As filed with the Securities and Exchange Commission on July 20, 1995
File No. 33-87376
811-8914
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT
Under
THE INVESTMENT COMPANY ACT OF 1940
Amendment No.
(Check appropriate box or boxes.)
PHL Variable Accumulation Account
(Exact Name of Registrant )
PHL Variable Insurance Company
(Name of Depositor)
One American Row, Hartford, Connecticut 06115
(Address of Depositor's Principal Executive Offices) (Zip Code)
(800) 447-4312
(Depositor's Telephone Number, Including Area Code)
Dona D. Young, Esq.
PHL Variable Insurance Company
One American Row
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
Copies to:
James F. Jorden, Esq. Patricia O. McLaughlin, Esq.
Jorden Burt & Berenson PHL Variable
1025 Thomas Jefferson Street, N.W. Insurance Company
Washington, D.C. 20007-0805 One American Row
Hartford, CT 06115
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
Title of Securities Amount to be Proposed Offering Proposed Aggregate Amount of
Being Registered Registered Price Per Unit Offering Price Registration Fee
<S> <C> <C> <C> <C>
Units of Interest * * $1,450,000* $ 500.00
in Deferred
Annuity Contracts
</TABLE>
* The maximum aggregate offering price is estimated solely for the purpose of
determining the registration fee. The amount being registered and the proposed
maximum offering price per unit are not applicable in that these contracts are
not issued in predetermined amounts or units.
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
REGISTRATION
STATEMENT ON FORM N-4
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
<TABLE>
<CAPTION>
Form N-4 Item Prospectus Caption
------------- ------------------
<S> <C> <C>
1. Cover Page..........................................Cover Page
2. Definitions.........................................Special Terms
3. Synopsis or Highlights..............................Summary of Expenses; Summary
4. Condensed Financial Information.....................Financial Highlights
5. General Description of Registrant, Depositor,
and Portfolio Companies............................PHL Variable Insurance Company and the PHL Variable
Accumulation Account; The Fund; Voting Rights
6. Deductions..........................................Deductions and Charges; Sales of Variable Accumulation
Contracts
7. General Description of Variable Annuity Contracts...The Variable Accumulation Annuity; Purchase of Contracts;
The Accumulation Period; Miscellaneous Provisions
8. Annuity Period......................................The Annuity Period
9. Death Benefits......................................Payment Upon Death Before Maturity Date; Payment Upon
Death After Maturity Date
10. Purchases and Contract Value........................Purchase of Contracts; The Accumulation Period; Variable
Account Valuation Procedures; Sales of Variable
Accumulation Contracts
11. Redemptions.........................................Surrender of Contracts; Partial Withdrawals; Free Look
Period
12. Taxes...............................................Federal Income Taxes
13. Legal Proceeding....................................Litigation
14. Table of Contents of Statement of
Additional Information............................Statement of Additional Information
15. Cover Page..........................................Cover Page
16. Table of Contents...................................Table of Contents
17. General Information and History.....................Not Applicable
18. Services............................................Not Applicable
19. Purchase of Securities Being Offered................Appendix
20. Underwriters........................................Underwriter
21. Calculation of Yield Quotations of Money Market
Sub-accounts.......................................Calculation of Yield and Return
22. Annuity Payments....................................Calculation of Annuity Payments
23. Financial Statements................................Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
PHL VARIABLE ACCUMULATION ACCOUNT
Variable Accumulation Annuity Contract
issued by
PHL VARIABLE INSURANCE COMPANY
VARIABLE PRODUCTS OPERATION
101 MUNSON STREET
P.O. BOX 942
GREENFIELD, MASSACHUSETTS 01302-0942
TELEPHONE: (800) 447-4312
For Tax Qualified and Non-Tax Qualified Annuity Plans
This Prospectus describes a deferred variable accumulation annuity contract
("Contract") issued by PHL Variable Insurance Company ("PHL Variable"). The
Contract provides for both an Accumulation Period and an Annuity Period. Premium
payments under the Contract are flexible.
Generally, a minimum initial purchase payment of $1,000 is required and each
subsequent purchase payment must be at least $25. If the bank draft investment
program ("check-o-matic" as described under "Purchase of Contracts") is elected,
the minimum initial purchase payment required is $25. Generally, a Contract may
not be purchased with respect to a proposed Annuitant who is eighty-one years of
age or older.
Purchase payments are allocated to one or more of the available Sub-accounts
of the PHL Variable Accumulation Account (the "Account") and/or to the
Guaranteed Interest Account (see Appendix A) as specified by the Contract Owner
in the application for the Contract. The Account is divided into Sub-accounts,
each of which invests in a corresponding series of The Phoenix Edge Series Fund
or Wanger Advisors Trust (the "Funds").
You may surrender a Contract for any reason within 10 days after its receipt
and receive in cash the adjusted value of the initial purchase payment. You may
receive more or less than the initial payment depending on investment experience
within the Sub-account during the 10-day period, unless the Contract was issued
with the Temporary Money Market Allocation Amendment, in which case your initial
purchase payment is refunded. If the initial purchase payment, or any portion
thereof, was allocated to the Guaranteed Interest Account, that payment (or
portion) and any earned interest is refunded. (See "Free Look Period.")
This Prospectus provides information a prospective investor should know before
investing and should be kept for future reference. It is accompanied by current
Prospectuses for the Funds. No offer is being made of a Contract funded by any
Fund for which a current Prospectus has not been delivered.
Contracts are not deposits or obligations of, or guaranteed or endorsed by,
any bank, credit union or affiliated entity and are not federally insured or
otherwise protected by the Federal Deposit Insurance Corporation (FDIC), Federal
Reserve Board, or any other agency and involve investment risks including
possible loss of principal.
Additional information about the Contracts has been filed with the Securities
and Exchange Commission in a Statement of Additional Information, dated July 31,
1995, which is incorporated herein by reference. The Statement of Additional
Information, the table of contents of which is set forth in this Prospectus, is
available without charge upon request by writing or telephoning PHL Variable at
the address or telephone number set forth above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
July 31, 1995
<PAGE>
TABLE OF CONTENTS
SPECIAL TERMS 3
SUMMARY OF EXPENSES 4
FINANCIAL HIGHLIGHTS 5
PERFORMANCE HISTORY 5
SUMMARY 6
THE VARIABLE ACCUMULATION ANNUITY 8
PHL VARIABLE INSURANCE COMPANY AND THE PHL
VARIABLE ACCUMULATION ACCOUNT 9
THE PHOENIX EDGE SERIES FUND 9
WANGER ADVISORS TRUST 9
PURCHASE OF CONTRACTS 10
DEDUCTIONS AND CHARGES 10
Premium Tax 10
Sales Charges 10
Charges for Mortality and Expense Risks 11
Charges for Administrative Services 11
Other Charges 11
THE ACCUMULATION PERIOD 12
Accumulation Units 12
Accumulation Unit Values 12
Transfers 12
Surrender of Contract; Partial Withdrawals 13
Lapse of Contract 13
Payment Upon Death Before Maturity Date 13
THE ANNUITY PERIOD 14
Variable Accumulation Annuity Contracts 14
Annuity Options 14
Option A -- Life Annuity With Specified Period
Certain 14
Option B -- Non-Refund Life Annuity 14
Option D -- Joint and Survivor Life Annuity 15
Option E -- Installment Refund Life Annuity 15
Option F -- Joint and Survivor Life Annuity With
10 Year Period Certain 15
Option G -- Payments for Specified Period 15
Option H -- Payments of Specified Amount 15
Option I -- Variable Payment Life Annuity with Ten Year
Period Certain 15
Option J -- Joint Survivor Variable Payment Life Annuity
with Ten Year Period Certain 15
Option K -- Variable Payment Annuity for a Specified
Period 15
Option L -- Variable Payment Life Expectancy Annuity 15
Option M -- Unit Refund Variable Payment Life Annuity 15
Option N -- Variable Payment Non-Refund Life Annuity 15
Other Options and Rates 15
Other Conditions 16
Payment Upon Death After Maturity Date 16
VARIABLE ACCOUNT VALUATION PROCEDURES 16
MISCELLANEOUS PROVISIONS 16
Assignment 16
Deferment of Payment 16
Free Look Period 17
Amendments to Contracts 17
Substitution of Fund Shares 17
Ownership of the Contract 17
FEDERAL INCOME TAXES 17
Introduction 17
Tax Status 17
Taxation of Annuities in General-- Non-Qualified Plans 17
Surrenders or Withdrawals Prior to the Contract
Maturity Date 17
Surrenders or Withdrawals on or after the Contract
Maturity Date 18
Penalty Tax on Certain Surrenders and Withdrawals 18
Additional Considerations 18
Diversification Standards 19
Qualified Plans 20
Tax Sheltered Annuities 20
Keogh Plans 20
Individual Retirement Accounts 20
Corporate Pension and Profit-Sharing Plans 21
Deferred Compensation Plans with Respect to
Service for State and Local Governments and
Tax-Exempt Organizations 21
Seek Tax Advice 21
SALES OF VARIABLE ACCUMULATION CONTRACTS 21
STATE REGULATION 21
REPORTS 21
VOTING RIGHTS 21
TEXAS OPTIONAL RETIREMENT PROGRAM 22
LITIGATION 22
LEGAL MATTERS 22
STATEMENT OF ADDITIONAL INFORMATION 22
APPENDIX A 23
APPENDIX B 24
2
<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT: PHL Variable Accumulation Account.
ACCUMULATION UNIT: A standard of measurement with respect to each Sub-account
used in determining the value of a Contract and the interest in the Sub-accounts
prior to the commencement of annuity payments.
ACCUMULATION VALUE: The value of a Contract on or prior to its Maturity Date,
equal to the sum of the products obtained by multiplying the number of
Accumulation Units in each Sub-account then credited to the Contract by the
appropriate Accumulation Unit Value.
ANNUITANT: The person whose life is used as the measuring life under the
Contract. The primary Annuitant as shown on the Contract's Schedule Page while
the primary Annuitant is living, and then the contingent Annuitant designated on
the application for the Contract or as later changed by the Owner, if the
contingent Annuitant is living at the death of the primary Annuitant.
ANNUITY OPTION: The provisions under which a series of annuity payments is made
to the Annuitant or other payee, such as Life Annuity with Ten Years Certain.
(See "Annuity Options".)
ANNUITY UNIT: A standard of measurement used in determining the amount of each
variable income payment under the variable payment Annuity Options I, J, K, M
and N.
CONTRACT: The deferred variable accumulation annuity contract described in this
Prospectus.
CONTRACT VALUE: Prior to the Maturity Date, the sum of the value under a
Contract of all Accumulation Units held in the Sub-accounts of the Account and
the value held in the Guaranteed Interest Account.
FIXED PAYMENT ANNUITY: A benefit providing periodic payments of a fixed dollar
amount throughout the Annuity Period that does not vary with or reflect the
investment performance of any Sub-account.
THE FUNDS: The Phoenix Edge Series Fund and the Wanger Advisors Trust.
GUARANTEED INTEREST ACCOUNT (GIA): An allocation option under which premium
amounts are guaranteed to earn a fixed rate of interest. Excess interest may
also be credited, in the sole discretion of PHL Variable Insurance Company.
ISSUE DATE: The date that the initial purchase payment is invested under a
Contract.
MATURITY DATE: The date elected by the Owner pursuant to the Contract as of
which annuity payments will commence. The Maturity Date shall be no earlier than
the fifth Contract anniversary and no later than the Annuitant's 95th birthday.
The election is subject to certain conditions described in "THE ANNUITY PERIOD."
MINIMUM INITIAL PURCHASE PAYMENT: The amount which must be paid when a Contract
is purchased. Minimum initial purchase payments of $1,000, $25, $25, and $1,000
annually are required for non-qualified, IRA, bank draft program, and qualified
plan contracts respectively.
MINIMUM SUBSEQUENT PAYMENT: The amount which must be paid when any subsequent
payments are made, after the minimum initial purchase payment has been made (see
above). The minimum subsequent payment for all Contracts is $25.
OWNER: The person or entity, usually the one to whom the Contract is issued, who
has the sole right to exercise all rights and privileges under the Contract
except as otherwise provided in the Contract. The Owner may be the Annuitant, an
employer, a trust or any other individual or entity specified in the application
for the Contract. However, under Contracts used with certain tax qualified
plans, the Owner must be the Annuitant. A husband and wife may be designated as
joint owners, and if such a joint owner dies, the other joint owner becomes the
sole Owner of the Contract. If no Owner is named, the Annuitant will be the
Owner.
PAYMENT UPON DEATH: The obligation of PHL Variable under a Contract to make a
payment on the death of the Owner or Annuitant at any time before the Maturity
Date of a Contract (see "Payment Upon Death Before Maturity Date") or after the
Maturity Date of a Contract (see "Payment Upon Death After Maturity Date").
PHL VARIABLE: PHL Variable Insurance Company.
VARIABLE PAYMENT ANNUITY: An annuity providing payments that vary in amount
after the first payment is made, in accordance with the investment experience of
the selected Sub-accounts.
