivers,
and/or
reimbursements,
if any)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VANGUARD(1)
Money Market .16% .04% .20% .20%
High-Grade Bond .23% .05% .28% .28%
High Yield Bond .28% .03% .31% .31%
Balanced .28% .03% .31% .31%
Equity Income .33% .03% .36% .36%
Equity Index .17% .03% .20% .20%
Growth .36% .03% .39% .39%
Small Company Growth .38% .04% .42% .42%
International .39% .09% .48% .48%
NEUBERGER BERMAN AMT(2)
Limited Maturity .65% .11% .76% .76%
Balanced .85% .18% 1.03% 1.03%
Partners .78% .06% .84% .84%
Growth .83% .09% .92% .92%
BERGER IPT(3)
100 Fund .75% 2.13% 2.88% 1.00%
Small Company Growth .90% 1.29% 2.19% 1.15%
RYDEX(4)
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>
(1) 9/30/98 fiscal year end.
(2) 12/31/98 fiscal year end.
(3) 12/31/98 fiscal year end. Expenses reflect fee waiver and expense
reimbursement.
(4) 12/31/98 fiscal year end. Expenses reflect fee waiver and/or expense
reimbursement.
None of the Fund management fees will be assessed against amounts in the Fixed
Account.
TAXES. Currently, no additional charges are made against Separate Account LLVL
for 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. Charges for such
taxes, if any, would be
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<PAGE> 33
deducted from Separate Account LLVL and/or the Fixed Account. (See the section
on Federal Tax Matters.)
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. The Policy controls the rights and
benefits. A copy of the Policy 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. The Policy Owner 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 Insured,
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 during the Insured's lifetime 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 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. 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
proceeds is subject to the rights of any assignee of record. A collateral
assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The proceeds are subject first to any indebtedness 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 the
Insured, the 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 on the Maturity Date or upon Surrender shall be
paid in one sum unless an optional method of payment is elected.
INCONTESTABILITY. Ameritas can not contest the Policy or reinstated Policy while
the 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 the
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 that provide disability or accidental death benefits.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the Insured or any person
insured by rider has been misstated, the amount of the Death Benefit will be
adjusted. The Death Benefit will be adjusted to the amount that would be
purchased by the most recent cost of insurance deductions using the correct cost
of insurance rate.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's insurance law. If the 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 the 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 applied to the increase. The laws of Missouri
provide that
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<PAGE> 34
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
Withdrawals, policy loans, benefits payable at death or maturity, and transfers
may be postponed whenever: (1) 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; (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 to determine the
value of Separate Account LLVL's net assets; or (4) Surrender, 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 otherwise notified 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.
(See the section on Charges Deducted From Accumulation Value-Monthly Deduction.)
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT
RIDER). Upon satisfactory proof of terminal illness 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. Ameritas may charge the lesser of 2% of the
benefit or $50 as a Partial Withdrawal charge to cover the costs of
administration.
Satisfactory proof of terminal illness 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 physician's statement. Further, the condition
must first be diagnosed while the Policy was in force.
The accelerated benefit first will be used to repay any outstanding
policy loans and unpaid loan interest, and will also affect future
loans, Partial Withdrawals, and Surrender. The accelerated benefit will
be treated as a lien against the Policy Death Benefit and will thus
reduce the proceeds payable on the death of the Insured. There is no
extra premium for this rider.
CHILDREN'S PROTECTION RIDER. Provides for term insurance on the
Insured's children, as defined in the rider. Under the terms of the
rider, the Death Benefit will be payable to the named beneficiary upon
the death of any insured child. Upon receipt of proof of the Insured's
death before the rider terminates, the rider will be considered paid up
for the term of the rider.
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<PAGE> 35
GUARANTEED INSURABILITY RIDER. Provides that the Policy Owner can
purchase additional insurance for the Insured by increasing the
Specified Amount of the Policy at certain future dates without evidence
of insurability.
WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY. Provides, while the Insured
is disabled, for the waiver of monthly deduction for expense charges and
the cost of insurance charges including table ratings and flat extras
for the policy and all riders.
PAYOR WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY. Provides, while the
covered person is disabled, for the waiver of monthly deductions for
expense charges and the cost of insurance charges including table
ratings and flat extras for the Policy and all riders. This rider is
available for Insureds ages 0 to 14.
COST RECOVERY RIDER. This rider allows a one time special Partial
Withdrawal without reducing the Specified Amount. There is no charge for
this rider.
EXTENDED MATURITY RIDER. This rider may be elected by submitting a
written request to Ameritas during the 90 days prior to Maturity Date.
If elected, as long as the Surrender Value is greater than zero, the
Policy will remain in force for purposes of providing a benefit at the
time of the Insured's death. Once this rider becomes effective, no
further premium payments will be accepted, and no monthly charges will
be made for cost of insurance, riders or flat extra rating. All other
policy provisions not specifically noted herein will remain in effect
while the Policy continues in force. Interest on Policy loans will
continue to accrue and become part of the Outstanding Policy Debt. This
rider does not extend the Maturity Date for purposes of determining
benefits under any other riders. Death Benefit Proceeds are payable to
the Beneficiary.
There is no extra premium for this rider. This rider is not available in
all states.
The Internal Revenue Service has not issued a ruling regarding the tax
consequences of this rider. The Policy may be subject to certain adverse
tax consequences when continued beyond the Maturity Date. Due to the
lack of specific guidance by the Internal Revenue Service on this issue,
the result is not certain. If the Policy is not treated as a life
insurance contract for federal income tax purposes after the original
scheduled Maturity Date, among other things, the Death Benefit may be
taxable to the recipient. The Policy Owner should consult a qualified
tax advisor regarding the possible adverse tax consequences resulting
from extension of the original scheduled Maturity Date.
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
annuities, and for Ameritas Variable Life Insurance Company's variable life and
variable annuities. 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.
LLVL
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<PAGE> 36
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 9% of the target first year premium paid plus the first
year cost of any riders, and 2% of excess first year premium. In years
thereafter, AIC or the other broker-dealer may receive asset based compensation
at an annualized rate of .1% per Policy Year of the Net Cash Surrender Value.
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
(except premium taxes, see the section on Deductions From Premium Payment) laws.
This discussion is based upon Ameritas' understanding of the relevant laws at
the time of filing. Counsel and other competent 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 Insured,
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 an entity separate 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 Policy.
Ameritas does not currently expect to incur any additional 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.
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. Ameritas
believes that the Policy meets the statutory definition of a life
insurance contract. If the Death Benefit of a Policy is changed, the
applicable definitional limitations may change. In the case of a decrease
in the death benefit, a partial Surrender, 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 Owners in order for the Policy to
LLVL
33
<PAGE> 37
continue complying with the section 7702 definitional limitations 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.
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 Insured 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.
Should the Policy become a "modified endowment contract", Partial
Withdrawal, 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 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. One may avoid a Policy
becoming a modified endowment contract by, among other things, not making
excessive payments or reducing benefits. Should one deposit excessive
premiums during a policy year, that portion that is returned by the
insurance company within 60 days after the policy anniversary will reduce
the premiums paid to avoid the policy 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 Code. Any life insurance policy received in exchange for a modified
endowment contract will also be treated as a modified endowment contract.
A Policy Owner 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
temporary 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 temporary 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
LLVL
34
<PAGE> 38
believes that the Death Benefit payable prior to the original maturity
date will be generally 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. However, in the event of certain cash
distributions under the Policy resulting from any change which reduces
future benefits under the Policy, the distribution will be taxed in whole
or in part as ordinary income (to the extent of gain in the Policy). See
the discussion on Tax Status of the Policy.