VARIABLE PRODUCTS OPERATIONS: The Variable Products Operations Division of PHL
Variable Insurance Company.
3
<PAGE>
SUMMARY OF EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES ALL SUB-ACCOUNTS
Sales Load Imposed on Purchases None
Deferred Sales Load (as a percentage of amount surrendered)*:
Age of Deposit in Complete Years 0-1 7%
Age of Deposit in Complete Years 1-2 6%
Age of Deposit in Complete Years 2-3 5%
Age of Deposit in Complete Years 3-4 4%
Age of Deposit in Complete Years 4-5 3%
Age of Deposit in Complete Years 5-6 2%
Age of Deposit in Complete Years 6-7 1%
Age of Deposit in Complete Years 7 and thereafter None
Exchange Fee
Current Fee None
Maximum Allowable Charge Per Exchange: $10
ANNUAL CONTRACT FEE
Currently $35
Maximum $35
SEPARATE ACCOUNT EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees 1.25%
Account Fees and Expenses
Daily Administrative Fee 0.125%
Total Separate Account Expenses 1.375%
<TABLE>
<CAPTION>
Wanger Wanger
Total Money Real U.S. Small Int'l Small
Sub-Accounts Growth Bond Return Market Int'l Balanced Estate*** Cap*** Cap***
- ------------- ------ ---- ------ ------ ----- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUND ANNUAL EXPENSES
(as a percentage of fund average
net assets)
Investment Management Fees .65% .50% .60% .40% .75% .55% .75% .98% 1.27%
Other Operating Expenses (After
Expense Reimbursements)** .15% .15% .15% .15% .35% .15% .25% .17% .27%
Total Fund Annual Expenses .80% .65% .75% .55% 1.10% .70% 1.00% 1.15% 1.54%
Example
If you surrender your Contract at
the end of the applicable
time period:
You would pay the following
expenses on a $1,000
investment assuming 5% annual
return on assets:
1 year $ 79 $ 78 $ 79 $ 77 $ 82 $ 78 $ 81 $ 83 $ 86
3 years 112 108 111 105 121 109 118 122 133
5 years 145 138 143 133 160 141 155 163 181
10 years 266 251 261 241 296 256 286 301 339
If you annuitize your Contract at
the end of the applicable
time period:
You would pay the following
expenses on a $1,000
investment assuming 5% annual
return on assets:
1 year $ 79 $ 78 $ 79 $ 77 $ 82 $ 78 $ 81 $ 83 $ 86
3 years 112 108 111 105 121 109 118 122 133
5 years 125 117 122 112 140 120 135 142 162
10 years 266 251 261 241 296 256 286 301 339
If you do not surrender your Contract:
You would pay the following
expenses on a $1,000
investment assuming 5% annual
return on assets:
1 year $ 24 $ 22 $ 23 $ 21 $ 27 $ 23 $ 26 $ 27 $ 31
3 years 73 69 72 66 82 70 79 84 95
5 years 125 117 122 112 140 120 135 142 162
10 years 266 251 261 241 296 256 286 301 339
</TABLE>
* A sales charge is taken from the proceeds when a Contract is surrendered or
when an amount is withdrawn, if assets have not been held under the Contract for
a certain period of time. If a surrender or withdrawal is made during the first
Contract year, a sales charge will apply to the total amount withdrawn. After
the first year, 10% of the Contract Value at the last anniversary may be
withdrawn each year free of sales charge. (See "Deductions and Charges -- Sales
Charges".)
**Each Series pays a portion or all of its total operating expenses other
than the management fee. The Growth, Bond, Total Return, Money Market and
Balanced Series will pay up to .15%; the International Series will pay up to
.40%; the Real Estate Series will pay up to .25%; the Wanger U.S. Small Cap
Series will pay up to .17%; and the Wanger International Small Cap Series will
pay up to .27%. Absent expense reimbursement these listed Series would have paid
(or would be expected to pay) .80%, .72%, .75%, .58%, .70%, 1.10%, 1.00%, 1.15%
and 1.54% in total operating expenses respectively.
***The inclusion of this Sub-account began on May 1, 1995. Accordingly,
annualized expenses have been projected for the fiscal period ending December
31, 1995.
4
<PAGE>
The purpose of the table set forth above is to assist the Contract Owner in
understanding the various costs and expenses that a Contract Owner will bear
directly or indirectly. The table reflects expenses of the Account as well as
the Funds. (See "Deductions and Charges" in this Prospectus and in the Fund
Prospectus)
Premium taxes, which are not reflected in the table above, may apply. Any
premium or other taxes levied by any governmental entity with respect to the
Contract will be charged against the Contract Values based on a percentage of
premiums paid. Premium taxes are currently imposed by certain states on the
Contracts and range from 0% to 3.5% of premiums paid. (See "Deductions and
Charges -- Premium Tax".)
The Example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. The $35
annual administrative charge is reflected in the Example as $1.75 since the
average Contract account size is greater than $1,000 and the expense effect is
reduced accordingly. (See "Deductions and Charges").
PHL VARIABLE ACCUMULATION ACCOUNT
FINANCIAL HIGHLIGHTS
ACCUMULATION UNIT VALUES
(Selected data for an Accumulation Unit Outstanding
Throughout the Indicated Period)
The Sub-accounts commenced operations as of the date of this Prospectus;
therefore, data for these Sub-accounts is not yet available.
PERFORMANCE HISTORY
From time to time the Account may include the performance history of any or
all Sub-accounts in advertisements, sales literature or reports. Performance
information may be expressed as yield and effective yield of the Money Market
Sub-account, as yield of the Bond Sub-account and as total return of any
Sub-account. For the Bond Sub-account, quotations of yield will be based on all
investment income per unit earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing the net investment income by
the maximum offering price per unit on the last day of the period.
When a Sub-account advertises its total return, it will usually be calculated
for one year, five years, and ten years or since inception if the Sub-account
has not been in existence for at least ten years. Total return is measured by
comparing the value of a hypothetical $1,000 investment in the Sub-account at
the beginning of the relevant period to the value of the investment at the end
of the period, assuming the reinvestment of all distributions at net asset value
and the deduction of all applicable Contract charges except for premium taxes
(which vary by state) at the beginning of the relevant period.
The Sub-accounts below are based on the actual performance of the underlying
Funds and became available for investment on July 31, 1995. The standardized
average annual total return quotations show the investment performance the
Sub-accounts would have achieved (reduced by the applicable charges) had they
been available to invest in shares of the Fund for the periods quoted.
Average Annual Total Return
For the Period Ended 12/31/94
Commencement
Date of Corre-
Sub account sponding Fund 1 Year 5 Years 10 Years Life of Fund
- ----------- ------------- ------ ------- -------- ------------
Bond 1/1/83 (11.98) 6.68 8.57 8.30
Balanced 5/1/92 (9.50) N/A N/A 2.15
Total Return 9/17/84 (8.17) 8.57 11.28 10.71
Growth 1/1/83 (5.49) 12.63 15.52 16.16
International 5/1/90 (6.80) N/A N/A 4.03
Annual Total Return*
--------------------
Total
Year Bond Balanced Return Growth International
- ---- ---- -------- ------ ------ -------------
1983 4.56 N/A N/A 31.10 N/A
1984 9.82 N/A (1.51) 9.16 N/A
1985 18.97 N/A 25.61 33.09 N/A
1986 17.67 N/A 14.11 18.83 N/A
1987 (0.30) N/A 11.02 5.47 N/A
1988 8.98 N/A 0.94 2.50 N/A
1989 6.76 N/A 18.28 34.35 N/A
1990 3.78 N/A 4.32 2.62 (8.98)
1991 17.96 N/A 27.56 40.81 18.11
1992 8.58 8.43 9.15 8.79 (14.03)
1993 14.35 7.13 9.50 18.08 36.59
1994 (6.78) (4.17) (2.75) 0.08 (1.31)
* Sales charges have not been deducted from the Annual Total Returns
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE
Current yield for the Money Market Sub-account is based upon the income earned
by the Sub-account over a seven-day period and then annualized, i.e. the income
earned in the period is assumed to be earned every seven days over a 52-week
period and stated as a percentage of the investment. Effective yield is
calculated similarly but when annualized, the income earned by the investment is
assumed to be reinvested in Sub-account Units and thus compounded in the course
of a 52-week period. Yield and effective yield reflect the recurring charges on
the Account level including the annual administrative fee.
Yield calculations of the Money Market Sub-account used for illustration
purposes are based on the consideration of a hypothetical participant's account
having a balance of exactly one Unit at the beginning of a seven day period,
which period will end on the date of the most recent financial statements. The
yield for the Sub-account during this seven day period will be the change in the
value of the hypothetical participant's account's original Unit. The Money
Market Sub-account became available for investment on July 31, 1995. The yield
quotation below is based on the actual yield of the underlying Fund based on a
seven day period ending December 31, 1994.
5
<PAGE>
Example:
Value of hypothetical pre-existing account
with exactly one unit at the beginning of the
period: 1.000000
Value of the same account (excluding
capital changes) at the end of the seven day
period: 1.000774
Calculation:
Ending account value 1.000774
Less beginning account value 1.000000
Net change in account value 0.000774
Base period return:
(adjusted change/beginning account value) 0.000774
Current yield = return x (365/7) = 4.03%
Effective yield = [(1 + return)365/7] -1 = 4.12%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies, due to charges which
will be deducted on the Account level.
A Sub-account's performance may be compared to that of the Consumer Price
Index or various unmanaged equity or bond indices such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, and the Europe
Australia Far East Index, and may also be compared to the performance of the
other variable life accounts as reported by services such as Lipper Analytical
Services, Inc. ("Lipper"), CDA Investment Technologies, Inc. ("CDA") and
Morningstar, Inc. or in other various publications. Lipper and CDA are widely
recognized independent rating/ranking services. A Sub-account's performance may
also be compared to that of other investment or savings vehicles.
The Fund's Annual Report, available upon request and without charge, contains
a discussion of the performance of the Fund and a comparison of that performance
to a securities market index.
SUMMARY
The individual deferred accumulation annuity contract ("Contract") described
in this Prospectus presents a dynamic concept in retirement planning designed to
give you maximum flexibility in attaining your investment goals. There are no
deductions from your purchase payments so that your entire payment is put to
work in the investment portfolio(s) of your choice. Currently, the PHL Variable
Accumulation Account ("Account") consists of several Sub-accounts, which invest
their assets in specified Series of The Phoenix Edge Series Fund and the Wanger
Advisors Trust (the "Funds"). Each Series has a distinct investment objective.
You choose the Sub-account or Sub-accounts you wish to invest in among the
available Sub-accounts and/or the Guaranteed Interest Account when you make your
purchase payments under the Contracts. You may also transfer amounts held under
the Contracts among the available Sub-accounts and/or the Guaranteed Interest
Account. When the accumulation period ends, the then Contract Value will be
applied to furnish a Variable Payment Annuity unless a Fixed Payment Annuity is
elected. If a Fixed Payment Annuity is elected, payments will, thereafter, be
fixed and guaranteed by PHL Variable Insurance Company.
The Contracts are eligible for purchase as non-tax qualified retirement plans
by individuals. The Contracts are also eligible for use in connection with (1)
pension or profit-sharing plans qualified under the Self-Employed Individuals
Tax Retirement Act of 1962, known as "HR 10" or "Keogh" plans, (2) pension or
profit-sharing plans qualified under Sections 401(a) and 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"), known as "corporate plans," (3)
annuity purchase plans adopted under the provisions of Section 403(b) of the
Code by public school systems and certain other tax-exempt organizations (TSA),
(4) individual retirement account plans satisfying the requirements of Section
408 of the Code (IRA), and (5) government plans and deferred compensation plans
maintained by a state or political subdivision thereof under Section 457 of the
Code. These plans are sometimes referred to in this Prospectus as "tax qualified
plans."
How are payments made under the Contracts?
A Contract Owner may make payments at any time until the Maturity Date
selected by the Owner pursuant to the terms of the Contract. The payments
purchase Accumulation Units of the Sub-account(s) and/or are deposited in the
Guaranteed Interest Account, as chosen by the Owner. (See "PURCHASE OF
CONTRACTS" and "THE ACCUMULATION PERIOD".)
Is there a guaranteed option?
Yes. A Contract Owner may elect to have payments allocated to the Guaranteed
Interest Account. Amounts allocated to the GIA earn a fixed rate of interest and
PHL Variable may also, in its sole discretion, credit excess interest. (See
Appendix A.)
What are the investment objectives of the Series of the Funds?
The Phoenix Edge Series Fund
The investment objective of the Bond Series is to seek long-term total return
by investing in a diversified portfolio of high yield (high risk) and high
quality fixed income securities.
The investment objective of the Money Market Series is to provide maximum
current income consistent with capital preservation and liquidity. The Money
Market Series will invest exclusively in high quality money market instruments.
The investment objective of the Growth Series is to achieve intermediate and
long-term growth of capital, with income as a secondary consideration. The
Growth Series will invest principally in common stocks of corporations believed
by management to offer growth potential.