Ameritas also believes that loans received under a Policy 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, unless the Policy becomes a modified endowment contract. 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 Policies on the lives of individuals
who are or were officers, employees or persons financially interested in
the taxpayer's trade or business. Certain transitional rules for then
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's 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. The
right to exchange the Policy for a 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 Partial Withdrawal. Upon Surrender or when maturity benefits are paid,
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 Policy 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 the use of life insurance
in a qualified plan.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
Ameritas holds the assets of Separate Account LLVL. The assets are kept
physically segregated and held separate and apart from the General Account
assets, except for the Fixed Account. Ameritas maintains records of all
purchases and redemptions of Fund shares by each of the Subaccounts.
LLVL
35
<PAGE> 39
THIRD PARTY SERVICES
Ameritas is aware that certain third parties are offering investment advisory
services in connection with the Policies. Ameritas does not engage any such
third parties to offer such services of any type as part of the Policy. 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, to vote on matters that are required by the 1940 Act and upon any
other matter that may be voted upon at shareholder meetings of the Funds. To the
extent required by law, Ameritas will vote all shares of the Funds held in
Separate Account LLVL at regular and special shareholder meetings of the Funds
in accordance with instructions received from Policy Owners based on the number
of shares held as of the record date declared by the Fund's Board of Directors.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy Owner is determined by dividing the Policy's 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.
The number of votes will be determined as of the record date established by the
Portfolio. Voting instructions will be solicited by written communication prior
to the shareholder meeting in accordance with procedures established by the
Funds.
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.
LLVL
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<PAGE> 40
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.
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*
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.
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.
ARNOLD D. HENKEL, VICE PRESIDENT-PENSIONS*
Capital Analysis/Henkel & Anderson Financial; Senior Vice President: Ministers
Life.
LLVL
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<PAGE> 41
THOMAS D. HIGLEY, VICE PRESIDENT AND FINANCIAL ACTUARY*
Also serves as an 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, VICE PRESIDENT-SECURITIES*
Also serves as an officer of a subsidiary 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-GROUP CLAIMS 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*
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.
LLVL
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<PAGE> 42
DONALD R. STADING, SENIOR VICE PRESIDENT, SECRETARY AND CORPORATE GENERAL
COUNSEL*
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
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.
LLVL
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<PAGE> 43
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.
LLVL
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<PAGE> 44
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 as of 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> 45
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> 46
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 3
<PAGE> 47
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> 48
<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> 49
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> 50
<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> 51
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> 52
<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> 53
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> 54
<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> 55
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> 56
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 13
<PAGE> 57
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> 58
<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> 59
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> 60
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> 61
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> 62
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> 63
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> 64
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> 65
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> 66
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> 67
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> 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)
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> 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)
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> 70
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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND NET CASH SURRENDER 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-3
through A-6 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-3 and A-5 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 Net Cash Surrender Values shown in
the tables on pages A-4 and A-6 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 1.02% 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 0.75% on pages A-3 and A-5 and at an
annual rate of .90% on pages A-4 and A-6 of the average net assets of the
Subaccounts). Berger Associates has agreed to waive its advisory fee and
reimburse the Funds for additional expenses to the extent that normal operating
expenses in any fiscal year, including the management fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses, of Berger
IPT-100 Fund exceed 1.00%, and the normal operating expenses in any fiscal year
of the Berger IPT-Small Company Growth Fund exceed 1.15%, of the respective
Fund's average daily net assets. 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. 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 -1.92%, 4.08%, and 10.08% on pages A-3 and A-5 and -1.77%,
4.23%, and 10.23% respectively, on pages A-4 and A-6.
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.)
A- 1
<PAGE> 83
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, ALIC 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.
A- 2
<PAGE> 84
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
ENDOWMENT AT AGE 100
Male Issue Age: 45 Non-Smoker Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $4,800
INITIAL SPECIFIED AMOUNT: $250,000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN
(-1.77% NET) (4.23% NET) (10.23% NET)
ACCUMULATED ------------------- ------------------- ---------------------
END OF PREMIUMS AT NET CASH NET CASH NET CASH
POLICY 5% INTEREST SURRENDER DEATH SURRENDER DEATH SURRENDER DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --------------------- ----------- --------- ------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,040 4,142 250,000 4,407 250,000 4,672 250,000
2 10,332 8,174 250,000 8,963 250,000 9,784 250,000
3 15,888 12,043 250,000 13,618 250,000 15,325 250,000
4 21,723 15,770 250,000 18,398 250,000 21,360 250,000
5 27,849 19,363 250,000 23,313 250,000 27,949 250,000
6 34,281 22,832 250,000 28,380 250,000 35,161 250,000
7 41,035 26,180 250,000 33,606 250,000 43,066 250,000
8 48,127 29,463 250,000 39,055 250,000 51,791 250,000
9 55,573 32,685 250,000 44,741 250,000 61,431 250,000
10 63,392 35,849 250,000 50,676 250,000 72,082 250,000
15 108,755 50,405 250,000 84,144 250,000 144,466 250,000
20 166,652 60,832 250,000 123,495 250,000 262,923 320,766
Ages
70 240,544 65,461 250,000 170,447 250,000 453,495 526,055
75 334,851 61,421 250,000 229,664 250,000 759,846 813,035
80 455,213 42,508 250,000 305,643 320,926 1,255,694 1,318,479
85 608,830 0 0 395,758 415,546 2,041,928 2,144,025
</TABLE>
- ---------------
1) Assumes an annual $4,800 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 ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-3
<PAGE> 85
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
ENDOWMENT AT AGE 100
Male Issue Age: 45 Non-Smoker Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $4,800
INITIAL SPECIFIED AMOUNT: $250,000
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS
ANNUAL INVESTMENT ANNUAL INVESTMENT 12% HYPOTHETICAL GROSS
RETURN RETURN ANNUAL INVESTMENT RETURN
(-1.92% NET) (4.08% NET) (10.08% NET)
ACCUMULATED --------------------- --------------------- -------------------------
END OF PREMIUMS AT NET CASH NET CASH NET CASH
POLICY 5% INTEREST SURRENDER DEATH SURRENDER DEATH SURRENDER DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ ----------- --------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,040 4,142 250,000 4,407 250,000 4,672 250,000
2 10,332 7,572 250,000 8,340 250,000 9,140 250,000
3 15,888 10,879 250,000 12,377 250,000 14,005 250,000
4 21,723 14,064 250,000 16,522 250,000 19,305 250,000
5 27,849 17,120 250,000 20,773 250,000 25,081 250,000
6 34,281 20,047 250,000 25,132 250,000 31,382 250,000
7 41,035 22,834 250,000 29,592 250,000 38,255 250,000
8 48,127 25,469 250,000 34,146 250,000 45,749 250,000
9 55,573 27,944 250,000 38,792 250,000 53,929 250,000
10 63,392 30,245 250,000 43,518 250,000 62,860 250,000
15 108,755 38,784 250,000 68,260 250,000 122,091 250,000
20 166,652 40,797 250,000 94,326 250,000 219,225 267,455
Ages
70 240,544 31,918 250,000 120,427 250,000 375,793 435,919
75 334,851 2,859 250,000 145,346 250,000 623,347 666,982
80 455,213 0* 0* 166,992 250,000 1,019,354 1,070,321
85 608,830 0* 0* 185,245 250,000 1,631,354 1,712,921
</TABLE>
- ---------------
* In the absence of an additional premium the Policy would lapse.