The investment objective of the Total Return Series is to realize as high a
level of total rate of return over an extended period of time as is considered
consistent with prudent investment risk. The Total Return Series will invest in
stocks, bonds and money market instruments in accordance with the Investment
Adviser's appraisal of investments most likely to achieve the highest total rate
of return.
The investment objective of the International Series is to seek a high total
return consistent with reasonable risk. The International
6
<PAGE>
Series intends to invest primarily in an internationally diversified portfolio
of equity securities. It intends to reduce its risk by engaging in hedging
transactions involving options, futures contracts and foreign currency
transactions.
The investment objective of the Balanced Series is to seek reasonable income,
long-term capital growth and conservation of capital. The Balanced Series
intends to invest based on combined considerations of risk, income, capital
enhancement and protection of capital value.
The investment objective of the Real Estate Series is to seek capital
appreciation and income with approximately equal emphasis. It intends under
normal circumstances to invest in marketable securities of publicly traded real
estate investment trusts (REITs) and companies that operate, develop, manage
and/or invest in real estate located primarily in the United States.
Wanger Advisors Trust
The investment objective of the Wanger U.S. Small Cap Series ("U.S. Small Cap
Series") is to provide long-term growth. The U.S. Small Cap will invest
primarily in securities of U.S. companies with total common stock market
capitalization of less than $1 billion.
The investment objective of the Wanger International Small Cap Series
("International Small Cap Series") is to provide long-term growth. The
International Small Cap will invest primarily in securities of non-U.S.
companies with total common stock market capitalization of less than $1 billion.
For additional information concerning the Funds, see the accompanying Fund
Prospectuses, which should be read carefully before investing.
What sales costs are charged to purchase payments under the Contracts?
No deductions are made from purchase payments. A deduction for sales charges
may be taken from the proceeds when a Contract is surrendered or when an amount
is withdrawn, if assets have not been held under the Contract for a certain
period of time. However, no deduction for sales charges will be taken after the
Annuity Period has begun, unless unscheduled withdrawals are made under Annuity
Options K or L. If a sales charge is imposed, it is imposed on a first-in,
first-out basis.
If a withdrawal or surrender is made during the first year that a Contract is
in existence, a sales charge will apply to the total amount that is withdrawn.
After the first year, 10% of the value of the Contract at the last anniversary
may be withdrawn each year free of sales charge. A deduction for sales charges
expressed as a percentage of the amount withdrawn in excess of the 10% allowable
amount is as follows:
Age of Deposit
in Complete Years: 0 1 2 3 4 5 6 7 and over
Sales Charge to
be Applied: 7% 6% 5% 4% 3% 2% 1% 0%
In the event that the Annuitant dies before the date that annuity payments
will commence, no sales charge will be imposed.
The total deferred sales charges on a Contract will never exceed 9% of the
total purchase payments (see "Sales Charges").
What fees are charged to the Account?
There is a mortality and expense risk fee and a daily administrative fee and
an annual administrative charge assessed against the Account. The mortality and
expense risk fee is 1.25% (approximately 0.40% for mortality risks and
approximately 0.85% for expense risks). The daily administrative fee is equal to
0.125% on an annual basis.
The mortality and expense risk fee and the daily administrative fee are
deducted from the aggregate average daily accumulated values of the Sub-accounts
but are not deducted from values held in the Guaranteed Interest Account.
The Annual Administrative Charge is generally $35, and is deducted each year
(or any part thereof) under each Contract. A reduced annual administrative
charge may apply. This charge is deducted on the Contract Anniversary Date from
each Sub-account and/or the Guaranteed Interest Account on a pro-rata basis, and
is not subject to increase, but may be subject to decrease.
Are there any other charges or deductions?
In most states, premium taxes are imposed when a Contract is annuitized rather
than when premium payments are made by the Contract Owner. PHL Variable will
reimburse itself on the date of a partial withdrawal, surrender of the Contract,
Maturity Date or payment of death proceeds (see "Premium Tax"). For a more
complete description of the fees chargeable to the Account, see "DEDUCTIONS AND
CHARGES".
In addition, certain charges are deducted from the assets of the Funds. For
investment management services, each Series of a Fund pays the investment
manager a separate monthly fee calculated on the basis of its average daily net
assets during the year.
Each Series pays a portion or all of its total operating expenses other than
the management fee; the Growth, Bond, Total Return, Money Market and Balanced
Series will pay up to .15%; the International will pay up to .40%; the Real
Estate Series will pay up to .25%; the U.S. Small Cap Series will pay up to
.17%; and the International Small Cap Series will pay up to .27% of its total
net assets.
What are the minimum initial and subsequent purchase
payments?
For non-tax qualified plans and IRA's, the following minimum purchase payments
apply (unless investments are made pursuant to a bank draft investment program):
Initial minimum per Contract: $1,000
Subsequent minimum per Contract: $ 25
For Contracts issued in connection with Individual Retirement Accounts or
pursuant to a bank draft investment program, the following minimum purchase
payments apply:
Initial minimum per Contract: $ 25
Subsequent minimum per Contract: $ 25
7
<PAGE>
For contracts issued under tax-qualified or employer sponsored plans other
than individual retirement accounts, a minimum annual premium of $1,000 must be
paid.
May I allocate my purchase payments among available options?
Yes. You may choose the amount of each purchase payment to be directed to each
Sub-account and/or to the Guaranteed Interest Account, provided that the minimum
initial purchase payment requirements have been met (see "PURCHASE OF
CONTRACTS").
May I transfer amounts allocated to a Sub-account or the Guaranteed Interest
Account?
Yes. You may transfer some or all of the Contract Value among one or more
available Sub-accounts and/or the Guaranteed Interest Account provided that the
minimum initial purchase payment requirements have been met. Also, if elected,
the Temporary Money Market Allocation Amendment provides that no transfers may
be made until the termination of the Free Look Period. PHL Variable may limit
the number of transfers allowed during a Contract year, but in no event will the
limit be less than six transfers per year (see "Transfers"). However, there are
additional restrictions on transfers from the Guaranteed Interest Account as
described in Appendix A.
Does the Contract provide for payment upon death?
The Contract provides that if the Owner and the Annuitant are the same and the
Owner/Annuitant dies before annuity payments begin and there is no surviving
joint Owner, payment to the Owner/Annuitant's beneficiary will be made and no
surrender charge will be imposed. The Contract also provides for payment upon
death after the Contract Maturity Date (see "Payment Upon Death Before Maturity
Date" and "Payment Upon Death After Maturity Date").
Is there a short-term cancellation right?
An Owner may surrender a Contract for any reason within 10 days after its
receipt and receive in cash the adjusted value of the initial purchase payment.
The Owner may receive more or less than the initial payment depending on
investment experience within the Sub-account during the 10-day period, unless
the Contract is issued with a Temporary Money Market Allocation Amendment, in
which case the initial purchase payment is refunded. If the initial purchase
payment, or any portion thereof, was allocated to the Guaranteed Interest
Account, that payment (or portion) and any earned interest is refunded (see
"Free Look Period").
How will the annuity payments be determined on the maturing of a Contract?
The Owner and Annuitant bear the risk of the investment performance during the
Accumulation Period unless the Guaranteed Interest Account is selected. Once
annuity payments commence, investment in the Account will continue and the Owner
and Annuitant will continue to bear the risk of investment unless a Fixed
Payment Annuity is elected. If a Fixed Payment Annuity is elected, payments will
be fixed, and guaranteed by the general assets of PHL Variable. The fixed
payment schedule is a part of the Contract and the Owner may also be given the
opportunity to choose another annuity option available from PHL Variable at the
maturity of the Contract. If the current practice settlement rates in effect for
Contracts are more favorable than the applicable rates guaranteed under the
Contract, the current rates shall be applied (see "The Annuity Period").
Can money be withdrawn from the Contract?
If the Annuitant is living, amounts held under the Contract may be withdrawn
in whole or in part prior to the Maturity Date, or after the Maturity Date under
Annuity Options K or L. Certain limitations apply to Contracts held under 403(b)
plans (see "Qualified Plans; Tax-Sheltered Annuities"). There may be a penalty
assessed in connection with withdrawals (see "FEDERAL INCOME TAXES").
Can the Contract lapse?
If on any Valuation Date the total Contract Value equals zero, or, the premium
tax reimbursement due on a surrender or partial withdrawal is greater than or
equal to the Contract Value, the Contract will immediately terminate and lapse
without value.
The foregoing summary information should be read in conjunction with the
detailed information appearing elsewhere in this Prospectus.
THE VARIABLE ACCUMULATION ANNUITY
The individual deferred variable accumulation annuity contract (the
"Contract") issued by PHL Variable may be significantly different from a fixed
annuity contract in that, unless the Guaranteed Interest Account is selected, it
is the Owner and Annuitant under a Contract who assume the risk of investment
gain or loss rather than PHL Variable. To the extent that payments are not
allocated to the Guaranteed Interest Account, the amounts which will be
available for annuity payments under a Contract will depend on the investment
performance of the amounts allocated to the Sub-accounts of the PHL Variable
Accumulation Account (the "Account"). Upon the maturity of a Contract, the
amounts held under a Contract will continue to be invested in the Account and
monthly annuity payments will vary in accordance with the investment experience
of the selected Sub-accounts. However, a fixed annuity may be elected, in which
case PHL Variable will guarantee specified monthly annuity payments.
The Owner selects the investment objective of each Contract on a continuing
basis by directing the allocation of purchase payments and accumulated value
among the Guaranteed Interest Account or the Bond Sub-account, Money Market
Sub-account, Growth Sub-account, Total Return Sub-account, International
Sub-account, Balanced Sub-account, Real Estate Sub-account, U.S. Small Cap
Sub-account and the International Small Cap Sub-account.
8
<PAGE>
PHL VARIABLE AND THE PHL VARIABLE ACCUMULATION ACCOUNT
PHL Variable is a wholly-owned indirect subsidiary of Phoenix Home Life Mutual
Insurance Company. Its Executive Office is at One American Row, Hartford,
Connecticut 06115 and its main administrative office is at 100 Bright Meadow
Boulevard, Enfield, Connecticut 06083-1900. PHL Variable is a Connecticut stock
company formed on April 24, 1981. On December 31, 1994 it had total assets of
$10.5 million. PHL Variable sells variable annuity contracts through its own
field force of agents and through brokers. Its operations are currently
conducted in 20 states.
On December 7, 1994, PHL Variable established the Account, a separate account
created under the insurance laws of Connecticut. The Account is registered with
the Securities and Exchange Commission ("SEC") as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act") and it meets the definition
of a "separate account" under the 1940 Act. Registration under the 1940 Act does
not involve supervision of the management or investment practices or policies of
the Account or PHL Variable.
Under Connecticut law, all income, gains or losses of the Account, whether
realized or not, must be credited to or charged against the amounts placed in
the Account without regard to the other income, gains and losses of PHL
Variable. The assets of the Account may not be charged with liabilities arising
out of any other business that PHL Variable may conduct. Obligations under the
Contracts are obligations of PHL Variable.
Contributions to the Guaranteed Interest Account are not invested in the
Account; rather, they become part of the general account of PHL Variable (the
"General Account"). The General Account supports all insurance and annuity
obligations of PHL Variable and is made up of all of its general assets other
than those allocated to any separate account such as the Account. For more
complete information concerning the Guaranteed Interest Account, see Appendix A.
THE PHOENIX EDGE SERIES FUND
Certain Sub-accounts of the Account invest in corresponding Series of The
Phoenix Edge Series Fund. The investment adviser of all of the Series (except
the Real Estate Sub-account) is Phoenix Investment Counsel, Inc. ("PIC"). The
investment adviser of the Real Estate Series is Phoenix Realty Securities, Inc.
("PRS"). The fundamental investment objective of each of the Series of the Fund
is as follows:
(1) Bond Series: The investment objective of the Bond Series is to seek
long-term total return by investing in a diversified portfolio of high
yield (high risk) and high quality fixed income securities. For a
discussion of the risks associated with investing in high yield bonds,
please see the accompanying Fund prospectus.
(2) Money Market Series: The investment objective of the Money Market Series
is to provide maximum current income consistent with capital preservation
and liquidity. The Money Market Series will invest exclusively in high
quality money market instruments.
(3) Growth Series: The investment objective of the Growth Series is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration. The Growth Series will invest principally in common stocks
of corporations believed by management to offer growth potential.
(4) Total Return Series: The investment objective of the Total Return Series
is to realize as high a level of total rate of return over an extended
period of time as is considered consistent with prudent investment risk.
The Total Return Series will invest in stocks, bonds and money market
instruments in accordance with the Investment Adviser's appraisal of
investments most likely to achieve the highest total rate of return.
(5) International Series: The International Series seeks as its investment
objective a high total return consistent with reasonable risk. It intends
to achieve its objective by investing primarily in an internationally
diversified portfolio of equity securities. It intends to reduce its risk
by engaging in hedging transactions involving options, futures contracts
and foreign currency transactions. Investments may be made for capital
growth or for income or any combination thereof for the purpose of
achieving a high overall return.
(6) Balanced Series: The investment objective of the Balanced Series is to
seek reasonable income, long-term capital growth and conservation of
capital. The Balanced Series intends to invest based on combined
considerations of risk, income, capital enhancement and protection of
capital value.