1) Assumes an annual $4800 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 ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A- 4
<PAGE> 86
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
ENDOWMENT AT AGE 100
Male Issue Age: 45 Non-Smoker Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $14500
INITIAL SPECIFIED AMOUNT: $250000
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS
ANNUAL INVESTMENT 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.77% NET) (4.23% NET) (10.23% NET)
ACCUMULATED --------------------- ------------------------- -------------------------
END OF PREMIUMS AT NET CASH NET CASH NET CASH
POLICY 5% INTEREST SURRENDER DEATH SURRENDER DEATH SURRENDER DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ ----------- ---------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,225 13,332 263,332 14,158 264,158 14,984 264,984
2 31,211 26,382 276,382 28,868 278,868 31,453 281,453
3 47,996 39,098 289,098 44,093 294,093 49,496 299,496
4 65,621 51,503 301,503 59,874 309,874 69,294 319,294
5 84,127 63,604 313,604 76,235 326,235 91,027 341,027
6 103,559 75,415 325,415 93,209 343,209 114,903 364,903
7 123,962 86,938 336,938 110,821 360,821 141,137 391,137
8 145,385 98,237 348,237 129,157 379,157 170,035 420,035
9 167,879 109,322 359,322 148,253 398,253 201,873 451,873
10 191,498 120,196 370,196 168,142 418,142 236,953 486,953
15 328,533 170,999 420,999 280,134 530,134 473,237 723,237
20 503,428 213,360 463,360 413,238 663,238 852,489 1,102,489
Ages
70 726,644 245,068 495,068 568,910 818,910 1,460,523 1,710,523
75 1,011,530 262,791 512,791 747,517 997,517 2,435,574 2,685,574
80 1,375,125 261,096 511,096 946,827 1,196,827 3,999,994 4,249,994
85 1,839,174 228,573 478,573 1,156,933 1,406,933 6,497,410 6,822,280
</TABLE>
- ---------------
1) Assumes an annual $14500 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 ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A- 5
<PAGE> 87
ILLUSTRATION OF POLICY VALUES
AMERITAS LIFE INSURANCE CORP.
ENDOWMENT AT AGE 100
Male Issue Age: 45 Non-Smoker Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $14,500
INITIAL SPECIFIED AMOUNT: $250,000
DEATH BENEFIT OPTION: B
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT ANNUAL INVESTMENT ANNUAL INVESTMENT
RETURN RETURN RETURN
(-1.92% NET) (4.08% NET) (10.08% NET)
END ACCUMULATED --------------------- --------------------- -----------------------
OF PREMIUMS AT NET CASH NET CASH NET CASH
POLICY 5% INTEREST SURRENDER DEATH SURRENDER DEATH SURRENDER DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- ------ ----------- ---------- -------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,225 13,332 263,332 14,158 264,158 14,984 264,984
2 31,211 25,594 275,594 28,048 278,048 30,602 280,602
3 47,996 37,550 287,550 42,431 292,431 47,717 297,717
4 65,621 49,199 299,199 57,322 307,322 66,477 316,477
5 84,127 60,539 310,539 72,732 322,732 87,036 337,036
6 103,559 71,570 321,570 88,676 338,676 109,571 359,571
7 123,962 82,281 332,281 105,160 355,160 134,262 384,262
8 145,385 92,661 342,661 122,186 372,186 161,308 411,308
9 167,879 102,701 352,701 139,762 389,762 190,932 440,932
10 191,498 112,387 362,387 157,888 407,888 223,370 473,370
15 328,533 155,120 405,120 256,926 506,926 438,045 688,045
20 503,428 186,701 436,701 369,632 619,632 775,628 1,025,628
Ages
70 726,644 202,977 452,977 493,080 743,080 1,305,148 1,555,148
75 1,011,530 197,388 447,388 620,620 870,620 2,135,005 2,385,005
80 1,375,125 158,134 408,134 737,268 987,268 3,433,058 3,683,058
85 1,839,174 72,740 322,740 823,052 1,073,052 5,467,068 5,740,422
</TABLE>
- ---------------
1) Assumes an annual $14500 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 ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A- 6
<PAGE> 88
INCORPORATION BY REFERENCE
The Registrant, ALIC Separate Account LLVL, Registration 33-86500 purchases or
will purchase units from the portfolios of four 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:
The Vanguard Variable Insurance Fund
Registration No. 33-32216
Neuberger Berman Advisers Management Trust
Registration No. 2-88566
Berger Institutional Products Trust
Registration No. 33-63493
Rydex Variable Trust
Registration No. 333-57017
<PAGE> 89
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> 90
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Life Insurance Corp. Separate Account LLVL, certifies that it meets all
the requirements of effectiveness of this Post-Effective Amendment No. 6 to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized in the City of Lincoln,
County of Lancaster, State of Nebraska on this 19th day of April, 1999.
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVL,
Registrant
AMERITAS LIFE INSURANCE CORP.,
Depositor
<TABLE>
<S> <C>
Attest: /s/ Donald R. Stading By: /s/ Lawrence J. Arth
- -------------------------------------------- --------------------------------------------
Secretary Chairman of the Board
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Ameritas
Life Insurance Corp. on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Lawrence J. Arth Director, Chairman of the Board and April 19, 1999
- --------------------------------------------- Chief Executive Officer
Lawrence J. Arth
/s/ Kenneth C. Louis Director, President and Chief Operating April 19, 1999
- --------------------------------------------- Officer
Kenneth C. Louis
/s/ Donald R. Stading Senior Vice President, Secretary and April 19, 1999
- --------------------------------------------- Corporate General Counsel
Donald R. Stading
/s/ Jon C. Headrick Executive Vice President - Investments April 19, 1999
- --------------------------------------------- and Treasurer
Jon C. Headrick
/s/ JoAnn M. Martin Senior Vice President and Chief April 19, 1999
- --------------------------------------------- Financial Officer
JoAnn M. Martin
/s/ James P. Abel Director April 19, 1999
- ---------------------------------------------
James P. Abel
/s/ Duane W. Acklie Director April 19, 1999
- ---------------------------------------------
Duane W. Acklie
/s/ Robert W. Clyde Director April 19, 1999
- ---------------------------------------------
Robert W. Clyde
/s/ William W. Cook, Jr. Director April 19, 1999
- ---------------------------------------------
William W. Cook, Jr.
/s/ Bert A. Getz Director April 19, 1999
- ---------------------------------------------
Bert A. Getz
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James R. Knapp Director April 19, 1999
- ---------------------------------------------
James R. Knapp
/s/ Robert F. Krohn Director April 19, 1999
- ---------------------------------------------
Robert F. Krohn
/s/ Wilfred J. Maddux Director April 19, 1999
- ---------------------------------------------
Wilfred J. Maddux
/s/ Charles T. Nason Director April 19, 1999
- ---------------------------------------------
Charles T. Nason
/s/ Paul C. Schorr, III Director April 19, 1999
- ---------------------------------------------
Paul C. Schorr, III
/s/ William C. Smith Director April 19, 1999
- ---------------------------------------------
William C. Smith
/s/ Neal E. Tyner Director April 19, 1999
- ---------------------------------------------
Neal E. Tyner
/s/ Winston J. Wade Director April 19, 1999
- ---------------------------------------------
Winston J. Wade
</TABLE>
<PAGE> 92
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 84 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T) and the National Securities
Markets Improvements Act of 1996.
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 Separate Account.***
(2) Not applicable.
(3) (a) Proposed form of Principal Underwriting Agreement.***
(b) Proposed form of Selling Agreement.*
(c) Commission schedule.*
(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 Vanguard Variable Insurance Fund.*
(b) Participation Agreement in the Neuberger & Berman Advisers
Management Trust.*
(c) Participation Agreement (Berger IPT).**
(d) Form of Participation Agreement (Rydex).
(9) Not applicable.
(10) Application for Policy.***
(11) Memorandum describing Ameritas' exchange procedure.***
(12) Memorandum describing Ameritas' issuance, transfer, and redemption
procedures for the Policy.***
2. (a)(b) Opinion and Consent of Donald R. Stading, Senior Vice President,
Secretary and Corporate General Counsel of Ameritas Life Insurance Corp.