(7) Real Estate Series: The investment objective of the Real Estate Series is
to seek capital appreciation and income with approximately equal emphasis.
It intends under normal circumstances to invest in marketable securities
of publicly traded real estate investment trust (REITs) and companies that
operate, develop, manage and/or invest in real estate located primarily in
the United States.
WANGER ADVISORS TRUST
The investment adviser of the U.S. Small Cap and International Small Cap
Series is Wanger Asset Management, L.P. The fundamental investment objective of
each of the Series is as follows:
(1) U.S. Small Cap Series: The investment objective of the U.S. Small Cap
Series is to provide long-term growth. The The U.S. Small Cap will invest
primarily in securities of U.S. companies with total common stock market
capitalization of less than $1 billion.
(2) International Small Cap Series: The investment objective of the
International Small Cap Series is to provide long-term growth. The
International Small Cap will
9
<PAGE>
invest primarily in securities of non-U.S. companies with total common
stock market capitalization of less than $1 billion.
Each Series will be subject to the market fluctuations and risks inherent in
the ownership of any security and there can be no assurance that any Series'
stated investment objective will be realized.
Shares of the Funds may be sold to other separate accounts of PHL Variable or
its affiliates or of other insurance companies funding variable annuity or
variable life insurance contracts. It is conceivable that it may be
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the Funds simultaneously. Although
neither PHL Variable nor the Funds currently foresee any such disadvantages
either to variable annuity Contract Owners or to variable life insurance
policyowners, the Funds' Trustees intend to monitor events in order to identify
any material conflict between variable annuity Contract Owners and variable life
insurance policyowners and to determine what action, if any, should be taken in
response thereto. Material conflicts could result from, for example, (1) changes
in state insurance laws, (2) changes in Federal income tax laws, (3) changes in
the investment management of any portfolio of a Fund, or (4) differences in
voting instructions between those given by variable life insurance policyowners
and those given by variable annuity Contract Owners.
For additional information concerning the Funds, please see the accompanying
Fund Prospectuses, which should be read carefully before investing.
PURCHASE OF CONTRACTS
The minimum initial purchase payment for each Contract purchased is $1,000.
However, for contracts purchased in connection with Individual Retirement
Accounts (IRAs), the minimum initial purchase payment is $25 and for contracts
purchased in connection with tax-qualified or employer sponsored plans, a
minimum annual payment of $1,000 is required. In addition, a Contract Owner may
authorize his bank to draw $25 or more from his personal checking account
monthly to purchase Units in any available Sub-account or in the Guaranteed
Interest Account. The amount the Contract Owner designates will be automatically
invested on the date the bank draws on his account. If this "check-o-matic"
privilege is elected, the minimum initial purchase payment is $25. This payment
must accompany the application. Each subsequent purchase payment under a
Contract must be at least $25.
Generally, a Contract may not be purchased with respect to a proposed
Annuitant who is eighty-one years of age or older. Total purchase payments in
excess of $1,000,000 cannot be made without the permission of PHL Variable.
While the Annuitant is living and the Contract is in force, purchase payments
may be resumed at any time before the Maturity Date of a Contract.
Purchase payments received under the Contracts will be allocated to any
Sub-account or to the Guaranteed Interest Account, or a combination thereof, in
the proportion specified in the application for the Contract or as indicated by
the Owner from time to time. Changes in the allocation of purchase payments will
be effective as of receipt by Variable Products Operations of notice of election
in a form satisfactory to PHL Variable and will apply to any purchase payments
accompanying such notice or made subsequent to the receipt of the notice, unless
otherwise requested by the Contract Owner.
DEDUCTIONS AND CHARGES
Premium Tax
Whether or not a premium tax is imposed will depend upon, among other things,
the Owner's state of residence, the Annuitant's state of residence, the status
of PHL Variable within those states and the insurance tax laws of those states.
PHL Variable will pay any premium tax due and will only reimburse itself upon
the earlier of partial withdrawal, surrender of the Contract, Maturity Date or
payment of death proceeds. For a list of states and premium taxes, see Appendix
B to this Prospectus.
Sales Charges
A deduction for sales charges (also referred to in this Prospectus as
surrender charges) for these Contracts may be taken from proceeds of withdrawals
from, or complete surrender of, the Contracts if assets are not held under the
Contract for a certain period of time (see chart below). No sales charge will be
taken after the Annuity Period has begun except with respect to unscheduled
withdrawals under Annuity Option K or L below (see "Annuity Options"). Any sales
charge is imposed on a first-in, first-out basis.
With respect to withdrawals or surrenders, during the first year a Contract is
in existence, the deduction applies against the total amount withdrawn. After
the first anniversary of the Contract, a withdrawal of up to 10% of the amount
held under a Contract as of the previous Contract anniversary may be made each
year without imposition of a sales charge. The deduction for sales charges,
expressed as a percentage of the amount redeemed in excess of the 10% allowable
amount, is as follows:
Age of Deposit Contingent
in Complete Deferred Sales
Years from Charge as a
Payment Date Unit Percentage of
Released was Credited Amount Withdrawn
- --------------------- --------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 and over 0%
In the event that the Annuitant dies before the Maturity Date of the Contract,
the sales charge described in the table above will not apply.
The total deferred sales charges on a Contract will never exceed 9% of the
total purchase payments, and the applicable level of sales charge cannot be
changed with respect to outstanding Contracts. Sales charges imposed in
connection with partial surrenders will be deducted from the Sub-accounts and
the Guaranteed Interest
10
<PAGE>
Account on a pro-rata basis. Any distribution costs not paid for by sales
charges will be paid by PHL Variable from the assets of the General Account.
Charges For Mortality and Expense Risks
While fixed annuity payments to Annuitants will reflect the investment
performance of the applicable Series of the Funds during the Accumulation
Period, the amount of such payments will not be decreased because of adverse
mortality experience of Annuitants as a class or because of an increase in
actual expenses of PHL Variable over the expense charges provided for in the
Contracts. PHL Variable assumes the risk that Annuitants as a class may live
longer than expected (necessitating a greater number of annuity payments) and
that its expenses may be higher than the deductions for such expenses.
In assuming the mortality risk, PHL Variable agrees to continue life annuity
payments, determined in accordance with the annuity tables and other provisions
of the Contract, to the Annuitant or other payee for as long as he or she may
live.
PHL Variable charges each Sub-account the daily equivalent of 1.25% on an
annual basis of the current value of the Sub-account's net assets for mortality
and expense risks assumed. (See the Contract's Schedule Pages). No mortality and
expense risk charge is deducted from the Guaranteed Interest Account. If the
percentage charges prove insufficient to cover actual insurance underwriting
costs and excess administrative costs, then the loss will be borne by PHL
Variable; conversely, if the amount deducted proves more than sufficient, the
excess will be a profit to PHL Variable. Any such profit may be used, as a part
of PHL Variable's General Account's assets, to meet sales expenses, if any,
which are in excess of sales commission revenue generated from any sales
charges. PHL Variable has concluded that there is a reasonable likelihood that
the distribution financing arrangement being used in connection with the
Contracts will benefit the Account and the Contract Owners.
Charges For Administrative Services
PHL Variable is responsible for administering the Contract. In this
connection, PHL Variable, among other things, maintains an account for each
Owner and Annuitant, makes all disbursements of benefits, furnishes
administrative and clerical services for each Contract, makes disbursements to
pay obligations chargeable to the Account, maintains the accounts, records, and
other documents relating to the business of the Account required by regulatory
authorities, causes the maintenance of the registration and qualification of the
Account under laws administered by the Securities and Exchange Commission,
prepares and distributes notices and reports to Owners, and the like. PHL
Variable also reimburses Phoenix Equity Planning Corporation for any expenses
incurred by it as "principal underwriter." All organizational expenses of the
Account are paid by PHL Variable.
To cover its fixed cost of administration, such as preparation of billings and
statements of account, PHL Variable charges each Contract $35 each year prior to
the Contract's Maturity Date. A reduced charge may apply. For Contracts issued
under a tax-qualified plan other than an IRA, a reduced annual administrative
charge of $15 may apply. For Contracts with a Contract Value of at least $50,000
there is no annual administrative charge. This cost-based charge is deducted
from each Sub-account and/or the Guaranteed Interest Account holding the assets
of the Owner or on a pro-rata basis from two or more Sub-accounts or the
Guaranteed Interest Account in relation to their values under the Contract, and
is not subject to increase but may be subject to decrease. This charge is
deducted on the Contract anniversary date for services rendered since the
preceding Contract anniversary date. Upon surrender of a Contract, the entire
annual administrative charge of $35 is deducted regardless of when the surrender
occurs.
PHL Variable also charges each Sub-account available through a Contract the
daily equivalent of 0.125% on an annual basis of the accumulated value of the
Sub-account to cover its variable costs of administration, such as printing and
distribution of Contract Owner meetings. This cost-based fee is not deducted
from the Guaranteed Interest Account.
PHL Variable may reduce the annual administrative charges for Contracts issued
under group or sponsored arrangements such as Internal Revenue Code Section
403(b) or 457 Plans. Generally, administrative costs per Contract vary with the
size of the group or sponsored arrangement, its stability as indicated by its
term of existence and certain characteristics of its members, the purposes for
which the Contracts are purchased and other factors. The amounts of reductions
will be considered on a case-by-case basis but will be applied in a uniform,
nondiscriminatory manner that reflects the reduced administrative costs expected
as a result of sales to a particular group or sponsored arrangement.
No sales or annual administrative charges will be deducted for Contracts sold
to registered representatives of the principal underwriter or to officers,
directors and employees of PHL Variable or its affiliates and their spouses; or
to employees or agents who retire from PHL Variable or its affiliates or Phoenix
Equity Planning Corporation, or its affiliates or to registered representatives
of broker/dealers with whom Phoenix Equity Planning Corporation has selling
agreements, regardless as to their state of residence.
Other Charges
As compensation for investment management services, the Advisers are entitled
to a fee, payable monthly and based on an annual percentage of the average
aggregate daily net asset values of each Series as summarized in the table below
Phoenix Investment Counsel, Inc.
--------------------------------
Rate for First Rate for Next Rate for Excess
Series $250,000,000 $250,000,000 Over $500,000,000
- ------ ------------ ------------ -----------------
Money Market .40% .35% .30%
Bond .50% .45% .40%
Balanced .55% .50% .45%
Total Return .60% .55% .50%
Growth .70% .65% .60%
International .75% .70% .65%
Phoenix Realty Securities, Inc.
--------------------------------
Rate for First Rate for Next Rate for Excess Over
Series $1,000,000,000 $1,000,000,000 $2,000,000,000
- ------ ------------ ------------ -----------------
Real Estate .75% .70% .65%
11
<PAGE>
Wanger Asset Management, L.P.
--------------------------------
Rate for First Rate for Next Rate for Excess Over
Series $1,000,000,000 $1,000,000,000 $2,000,000,000
- ------ ------------ ------------ -----------------
U.S. Small Cap .98% .95% .90%
International 1.27% 1.20% 1.10%
Small Cap
Each Series pays a portion or all of its total operating expenses other than
the management fee; the Growth, Bond, Total Return, Money Market and Balanced
Series will pay up to .15%; the International will pay up to .40%; the Real
Estate Securities will pay up to .25%; the U.S. Small Cap Series will pay up to
.17%; and the International Small Cap Series will pay up to .27% of its total
net assets.
These Fund charges and other expenses are described more fully in the
accompanying Fund prospectus.
THE ACCUMULATION PERIOD
Accumulation Units
Initial purchase payments will be applied within two days if the application
for a Contract is complete. If an incomplete application is completed within
five business days of receipt by Variable Products Operations, the initial
purchase payment will be applied within two days of the completion of the
application. In the event that Variable Products Operations does not accept the
application within five business days or if an order form is not completed
within five business days of receipt by Variable Products Operations, then the
purchase payment will be immediately returned. If the Guaranteed Interest
Account is chosen, additional purchase payments are deposited on the date of
receipt of such purchase payment at Variable Products Operations. If one or more
of the Sub-accounts is chosen, additional purchase payments are applied to the
purchase of Accumulation Units of the Sub-account(s) chosen, at the value of
such Units next determined after the receipt of such purchase payment at
Variable Products Operations. The number of Accumulation Units of a Sub-account
purchased with a specific purchase payment will be determined by dividing the
applied purchase payment by the value of an Accumulation Unit in that
Sub-account next determined after receipt of the purchase payment. The value of
the Accumulation Units of a Sub-account will vary depending upon the investment
performance of the applicable Series of the Fund, the fee of the Fund's
investment adviser and the charges and deductions made against the Sub-account.
Accumulation Unit Values
At any date prior to the Maturity Date of the Contract, the total value of the
Accumulation Units in a Sub-account which has been credited under a Contract can
be computed by multiplying the number of such Units by the appropriate value of
an Accumulation Unit in effect for such date. The value of an Accumulation Unit
on a day other than a Valuation Date is the value of the Accumulation Unit on
the next Valuation Date. The number of Accumulation Units in each Sub-account
credited under each Contract and their current value will be reported to the
Owner at least annually.
Transfers
A Contract Owner may, at any time but no later than 30 days prior to the
Maturity Date of a Contract, elect to transfer all or any part of the Contract
Value among one or more Sub-accounts or the Guaranteed Interest Account. Any
such transfer from a Sub-account will result in the redemption of Accumulation
Units and, if another Sub-account is selected, in the purchase of Accumulation
Units on the basis of the respective values next determined after the receipt by
Variable Products Operations of written notice of election in a form
satisfactory to PHL Variable. A transfer among Sub-accounts or the Guaranteed
Interest Account does not automatically change the payment allocation schedule
of a contract.
A Contract Owner may also request transfers and changes in payment allocations
among available Sub-accounts or the Guaranteed Interest Account by calling
800-447-4312 between the hours of 8:30 A.M. and 4:00 P.M. Eastern Time. Unless
the Contract Owner elects in writing not to authorize telephone transfers or
allocation changes, telephone transfer orders and allocation changes will also
be accepted on behalf of the Contract Owner from his or her registered
representative. Telephone transfer instructions and change in payment allocation
instructions will be recorded on tape; however, PHL Variable will not be able to
verify the authenticity of any order received and will not be liable for any
loss incurred as a result of acting upon telephone transfer or change in payment
allocation instructions unless such loss results from the erroneous processing
of a telephone instruction. These telephone privileges may be modified or
terminated at any time and during times of extreme market volatility, may be
difficult to exercise. In such cases a Contract Owner should submit a written
request.
A Contract Owner may also elect to transfer funds automatically among the
Sub-accounts or the Guaranteed Interest Account on a monthly, quarterly,
semi-annual or annual basis under the Systematic Transfer Program for Dollar
Cost Averaging ("Systematic Transfer Program"). Under this Systematic Transfer
Program, the minimum initial and subsequent transfer amounts are $25 monthly,
$75 quarterly, $150 semi-annually, or $300 annually. A Contract Owner must have
an initial value of $2,000 in the Guaranteed Interest Account or the Sub-account
that funds will be transferred from, and if the value in that Sub-account or the
Guaranteed Interest Account drops below the elected transfer amount, the entire
remaining balance will be transferred and no more systematic transfers will be
processed. Funds may be transferred from only one Sub-Account or the Guaranteed
Interest Account, but may be allocated to multiple Sub-accounts. Under the
Systematic Transfer Program, Contract Owners may make multiple transfers of
approximately equal amounts per Contract year from the Guaranteed Interest
Account over a minimum 18 month period.
All transfers under the Systematic Transfer Program will be executed on the
basis of the respective values as of the first of the month rather than on the
basis of the respective values next determined after receipt of the transfer
request. If the first of the month falls on a holiday or weekend, then the
transfer will be processed on the next succeeding business day.
Unless PHL Variable agrees otherwise or the Systematic Transfer Program has
been elected, a Contract Owner may make only one
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transfer per Contract year from the Guaranteed Interest Account. Non-systematic
transfers from the Guaranteed Interest Account will be effectuated on the date
of receipt by Variable Products Operations except as otherwise may be requested
by the Contract Owner. For non-systematic transfers, the amount that may be
transferred from the Guaranteed Interest Account at any one time cannot exceed
the greater of $1,000 or 25% of the Contract Value in the Guaranteed Interest
Account at the time of transfer.
PHL Variable reserves the right not to accept transfer instructions from
registered representatives acting under powers of attorney for multiple Contract
Owners unless the registered representative's broker-dealer and PHL Variable
have entered into a third party transfer service agreement.
No sales charge will be assessed when a transfer is made. The date a payment
was credited for the purpose of calculating the sales charge will remain the
same notwithstanding the transfer. Currently, there is no charge for transfers;
however, the Account reserves the right to charge a transfer fee of $10.00 per
transfer after the first two in each Contract year to defray administrative
costs. Currently, unlimited transfers are permitted; however, the Account
reserves the right to limit the number of transfers made during each Contract
year a Contract is in existence. When the temporary Money Market Allocation
Amendment has been elected, no transfers may be made until the end of the free
look period (See "Free Look Period"). However, Contract Owners will be permitted
at least six transfers during each Contract year. THERE ARE ADDITIONAL
RESTRICTIONS ON TRANSFERS FROM THE GUARANTEED INTEREST ACCOUNT AS DESCRIBED
ABOVE AND IN APPENDIX A.
Surrender of Contract; Partial Withdrawals
If the Annuitant is living, amounts held under the Contract may be withdrawn
in whole or in part prior to the Maturity Date, or after the Maturity Date under
Annuity Options K or L. After the Contract has been owned for one year, and
prior to the Maturity Date, the Contract Owner may withdraw up to 10% of the
Contract Value (as of the previous Contract anniversary) annually, either in a
single sum or in equal monthly payments by sending a signed written request for
withdrawal to Variable Products Operations. If the Contract Owner has not yet
reached age 59-1/2, a 10% penalty tax will apply on taxable income withdrawn
(see "Federal Income Taxes"). The appropriate number of Accumulation Units of a
Sub-account will be redeemed at their value next determined after the receipt by
Variable Products Operations of a written notice in a form satisfactory to PHL
Variable. Unless the Owner designates otherwise, Accumulation Units redeemed in
a partial withdrawal will be redeemed in each Sub-account in the same proportion
as the value of the Accumulation Units of the Contract is then allocated among
the Sub-accounts. Also, Contract Values in the Guaranteed Interest Account will
be withdrawn in a partial withdrawal in the same proportion as the Contract
Value is then allocated to the Guaranteed Interest Account, unless the Owner
designates otherwise. The redemption value of Accumulation Units may be more or
less than the purchase payments applied under the Contract to purchase the
Accumulation Units, depending upon the investment performance in each
Sub-account. The resulting cash payment will be made in a single sum, ordinarily
within seven days after receipt of such notice. However, redemption and payment
may be delayed under certain circumstances (see "Deferment of Payment"). There
may be adverse tax consequences to certain surrenders and partial withdrawals
(see "Surrenders or Withdrawals Prior to the Contract Maturity Date"). Certain
restrictions on redemptions are imposed on Contracts used in connection with
Internal Revenue Code Section 403(b) plans (see "Qualified Plans";
"Tax-Sheltered Annuities"). A deduction for sales charges may be imposed on
partial withdrawals from, and complete surrender of, a Contract (see "Sales
Charges"). Any sales charge is imposed on a first-in, first-out basis.
Any request for a withdrawal from, or complete surrender of, a Contract should
be mailed to Variable Products Operations, PHL Variable Insurance Company , 101
Munson Street, PO Box 942, Greenfield, Massachusetts 01302-0942.
Lapse of Contract
If on any Valuation Date the Contract Value is zero, or the premium tax
reimbursement due on surrender or partial withdrawal is greater than or equal to
the Contract Value, the Contract will immediately terminate and lapse without
value. Within 30 days after this Valuation Date, PHL Variable will notify the
Contract Owner in writing that the Contract has lapsed.
Payment Upon Death Before Maturity Date
If the Owner is the Annuitant and dies before the Contract Maturity Date, the
contingent Annuitant becomes the Annuitant. If there is no contingent Annuitant,
the death benefit will be paid under the Contract to the Owner/Annuitant's
beneficiary. If the Owner and the Annuitant are not the same and the Annuitant
dies prior to the Maturity Date, the contingent Annuitant becomes the Annuitant.
If there is no contingent Annuitant, the death benefit will be paid to the
Annuitant's beneficiary. The death benefit is calculated according to the
following method. If the death occurred prior to the first Contract anniversary
following the Annuitant's 85th birthday and during the first 7 years, this
payment would be equal to the greater of: (a) the sum of all purchase payments
made under the Contract less any prior partial withdrawals (see "Surrender of
Contract; Partial Withdrawals"); or (b) the Contract Value next determined
following receipt of a certified copy of the death certificate at Variable
Products Operations. If the death occurred prior to the first Contract
anniversary following the Annuitant's 85th birthday and during Contract years 8
through 14 (or during any subsequent 7 year period), this payment would be equal
to the greater of: (a) the death benefit that would have been payable at the end
of the immediately preceding 7 year period, plus any purchase payments made and
less any partial withdrawals since such date; or (b) the Contract Value next
determined following receipt of a certified copy of the death certificate at
Variable Products Operations. In Contract years following the Annuitant's 85th
birthday, the death benefit is the Contract Value next determined following
receipt of a certified copy of the death certificate at Variable Products
Operations.
If the Owner and the Annuitant are not the same and the Owner dies prior to
the Maturity Date and there is no surviving joint Owner, upon receipt of due
proof of death, PHL Variable will fully surrender the Contract and pay the Cash
Surrender Value (Contract Value less any applicable sales charge) to the Owner's
beneficiary (see "Sales Charges").
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Payments will be made in a single sum to the beneficiary designated by the
Owner prior to the Annuitant's death unless an optional method of settlement had
been elected by the Owner. If an optional method of settlement had not been
elected by the Owner, the beneficiary may elect an optional method of settlement
in lieu of a single sum. No deduction is made for sales or other expenses upon
such election (see "Sales Charges"). Notwithstanding the foregoing, if the
amount to be paid is less than $2,000, it will be paid in a single sum (see
"Annuity Options"). Depending upon state law, the payment to the beneficiary may
avoid probate and the death benefit may be reduced by any premium tax due (see
"Premium Tax").
THE ANNUITY PERIOD
Variable Accumulation Annuity Contracts
Annuity payments will commence on the Contract's Maturity Date if the
Annuitant is then living and the Contract is then in force. On the Maturity Date
and thereafter, investment in the Account is continued unless a Fixed Payment
Annuity is elected. No sales charge is taken. Each Contract will provide, at the
time of its issuance, for a Variable Payment Life Annuity with Ten Year Period
Certain unless a different annuity option is elected by the Owner (see "Annuity
Options"). Under a Variable Payment Life Annuity with Ten Year Period Certain,
annuity payments, which may vary in amount based on the performance of the
Sub-account selected, are made monthly to the Annuitant for life and, if the
Annuitant dies within ten years after the Maturity Date, the beneficiary will be
paid the payments remaining in the ten-year period. A different form of annuity
may be elected by the Owner prior to the Maturity Date. Once annuity payments
have commenced, the Annuity Option may not be changed.
If the amount to be applied on the Maturity Date is less than $2,000, PHL
Variable may pay such amount in one lump sum in lieu of providing an annuity. If
the initial monthly annuity payment under an Annuity Option would be less than
$20, PHL Variable may also make a single sum payment equal to the total Contract
Value on the date the initial payment would be payable, in place of all other
benefits provided by the Contract, or, make periodic payments quarterly,
semi-annually or annually in place of monthly payments.
Each Contract specifies a provisional Maturity Date at the time of its
issuance. The Owner may subsequently elect a different Maturity Date. The
Maturity Date shall not be earlier than the fifth Contract anniversary or later
than the Contract anniversary nearest the Annuitant's ninety-fifth birthday
unless the Contract is issued in connection with certain qualified plans.
The Maturity Date election shall be made by written notice and must be
received by Variable Products Operations thirty days before the provisional
Maturity Date. If a Maturity Date, which is different from the provisional
Maturity Date of the Contract, is not elected by the Owner, the provisional
Maturity Date becomes the Maturity Date. Particular care should be taken in
electing the Maturity Date of a Contract issued under a Tax-Sheltered Annuity, a
Keogh Plan or an Individual Retirement Account (IRA) plan. (See "Tax-Sheltered
Annuities", "Keogh Plans" and "Individual Retirement Accounts".)
Annuity Options
Unless an alternative annuity payment option is elected on or before the
Maturity Date, the amounts held under a Contract on the Maturity Date will
automatically be applied to provide a 10-year period certain variable payment
monthly life annuity based on the life of the Annuitant under Option I described
below. Any annuity payments falling due after the death of the Annuitant during
the period certain will be paid to the Annuitant's beneficiary. Each annuity
payment will be based upon the value of the Annuity Units credited to the
Contract. The number of Annuity Units in each Sub-account to be credited is
based on the value of the Accumulation Units in that Sub-account and the
applicable annuity purchase rate. The purchase rate differs according to the
payment option selected and the age of the Annuitant. The value of the Annuity
Units will vary with the investment performance of each Sub-account to which
Annuity Units are credited based on an assumed investment return of 4-1/2% per
year. This rate is a fulcrum rate around which Variable Annuity payments will
vary to reflect whether actual investment experience of the Sub-account is
better or worse than the assumed investment return. The assumed investment rate
and the calculation of variable income payments for such 10-year period certain
variable payment life annuity and for Options J and K described below are
described in more detail in the Contract and in the Statement of Additional
Information.
In lieu of the 10-year period certain variable payment life annuity (see
"Option I -- Variable Payment Life Annuity with Ten Year Period Certain"), the
Owner may, by written request received by Variable Products Operations on or
before the Maturity Date of the Contract, elect any of the other annuity payment
options described below. No surrender charge will be assessed under any annuity
option, unless unscheduled withdrawals are made under Annuity Options K or L.