3. No financial statements are omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not Required.
7. (a)(b) Opinion and Consent of Thomas P. McArdle.
8. Consent of 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.***
10. Actuary Opinion in Support of Exemptive Application***
- ---------------
* Incorporated by reference to the initial registration statement for
Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-5529),
filed on June 7, 1996.
** Incorporated by reference to the Pre-Effective Amendment No. 1 for the
Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-5529),
filed on October 3, 1996.
*** Incorporated by reference to Post-Effective Amendment No. 4 for Ameritas
Life Insurance Corp. Separate Account LLVL (File No. 33-86500), filed on
April 3, 1998.
**** Incorporated by reference to Post-Effective Amendment No. 5 for Ameritas
Life Insurance Corp. Separate Account LLVL (File No. 33-86500), filed
February 26, 1999.
<PAGE> 93
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
1.(8)(d) Form of Participation Agreement (Rydex)
2.(a)(b) Opinion and Consent of Donald R. Stading, Senior Vice
President, Secretary and Corporate General Counsel of
Ameritas Life Insurance Corp.
7.(a)(b) Opinion and Consent of Thomas P. McArdle.
8. Consent of Deloitte & Touche LLP
</TABLE>
<PAGE> 1
PARTICIPATION AGREEMENT
Among
RYDEX VARIABLE TRUST,
PADCO FINANCIAL SERVICES, INC.
and
AMERITAS VARIABLE LIFE INSURANCE COMPANY
DATED AS OF
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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 .................. 7
ARTICLE V Fees and Expenses ............................... 9
ARTICLE VI Diversification ................................. 9
ARTICLE VII Potential Conflicts ................. .......... 9
ARTICLE VIII Indemnification ................................. 11
ARTICLE IX Applicable Law .................................. 17
ARTICLE X Termination ..................................... 17
ARTICLE XI Notices ......................................... 19
ARTICLE XII Miscellaneous ................................... 19
SCHEDULE A Separate Accounts and Contracts .... ..... ...... 22
SCHEDULE B Proxy Voting Procedures ......................... 23
</TABLE>
<PAGE> 3
THIS AGREEMENT, made and entered into as of the day of ______________, by
and among AMERITAS VARIABLE LIFE INSURANCE COMPANY (hereinafter the "Company"),
a _____ 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, dated ________ (File No. _____), 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
<PAGE> 4
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
1.1. 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. 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 not later than the appropriate fund closing time
on the same Business Day that such order is received by the Company. "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.
1.2. 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.
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.
-2-
<PAGE> 5
1.3. 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.
1.4. 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.
1.5. 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. 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 not later than the appropriate fund closing time on the same Business Day
that such order is received by the Company.
1.6. 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 45 days advance written notice of its intention to
make available in the future as a funding vehicle under the Contracts, any other
investment company,
1.7. 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 shall be in federal funds transmitted by wire. For
purposes of Section 2.9 and 2.10, upon receipt by the Trust of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Trust.
1.8. 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.
1.9 The Trust shall furnish same day notice (by electronic means, wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on Fund Shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on Fund shares in additional shares of
-3-
<PAGE> 6
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.
1.10. 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.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. 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 ____ 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.
2.2. 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.
2.3. 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 in the future.
2.4 The Company represents and warrants 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
-4-
<PAGE> 7
having a reasonable basis for believeing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. 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 l2b-1 to finance distribution
expenses.
2.6. 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.
2.7. 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.
2.8. The Underwriter represents and warrants that it is and shall remain
duly registered in all material respects to the extent 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.
2.9. 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.
2.10. 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 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.
-5-
<PAGE> 8
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. 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.
3.2. Except as provided in this Section 3.2., all expenses of printing and
distributing Trust 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 shall be borne by the Trust. The Trust will provide
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Trust's prospectus. 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.
3.3. 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.
3.4. 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, which are covered in
section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.5. If and to the extent required bylaw the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
-6-
<PAGE> 9
(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.
3.6. 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.