The level of annuity payments payable under the following options is based
upon the option selected and, depending on the option chosen, such factors as
the age at which payments begin, the form of annuity, annuity purchase rates,
assumed investment return (for variable payment annuities), and the frequency of
payments.
PHL Variable deducts a daily charge for mortality and expense risks and a
daily administrative fee from Contract Values held in the Sub-accounts (see
"Charges For Mortality and Expense Risks"). Therefore, electing Option K will
result in a deduction being made even though PHL Variable assumes no mortality
risk under that option.
Option A -- Life Annuity with Specified Period Certain
Provides a monthly income for the life of the Annuitant. In the event of death
of the Annuitant, the annuity income will be paid to the beneficiary until the
end of the specified period certain. For example, a ten year period certain will
provide a total of 120 monthly payments. The certain period may be 5, 10, or 20
years.
Option B -- Non-Refund Life Annuity
Provides a monthly income for the lifetime of the Annuitant. No income is
payable after the death of the Annuitant.
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Option C -- Discontinued
Option D -- Joint and Survivor Life Annuity
Provides a monthly income for the lifetimes of both the Annuitant and a joint
annuitant as long as either is living. In the event of the death of the
Annuitant or joint annuitant, the annuity income will continue to the survivor.
The amount to be continued to the survivor is 100% of the amount of the joint
annuity payment, as elected at the time the annuity option is chosen. No income
is payable after the death of the survivor annuitant.
Under Option D, the joint annuitant must be named at the time the option is
elected and cannot be changed. The joint annuitant must have reached an adjusted
age of 40, as defined in the Contract.
Option E -- Installment Refund Life Annuity
Provides a monthly income for the life of the Annuitant. In the event of the
Annuitant's death, the annuity income will continue to the named beneficiary
until the amount applied to purchase the annuity has been distributed.
Option F -- Joint and Survivor Life Annuity with 10 Year
Period Certain
Provides a monthly income for the lifetime of both the Annuitant and a joint
annuitant as long as either is living. In the event of the death of the
Annuitant or joint annuitant, the annuity income will continue to the survivor.
If the survivor dies prior to the end of the 10 year period, the annuity income
will continue to the named beneficiary until the end of the 10 year period
certain.
Under Option F, the joint annuitant must be named at the time the option is
elected and cannot be changed. The joint annuitant must have reached an adjusted
age of 40, as defined in the Contract.
Option G -- Payments For Specified Period
Provides equal income installments for a specified period of years whether the
Annuitant lives or dies. Any specified whole number of years from 5 to 30 years
may be elected.
Option H -- Payments of Specified Amount
Provides equal installments of a specified amount over a period of at least 5
years. The specified amount may not be greater than the total annuity amount
divided by five annual installment payments. If the Annuitant dies prior to the
end of the elected period certain, annuity payments will continue to the named
beneficiary until the end of the elected period certain.
Option I -- Variable Payment Life Annuity With Ten
Year Period Certain
Unless another annuity option has been elected, this option will automatically
apply to any Contract proceeds payable on the Maturity Date. It provides a
variable payout monthly annuity based on the life of the Annuitant. In the event
of the death of the Annuitant, the annuity payments are made to the beneficiary
until the end of the ten year period. The ten year period provides a total of
120 monthly payments. Payments will vary as to dollar amount, based on the
investment experience of the Sub-accounts to which proceeds are applied.
Option J -- Joint Survivor Variable Payment Life Annuity
With Ten Year Period Certain
Provides a variable payout monthly annuity while the Annuitant and the
designated joint annuitant are living and continues thereafter during the
lifetime of the survivor or, if later, until the end of a ten year period
certain. Payments will vary as to dollar amount, based on the investment
experience of the Sub-accounts to which proceeds are applied. The joint
annuitant must be named at the time the option is elected and cannot be changed.
The joint annuitant must have reached an adjusted age of 40, as defined in the
Contract.
Option K -- Variable Payment Annuity for a Specified Period
Provides variable payout monthly income installments for a specified period of
time, whether the Annuitant lives or dies. The period certain specified must be
in whole numbers of years from 5 to 30. However, the period certain selected by
the beneficiary of any death benefit under the Contract may not extend beyond
the life expectancy of such beneficiary. A Contract Owner may request an
unscheduled withdrawal representing part or all of the remaining Contract Value
less any applicable contingent deferred sales charge at any time.
Option L -- Variable Payment Life Expectancy Annuity
Provides a variable payout monthly income payable over the Annuitant's
annually recalculated life expectancy or the annually recalculated life
expectancy of the Annuitant and joint annuitant. A Contract Owner may request an
unscheduled withdrawal representing part or all of the remaining Contract Value
less any applicable contingent deferred sales charge at anytime. Upon the death
of the Annuitant (and joint annuitant, if there is a joint annuitant), the
remaining Contract Value will be paid in a lump sum to the Annuitant's
beneficiary.
Option M -- Unit Refund Variable Payment Life Annuity
Provides variable monthly payments as long as the Annuitant lives. If the
Annuitant dies, the Annuitant's beneficiary will receive the value of the
remaining Annuity Units in a lump sum.
Option N -- Variable Payment Non-Refund Life Annuity
Provides a variable monthly income for the life of the Annuitant. No income or
payment to a beneficiary is paid after the death of the Annuitant.
Other Options and Rates
PHL Variable may offer other annuity options at the Maturity Date of a
Contract. In addition, in the event that current settlement rates for Contracts
are more favorable than the applicable rates guaranteed under the Contract, the
current settlement rates shall be used in determining the amount of any annuity
payment under the Annuity Options above.
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Other Conditions
Federal income tax requirements currently applicable to Keogh and Individual
Retirement Account plans provide that the period of years guaranteed under joint
and survivorship annuities with specified periods certain (see "Option F" and
"Option J" above) cannot be any greater than the joint life expectancies of the
payee and his or her spouse.
Federal income tax requirements also provide that participants in qualified
plans or IRAs must begin minimum distributions by April 1 of the year following
the one in which they attain age 70-1/2. The distributions must be such that the
full amount in the contract will be distributed over a period not greater than
the participant's life expectancy, or the combined life expectancy of the
participant and his or her spouse or designated beneficiary. Distributions made
under this method are generally referred to as Life Expectancy Distributions
(LEDs). An LED program is available to participants in qualified plans or IRAs.
Requests to elect this program must be made in writing.
Under an LED, if a distribution is required in the first Contract year, the
amount of the distribution will be subtracted from the first year payments. In
subsequent Contract years, under the LED program, amounts up to the required
minimum distribution may be withdrawn without a deduction for sales charges,
even if the minimum distribution exceeds the 10% allowable amount (see "Sales
Charges"). In any Contract year, any amounts withdrawn that have not been held
under a Contract for at least six years and are in excess of the greater of the
minimum distribution and the 10% free available amount will be subject to any
applicable sales charge.
If the initial monthly annuity payment under an Annuity Option would be less
than $20, PHL Variable may make a single sum payment equal to the Contract Value
on the date the initial payment would be payable, in place of all other benefits
provided by the Contract, or, may make periodic payments quarterly,
semi-annually or annually in place of monthly payments.
Payment Upon Death After Maturity Date
If an Owner who is also the Annuitant dies on or after the Maturity Date,
except as may otherwise be provided under any supplementary contract between the
Owner and PHL Variable, PHL Variable will pay to the Owner/Annuitant's
beneficiary any annuity payments due during any applicable period certain under
the Annuity Option in effect on the Annuitant's death. If the Annuitant who is
not the Owner dies on or after the Maturity Date, PHL Variable will pay any
remaining annuity payments to the Annuitant's beneficiary according to the
payment option in effect at the time of the Annuitant's death. If an Owner who
is not the Annuitant dies on or after the Maturity Date, PHL Variable will pay
any remaining annuity payments to the Owner's beneficiary according to the
payment option in effect at the time of the Owner's death.
VARIABLE ACCOUNT VALUATION PROCEDURES
Valuation Date -- A Valuation Date is every day the New York Stock Exchange is
open for trading. The New York Stock Exchange is scheduled to be closed for
trading on the following days: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Board of Directors of the Exchange reserves the right to change this
schedule as conditions warrant. On each Valuation Date, the value of the
Separate Account is determined at the close of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time).
Valuation Period -- A Valuation Period is that period of time from the beginning
of the day following a Valuation Date to the end of the next following Valuation
Date.
Accumulation Unit Value -- The value of one Accumulation Unit was set at $1.0000
on the date assets were first allocated to each Sub-account. The value of one
Accumulation Unit on any subsequent Valuation Date is determined by multiplying
the immediately preceding Accumulation Unit Value by the applicable Net
Investment Factor for the Valuation Period ending on such Valuation Date.
Net Investment Factor -- The Net Investment Factor for any Valuation Period is
equal to 1.000000 plus the applicable net investment rate for such Valuation
Period. A Net Investment Factor may be more or less than 1.000000. To determine
the net investment rate for any Valuation Period for the funds allocated to each
Sub-account, the following steps are taken: (a) the aggregate accrued investment
income and capital gains and losses, whether realized or unrealized, of the
Sub-account for such Valuation Period is computed, (b) the amount in (a) is then
adjusted by the sum of the charges and credits for any applicable income taxes
and the deductions at the beginning of the Valuation Period for mortality and
expense risk charges and daily administration fee, and (c) the results of (a) as
adjusted by (b) are divided by the aggregate Unit Values in the Sub-account at
the beginning of the Valuation Period.
MISCELLANEOUS PROVISIONS
Assignment
Owners of Contracts issued in connection with non-tax qualified plans may
assign their interest in the Contract without the consent of the beneficiary. A
written notice of such assignment must be filed with Variable Products
Operations before it will be honored.
A pledge or assignment of a Contract is treated as payment received on account
of a partial surrender of a Contract (See "Surrenders or Withdrawals Prior to
the Contract Maturity Date").
In order to qualify for favorable tax treatment, Contracts issued in
connection with tax qualified plans may not be sold, assigned, discounted or
pledged as collateral for a loan or as security for the performance of an
obligation, or for any other purpose, to any person other than PHL Variable.
Deferment of Payment
Payment of the Contract Value in a single sum upon a withdrawal from, or
complete surrender of, a Contract will ordinarily be made within seven days
after receipt of the written request by Variable Products Operations. However,
payment of the value of any Accumulation Units may be postponed at times (a)
when the New York Stock Exchange is closed, other than customary weekend and
holiday closings, (b) when trading on the Exchange is restricted, (c) when an
emergency exists as a result of which disposal of securities in the Fund is not
reasonably practicable or it is not reasonably
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practicable to determine the Contract Value or (d) when a governmental body
having jurisdiction by order permits such suspension. Rules and regulations of
the SEC, if any, are applicable and will govern as to whether conditions
described in (b), (c) or (d) exist.
Free Look Period
PHL Variable may mail the Contract to the Owner or it may be delivered in
person. An Owner may surrender a Contract for any reason within 10 days after
its receipt and receive in cash the adjusted value of the initial purchase
payment. (A longer free look period may be provided in the Contract Owner's
State.) The Owner may receive more or less than the initial payment depending on
investment experience within the Sub-account during the free look period, unless
the Contract was issued with a Temporary Money Market Allocation Amendment, in
which case the initial purchase payment will be refunded.
If the Contract Owner elected on the application to have the Temporary Money
Market Allocation Amendment issued with the Contract, PHL Variable temporarily
allocates the initial purchase payment to the Money Market Sub-account. Under
this Amendment, if the Contract Owner surrenders the Contract during the Free
Look Period, the initial purchase payment is refunded. At the expiration of the
Free Look Period, the value of the Accumulation Units held in the Money Market
Sub-account is allocated among the available Sub-accounts of the VA Account or
the Guaranteed Interest Account in accordance with the Contract Owner's
allocation instructions on the application.
If the initial purchase payment, or any portion thereof, was allocated to the
Guaranteed Interest Account, that payment (or portion) and any earned interest
is refunded.
Amendments to Contracts
Contracts may be amended to conform to changes in applicable law or
interpretations of applicable law, or to accommodate design changes. Changes in
the Contract may need to be approved by Contract Owners and state insurance
departments. A change in the Contract which necessitates a corresponding change
in the Prospectus or the Statement of Additional Information must be filed with
the SEC.
Substitution of Fund Shares
Although PHL Variable believes it to be highly unlikely, it is possible that
in the judgment of its management, one or more of the Series of the Funds may
become unsuitable for investment by Contract Owners because of a change in
investment policy, or a change in the tax laws, or because the shares are no
longer available for investment. In that event, PHL Variable may seek to
substitute the shares of another Series or the shares of an entirely different
mutual fund. Before this can be done, the approval of the SEC, and possibly one
or more state insurance departments, will be required.
Ownership of the Contract
Ordinarily, the purchaser of a Contract is both the Owner and the Annuitant
and is entitled to exercise all the rights under the Contract. However, the
Owner may be an individual or entity other than the Annuitant. Spouses may own a
Contract as joint Owners. Transfer of the ownership of a Contract may involve
Federal income tax consequences, and a qualified adviser should be consulted
before any such transfer is attempted.
FEDERAL INCOME TAXES
Introduction
The Contracts are designed for use with retirement plans which may or may not
be tax-qualified plans ("Qualified Plans") under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). The ultimate effect of Federal
income taxes on the amounts held under a Contract, on annuity payments, and on
the economic benefits of the Contract Owner, Annuitant or beneficiary depends on
PHL Variable Insurance Company's tax status, on the type of retirement plan for
which the Contract is purchased, and upon the tax and employment status of the
individual concerned.
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any estate or inheritance taxes or any applicable state,
local or other tax laws. Moreover, the discussion is based upon PHL Variable
Insurance Company's understanding of the Federal income tax laws as they are
currently interpreted. No representation is made regarding the likelihood of
continuation of the Federal income tax laws or the current interpretations by
the Internal Revenue Service (the "Service"). For a discussion of Federal income
taxes as they relate to the Funds, please see the accompanying Prospectuses for
the Funds.
Tax Status
PHL Variable is taxed as a life insurance company under Part I of Sub-chapter
L of the Code. Since the Account is not a separate entity from PHL Variable and
its operations form a part of PHL Variable, it will not be taxed separately as a
"regulated investment company" under Sub-chapter M of the Code. Investment
income and realized capital gains on the assets of the Account are reinvested
and taken into account in determining the Contract Value. Under existing Federal
income tax law, the Account's investment income, including realized net capital
gains, is not taxed to PHL Variable. PHL Variable reserves the right to make a
deduction for taxes should they be imposed with respect to such items in the
future.
Taxation of Annuities in General -- Non-Qualified Plans
Section 72 of the Code governs taxation of annuities. In general, a Contract
Owner is not taxed on increases in value of the Units held under a Contract
until some form of distribution is made under the Contract. However, the
increase in value may be subject to tax currently. In the case of Contracts not
owned by natural persons, see "Contracts Owned by Non-Natural Persons". In the
case of Contracts not meeting the diversification requirements, see
"Diversification Standards".
1. Surrenders or Withdrawals Prior to the Contract
Maturity Date.
Code Section 72 provides that a total or partial surrender from a Contract
prior to the Contract Maturity Date will be
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treated as taxable income to the extent the amounts held under the Contract
exceed the "investment in the Contract." The "investment in the Contract" is
that portion, if any, of purchase payments (premiums paid) by or on behalf of
an individual under a Contract that is not excluded from the individual's
gross income. The taxable portion is taxed as ordinary income in an amount
equal to the value of the Contract or portion thereof that is pledged or
assigned. For purposes of this rule, a pledge or assignment of a Contract is
treated as a payment received on account of a partial surrender of a Contract.
These rules do not apply to amounts received under Qualified Plans.
2. Surrenders or Withdrawals on or after the Contract Maturity Date.
Upon receipt of a lump sum payment or an annuity payment under the Contract,
the recipient is taxed on the portion of the payment that exceeds the
investment in the Contract. However, under certain types of Qualified Plans
there may be no investment in the Contract within the meaning of Code Section
72, so that the total amount of all payments received will be taxable.
Ordinarily, such taxable portion is taxed as ordinary income. Under certain
circumstances, the proceeds of a surrender of a Contract may qualify for "lump
sum distribution" treatment under Qualified Plans. See your tax adviser if you
think you may qualify for "lump sum distribution" treatment.
For fixed annuity payments, the taxable portion of each payment is
determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the total
expected amount of annuity payments for the term of the Contract. That ratio
is then applied to each payment to determine the non-taxable portion of the
payment. The remaining portion of each payment is taxed as ordinary income.
For variable annuity payments, the taxable portion is determined by a formula
that establishes a specific dollar amount of each payment that is not taxed.
The dollar amount is determined by dividing the investment in the Contract by
the total number of expected periodic payments. The remaining portion of each
payment is taxed as ordinary income. Once the excludable portion of annuity
payments equals the investment in the Contract, the balance of the annuity
payments will be fully taxable.
Withholding of Federal income taxes on all distributions may be required
unless the recipient elects not to have any amounts withheld and properly
notifies Variable Products Operations of that election.
3. Penalty Tax on Certain Surrenders and Withdrawals.
With respect to amounts surrendered or distributed before the taxpayer
reaches age 59-1/2, a penalty tax is imposed equal to ten percent (10%) of the
portion of such amount that is includable in gross income. However, the
penalty tax will not apply to withdrawals: (i) made on or after the death of
the Contract Owner (or where the Contract Owner is not an individual, the
death of the "Primary Annuitant," who is defined as the individual the events
in whose life are of primary importance in affecting the timing and amount of
the payout under the Contract); (ii) attributable to the taxpayer's becoming
totally disabled within the meaning of Code Section 72(m)(7); (iii) which are
part of a series of substantially equal periodic payments made (not less
frequently than annually) for the life (or life expectancy) of the taxpayer,
or the joint lives (or joint life expectancies) of the taxpayer and his
beneficiary; (iv) from certain qualified plans (such distributions may,
however, be subject to a similar penalty under Code Section 72(4) relating to
distributions from qualified retirement plans.); (v) allocable to investment
in the contract before August 14, 1982; (vi) under a qualified funding asset
(as defined in Code Section 130(d)); (vii) under an immediate annuity contract
(as defined in Code Section 72(u)(4)); or (viii) that are purchased by an
employer on termination of certain types of qualified plans and which are held
by the employer until the employee separates from service.
If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments are subsequently
modified (other than by reason of death or disability), the tax for the first
year when the modification occurs will be increased by an amount (determined
by the Treasury regulations) equal to the tax that would have been imposed but
for item (iii) above, plus interest for the deferral period, if the
modification takes place: (a) before the close of the period which is 5 years
from the date of the first payment and after the taxpayer attains age 59-1/2,
or (b) before the taxpayer reaches age 59-1/2.
Additional Considerations
1. Distribution-at-Death Rules.
In order to be treated as an annuity contract for Federal income tax
purposes, a Contract must provide the following two distribution rules: (A) if
the Contract Owner dies on or after the Contract Maturity Date, and before the
entire interest in the Contract has been distributed, the remainder of the
Contract Owner's interest will be distributed at least as quickly as the
method in effect on the Contract Owner's death; and (B) if a Contract Owner
dies before the Contract Maturity Date, the Contract Owner's entire interest
must generally be distributed within five (5) years after the date of death,
or if payable to a designated beneficiary may be annuitized over the life of
that beneficiary or over a period not extending beyond the life expectancy of
that beneficiary, and must commence within one (1) year after the Contract
Owner's date of death. If the beneficiary is the spouse of the Contract Owner,
the Contract (together with the deferral of tax on the accrued and future
income thereunder) may be continued in the name of the spouse as Contract
Owner. These distribution requirements do not apply to annuity contracts under
Qualified Plans (other than Code Section 457 Plans).
If the Annuitant, who is not the Contract Owner, dies before the Maturity
Date and there is no Contingent Annuitant, the Annuitant's beneficiary must
elect within 60 days
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whether to receive the death benefit in a lump sum or in periodic payments
commencing within one (1) year.
If the Contract Owner is not an individual, the death of the Annuitant, is
considered to be the death of the Contract Owner. In addition, when the
Contract Owner is not an individual, a change in the primary Annuitant is
treated as the death of the Contract Owner. Finally, in the case of
non-spousal joint Contract Owners the distribution will be required at the
death of the first of the Contract Owners.
2. Transfer of Annuity Contracts.
Transfers of non-qualified Contracts prior to the Maturity Date for less
than full and adequate consideration to the Contract Owner at the time of such
transfer, will trigger tax on the gain in the Contract, with the transferee
getting a step-up in basis for the amount included in the Contract Owner's
income. This provision does not apply to transfers between spouses or incident
to a divorce.
3. Contracts Owned by Non-Natural Persons.
If the Contract is held by a non-natural person (for example, a corporation)
the income on that Contract (generally the increase in the net surrender value
less the premium paid) is includable in income each year. The rule does not
apply where the non-natural person is the nominal owner of a Contract and the
beneficial owner is a natural person. The rule also does not apply where the
annuity contract is acquired by the estate of a decedent, where the Contract
is held under a qualified plan, a TSA program, or an IRA, where the Contract
is a qualified funding asset for structured settlements, where the Contract is
purchased on behalf of an employee upon termination of a qualified plan, and
in the case of an immediate annuity.
4. Section 1035 Exchanges.
Code Section 1035 provides, in general, that no gain or loss shall be
recognized on the exchange of one annuity contract for another. A replacement
contract obtained in a tax-free exchange of contracts succeeds to the status
of the surrendered contract. If the surrendered contract was issued prior to
August 14, 1982, the tax rules that formerly provided that the surrender was
taxable only to the extent the amount received exceeds the Contract Owner's
investment in the Contract, will continue to apply. In contrast, Contracts
issued on or after January 19, 1985, in a Code Section 1035 exchange, are
treated as new Contracts for purposes of the distribution-at-death rules.
Special rules and procedures apply to Code Section 1035 transactions.
Prospective Contract Owners wishing to take advantage of Code Section 1035
should consult their tax advisers.
5. Multiple Contracts.
Code Section 72(e)(11)(A)(ii) provides that for Contracts entered into after
October 21, 1988, for purposes of determining the amount of any distribution
under Code Section 72(e) (amounts not received as annuities) that is
includable in gross income, all non-qualified deferred annuity contracts
issued by the same insurer (or affiliate) to the same Contract Owner during
any calendar year are to be aggregated and treated as one contract. Thus, any
amount received under any such contract prior to the Contract Maturity Date,
such as a withdrawal, dividend or loan, will be taxable (and possibly subject
to the 10% penalty tax) to the extent of the combined income in all such
contracts.
The Treasury Department has specific authority to issue regulations that
prevent the avoidance of Code Section 72(e) through the serial purchase of
annuity contracts or otherwise. In addition, there may be situations where the
Treasury may conclude that it would be appropriate to aggregate two or more
contracts purchased by the same Contract Owner. Accordingly, a Contract Owner
should consult a competent tax adviser before purchasing more than one
Contract or other annuity contracts.
Diversification Standards
1. Diversification Regulations.
To comply with the diversification regulations under Code Section 817(h)
("Diversification Regulations"), after a start-up period, each Series of the
Fund will be required to diversify its investments. The Diversification
Regulations generally require that, on the last day of each quarter of a
calendar year no more than 55% of the value of the assets of the Fund is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. A "look-through" rule
applies to treat a pro-rata portion of each asset of the Fund as an asset of
the Account, and each Series of the Fund is tested for compliance with the
percentage limitations. All securities of the same issuer are treated as a
single investment. As a result of the 1988 Act, each Government agency or
instrumentality will be treated as a separate issuer for purposes of these
limitations.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning
the extent to which Contract Owners may direct their investments to particular
divisions of a separate account. Regulations or a revenue ruling in this
regard are expected to be issued in the future. It is not clear, at this time,
what these regulations or the revenue ruling will provide. It is possible that
when issued, the Contract may need to be modified to comply with such rules.
For these reasons, PHL Variable reserves the right to modify the Contract, as
necessary, to prevent the Contract Owner from being considered the owner of
the assets of the Account.
PHL Variable has represented that it intends to comply with the
Diversification Regulations to assure that the Contracts continue to be
treated as annuity contracts for Federal income tax purposes.
2. Diversification Regulations and Qualified Plans.
Code Section 817(h) applies to a variable annuity contract other than a
pension plan contract. The Diversification Regu-
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lations reiterate that the diversification requirements do not apply to a
pension plan contract. All of the Qualified Plans (described below) are
defined as pension plan contracts for these purposes. Notwithstanding the
exception of Qualified Plan Contracts from application of the diversification
rules, all investments of the PHL Variable Qualified Plan Contracts (i.e. the
Fund) will be structured to comply with the diversification standards because
the Fund serves as the investment vehicle for non-qualified Contracts as well
as Qualified Plan Contracts.
Qualified Plans
The Contracts may be used with several types of Qualified Plans. TSAs, Keoghs,
Individual Retirement Accounts ("IRAs"), Corporate Pension and Profit-Sharing
Plans and State Deferred Compensation Plans will be treated, for purposes of
this discussion, as Qualified Plans. The tax rules applicable to participants in
such Qualified Plans vary according to the type of plan and the terms and
conditions of the plan itself. No attempt is made herein to provide more than
general information about the use of the Contracts with the various types of
Qualified Plans. Participants under such Qualified Plans as well as Contract
Owners, Annuitants, and beneficiaries, are cautioned that the rights of any
person to any benefits under such Qualified Plans may be subject to the terms
and conditions of the plans themselves or limited by applicable law, regardless
of the terms and conditions of the Contract issued in connection therewith. For
example, PHL Variable will accept beneficiary designations and payment
instructions under the terms of the Contract without regard to any spousal
consents that may be required under the Retirement Equity Act (REA).
Consequently, a Contract Owner's beneficiary designation or elected payment
option may not be enforceable.