3.7. The Trust shall use reasonable efforts to provide Trust 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
4.1. 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.
4.2. The Company shall not give any information or make any
representations or statement 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
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<PAGE> 10
literature or other promotional material approved by the Trust or its designee,
except with the permission of the Trust.
4.3. 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.
4.4. 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.
4.5. 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.
4.6. 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.
4.7. 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 public media), sales literature (i.e.,
any written communication distributed or made generally available to customers
or the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or exerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or
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<PAGE> 11
all agents or employees, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. 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 or a shareholder
servicing plan to finance investor services, then payments may be made to the
Company, or to the underwriter for the Contracts, or to other service providers
if and in amounts agreed upon by the parties.
5.2. 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.
5.3. The Company shall bear the expenses of distributing the Trust's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company, other than the expenses of distributing prospectuses and statements of
additional information to existing contract owners.
ARTICLE VI. DIVERSIFICATION
6.1. 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 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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<PAGE> 12
ARTICLE VII. POTENTIAL CONFLICTS
7.1. 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.
7.2. 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.
7.3. 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,
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.
7.4. 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 the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
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<PAGE> 13
7.5. 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 Trust shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.
7.6. 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.
7.7. 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.
ARTICLE VIII. INDEMNIFICATION
8.1. 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 and employee of the Trust, the Underwriter
and each director, officer and employee 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, and "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
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<PAGE> 14
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 distribution 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 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
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<PAGE> 15
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.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees 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:
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<PAGE> 16
(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 supplement thereto, or the omission or alleged
omission 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
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<PAGE> 17
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 and 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.
8.3. 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
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<PAGE> 18
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 and 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 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 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.
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<PAGE> 19
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the substantive laws of the State of
Delaware.
9.2. 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
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) 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 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
falls 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 judgement exercised in
good faith, that the Company and/or
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<PAGE> 20
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, 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 1.6 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 10.1(h)
shall be effective forty five (45) days after the notice
specified in Section 1.6 was given.
10.2. 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 10.2 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.
10.3. 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.
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<PAGE> 21
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
If to the Company:
Ameritas Variable Life Insurance Company
ARTICLE XII. MISCELLANEOUS
12.1. 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.
12.2. 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.
12.3. The captions in this Agreement are included for convenience of
reference only and in way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
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<PAGE> 22
12.5. 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.
12.6. 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 law or regulations.
12.7. 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.
12.8. 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 an Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Trust or its 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;
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<PAGE> 23
(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.
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 VARIABLE LIFE INSURANCE COMPANY
By:
-------------------------------------
RYDEX VARIABLE TRUST
By:
-------------------------------------
PADCO FINANCIAL SERVICES, INC.
By:
-------------------------------------
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<PAGE> 24
CONSECO VARIABLE INSURANCE COMPANY
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:
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF CONTRACT
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
- -------------------------------------- --------------------------
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<PAGE> 25
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 its 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
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<PAGE> 26
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
(envelopes and return envelopes are provided and paid for by the Company).
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 Company) 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 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 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.
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<PAGE> 27
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 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.
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. 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.
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<PAGE> 1
[AMERITAS LIFE INSURANCE CORP. LETTERHEAD]
April 20, 1999
Ameritas Life Insurance Corp.
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to the Post-Effective Amendment No. 6 to Registration Statement
No. 33-86500 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 flexible premium variable 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
Post-Effective Amendment No. 6 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
<PAGE> 1
EXHIBIT 7.(A)(B)
[AMERITAS LOGO]
April 20, 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 flexible premium variable life insurance policy
("Contract") under the Securities Act of 1933. With reference to Post-Effective
Amendment No. 6 to Registration Statement No. 33-86500 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 cash values included in the section
entitled "Illustrations of Death Benefits and Cash 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 male age 45, than to
prospective purchasers of the Contract for other ages or for females.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment No. 6 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
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 33-86500 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 a part of such Registration Statement, and
to the reference to us under the heading "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
April 19, 1999