Effective January 1, 1993, Section 3405 of the Internal Revenue Code was
amended to change the rollover rules applicable to the taxable portions of
distributions from qualified pension and profit-sharing plans and Section 403(b)
TSA arrangements. Taxable distributions eligible to be rolled-over will
generally be subject to 20 percent income tax withholding. Mandatory withholding
can only be avoided if the employee arranges for a direct rollover to another
qualified pension or profit-sharing plan or to an IRA.
The new mandatory withholding rules apply to all taxable distributions from
qualified plans or TSA's, except a) distributions required under the Code, and
b) substantially equal distributions made over the life (or life expectancy) of
the employee, or for a term certain of 10 years or more.
Numerous changes have been made to the income tax rules governing Qualified
Plans as a result of legislation enacted during the past several years,
including rules with respect to: coverage, participation, maximum contributions;
required distributions; penalty taxes on early or insufficient distributions,
and income tax withholding on distributions. The following are brief
descriptions of the various types of Qualified Plans and of the use of the
contracts in connection therewith.
1. Tax-Sheltered Annuities.
Code Section 403(b) permits public school systems and certain types of
charitable, educational and scientific organizations, generally specified in
Code Section 501(c)(3) to purchase annuity contracts on behalf of their
employees and, subject to certain limitations, allows employees of those
organizations to exclude the amount of purchase payments from gross income for
Federal income tax purposes. These annuity contracts are commonly referred to
as "TSAs".
For taxable years beginning after December 31, 1988, Code Section 403(b)(11)
imposes certain restrictions on a Contract Owner's ability to make partial
withdrawals from, or surrenders of, Code Section 403(b) Contracts, if the cash
withdrawn is attributable to purchase payments made under a salary reduction
agreement. Specifically, Code Section 403(b)(11) allows a Contract Owner to
make a surrender or partial withdrawal only (A) when the employee attains age
59-1/2, separates from service, dies, or becomes disabled (as defined in the
Code), or (B) in the case of hardship. In the case of hardship, the amount
distributable cannot include any income earned under the Contract.
The 1988 Act amended the effective date of Code Section 403(b)(11), so that
it applies only with respect to distributions from Code Section 403(b)
Contracts which are attributable to assets other than assets held as of the
close of the last year beginning before January 1, 1989. Thus, the
distribution requirements do not apply to assets held as of December 31, 1988.
In addition, in order for certain types of contributions under a Code
Section 403(b) Contract to be excluded from taxable income, the employer must
comply with certain nondiscrimination requirements. Contract Owners should
consult their employers to determine whether the employer has complied with
these rules.
2. Keogh Plans.
The Self-Employed Individual Tax Retirement Act of 1962, as amended, permits
self-employed individuals to establish "Keoghs," or qualified plans for
themselves and their employees. The tax consequences to participants under
such a plan depend upon the terms of the plan. In addition, such plans are
limited by law with respect to the maximum permissible contributions,
distribution dates, nonforfeitability of interests, and tax rates applicable
to distributions. In order to establish such a plan, a plan document must be
adopted and implemented by the employer, as well as approved by the Internal
Revenue Service.
3. Individual Retirement Accounts.
Code Section 408 permits eligible individuals to contribute to an individual
retirement program known as an "IRA". These IRAs are subject to limitations on
the amount which may be contributed, the persons who may be eligible, and on
the time when distributions may commence. In addition, distributions from
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<PAGE>
certain other types of Qualified Plans may be placed on a tax-deferred basis
into an IRA.
4. Corporate Pension and Profit-Sharing Plans.
Code Section 401(a) permits corporate employers to establish various types
of retirement plans for employees. Such retirement plans may permit the
purchase of Contracts to provide benefits thereunder.
As a general rule, the maximum amount which an employer may contribute on
behalf of a Participant to a defined benefit plan is the amount necessary to
fund an annual benefit equal to the lesser of 100% of compensation or
$120,000. If the plan is a defined contribution plan, the maximum contribution
is the lesser of 25% of compensation or $30,000 for each Participant. If the
plan is a profit-sharing plan, the amount which the employer may deduct cannot
exceed 15% of the compensation otherwise paid to participating employees in
the taxable year. Under a profit-sharing plan which includes a cash or
deferred provision described in Section 401(k) of the Code, elective deferral
contributions are limited to $9,240 a year, or less in the case of a highly
compensated employee (as defined by the tax law) where certain
non-discriminatory percentage tests require a lower limit.
5. Deferred Compensation Plans With Respect to Service for State and Local
Governments and Tax-Exempt Organizations.
Code Section 457 provides for certain deferred compensation plans with
respect to service for state and local governments and certain other entities.
The Contracts may be used in connection with these plans; however, under these
plans the Contract Owner is the plan sponsor, and the individual participants
in the plans are the Annuitants. Under such Contracts, the rights of
individual plan participants are governed solely by their agreements with the
plan sponsor and not by the terms of the Contracts.
6. Seek Tax Advice.
The above description of Federal income tax consequences of the different
types of Qualified Plans which may be funded by the Contracts offered by this
Prospectus is only a brief summary and is not intended as tax advice. The
rules governing the provisions of Qualified Plans are extremely complex and
often difficult to comprehend. In addition, the TRA has significantly changed
a great many rules involved with Qualified Plans. Anything less than full
compliance with the applicable rules, all of which are subject to change, may
have adverse tax consequences. A prospective Contract Owner considering
adoption of a Qualified Plan and purchase of a Contract in connection
therewith should first consult a qualified tax adviser, with regard to the
suitability of the Contract as an investment vehicle for the Qualified Plan.
SALES OF VARIABLE ACCUMULATION CONTRACTS
The principal underwriter of the Contracts is Phoenix Equity Planning
Corporation ("PEPCO"). Contracts may be purchased through registered
representatives of W.S. Griffith & Company, Inc. ("W.S. Griffith") licensed to
sell PHL Variable annuity contracts. W.S. Griffith and PEPCO are indirect
wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance Company.
Contracts may be purchased through other broker-dealers or entities registered
under or exempt under the Securities Exchange Act of 1934, whose representatives
are authorized by applicable law to sell Contracts under terms of agreement
provided by PEPCO and terms of agreement provided by PHL Variable.
Although the Glass-Steagall Act prohibits banks and bank affiliates from
engaging in the business of underwriting securities, banking regulators have not
indicated that such institutions are prohibited from purchasing variable annuity
contracts upon the order and for the account of their customers. In addition to
reimbursing PEPCO for its expenses, PHL Variable pays PEPCO an amount equal to
up to 7.25% of the purchase payments made under the Contract. PEPCO pays any
qualified distribution organization an amount which may not exceed up to 7.25%
of the purchase payments under the Contract. Any such amount paid with respect
to Contracts sold through other broker/dealers will be paid by PHL Variable to
or through PEPCO. The amounts paid are not deducted from the purchase payments.
Deductions for sales charges (as described under "Sales Charges") may be used as
reimbursement for commission payments.
STATE REGULATION
PHL Variable is subject to the provisions of the Connecticut insurance laws
applicable to life insurance companies and to regulation and supervision by the
Connecticut Superintendent of Insurance. PHL Variable is also subject to the
applicable insurance laws of all the other states and jurisdictions in which it
does an insurance business.
State regulation of PHL Variable includes certain limitations on the
investments which may be made for its General Account and separate accounts,
including the Account. It does not include, however, any supervision over the
investment policies of the Account.
REPORTS
Reports showing the Contract Value and containing the financial statements of
the Account will be furnished at least annually to Contract Owners.
VOTING RIGHTS
As stated above, all of the assets held in an available Sub-account will be
invested in shares of a corresponding Series of the Fund. PHL Variable is the
legal owner of those shares and as such has the right to vote to elect the Board
of Trustees of the Fund, to vote upon certain matters that are required by the
Investment Company Act of 1940 ("1940 Act") to be approved or ratified by the
shareholders of a mutual fund and to vote upon any other matter that may be
voted upon at a shareholders' meeting. However, PHL Variable intends to vote the
shares of the Fund at regular and special meetings of the shareholders of the
Fund in accordance with instructions received from Owners of the Contracts.
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PHL Variable currently intends to vote Fund shares attributable to any PHL
Variable assets and Fund shares held in each Sub-account for which no timely
instructions from Owners are received in the same proportion as those shares in
that Sub-account for which instructions are received. In the future, to the
extent applicable Federal securities laws or regulations permit PHL Variable to
vote some or all shares of the Fund in its own right, it may elect to do so.
Matters on which Owners may give voting instructions may include the
following: (1) election of the Board of Trustees of the Fund; (2) ratification
of the independent accountant for the Fund; (3) approval or amendment of the
investment advisory agreement for the Series of the Fund corresponding to the
Owner's selected Sub-account(s); (4) any change in the fundamental investment
policies or restrictions of each such Series; and (5) any other matter requiring
a vote of the Shareholders of the Fund. With respect to amendment of any
investment advisory agreement or any change in a Series' fundamental investment
policy, Owners participating in such Series will vote separately on the matter,
pursuant to the requirements of the 1940 Act.
The number of votes that a Contract Owner has the right to cast will be
determined by applying the Contract Owner's percentage interest in a Sub-account
to the total number of votes attributable to the Sub-account. In determining the
number of votes, fractional shares will be recognized. The number of votes for
which each Owner may give PHL Variable Insurance Company instructions will be
determined as of the record date for Fund shareholders chosen by the Board of
Trustees of the Fund. PHL Variable Insurance Company will furnish Owners with
proper forms and proxies to enable them to give these instructions.
TEXAS OPTIONAL RETIREMENT PROGRAM
Participants in the Texas Optional Retirement Program may not receive the
proceeds of a withdrawal from, or complete surrender of, a Contract, or apply
them to provide annuity options prior to retirement except in the case of
termination of employment in the Texas public institutions of higher education,
death or total disability. Such proceeds may, however, be used to fund another
eligible retirement vehicle.
LITIGATION
PHL Variable Insurance Company, the Account and PEPCO are not parties to any
litigation that would have a material adverse effect upon the Account or the
Contracts.
LEGAL MATTERS
Legal matters involving Federal securities and income tax laws in connection
with the Contracts described in this Prospectus have been passed upon by Jorden
Burt & Berenson, Washington, D.C.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to the Account and PHL Variable Insurance Company.
The Table of Contents of the Statement of Additional Information is set forth
below:
Underwriter
Calculation of Yield and Return
Calculation of Annuity Payments
Experts
Financial Statements
Contract Owner inquiries and requests for a Statement of Additional
Information should be directed to Variable Products Operations in writing at 101
Munson Street, P.O. Box 942, Greenfield, Massachusetts 01302-0942, or by calling
Variable Products Operations at (800) 447-4312.
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<PAGE>
APPENDIX A
THE GUARANTEED INTEREST ACCOUNT
Contributions to the Guaranteed Interest Account under the Contract and
transfers to the Guaranteed Interest Account become part of the general account
of PHL Variable Insurance Company (the "General Account"), which supports
insurance and annuity obligations. Because of exemptive and exclusionary
provisions, interest in the General Account has not been registered under the
Securities Act of 1933 ("1933 Act") nor is the General Account registered as an
investment company under the 1940 Act. Accordingly, neither the General Account
nor any interest therein is specifically subject to the provisions of the 1933
or 1940 Acts and the staff of the Securities and Exchange Commission has not
reviewed the disclosures in this Prospectus concerning the Guaranteed Interest
Account. Disclosures regarding the Guaranteed Interest Account and the General
Account, however, may be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
The General Account is made up of all of the general assets of PHL Variable
Insurance Company other than those allocated to any separate account. Premium
payments will be allocated to the Guaranteed Interest Account and, therefore,
the General Account, as elected by the Owner at the time of purchase or as
subsequently changed. PHL Variable will invest the assets of the General Account
in assets chosen by it and allowed by applicable law. Investment income from
General Account assets is allocated between PHL Variable and the contracts
participating in the General Account, in accordance with the terms of such
contracts.
Fixed annuity payments made to Annuitants under the Contract will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. PHL Variable assumes this "mortality
risk" by virtue of annuity rates incorporated in the Contract that cannot be
changed. In addition, PHL Variable guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the General Account allocated to PHL Variable includes
compensation for mortality and expense risks borne by it in connection with
General Account contracts.
The amount of investment income allocated to the Contracts will vary from year
to year in the sole discretion of PHL Variable. However, PHL Variable guarantees
that it will credit interest at a rate of not less than 4% per year compounded
annually, to amounts allocated to the Guaranteed Interest Account. PHL Variable
may credit interest at a rate in excess of these rates; however, it is not
obligated to credit any interest in excess of these rates.
Bi-weekly, PHL Variable will set the excess interest rate, if any, that will
apply to amounts deposited to the Guaranteed Interest Account. That rate will
remain in effect for such deposits for an initial guarantee period of one full
year from the date of deposit. Upon expiration of the initial one-year guarantee
period (and each subsequent one-year guarantee period thereafter), the rate to
be applied to any deposits whose guaranteed period has just ended will be the
same rate as is applied to new deposits allocated to the Guaranteed Interest
Account at that time. This rate will likewise remain in effect for a guarantee
period of one full year from the date the new rate is applied.
Excess interest, if any, will be determined by PHL Variable based on
information as to expected investment yields. Some of the factors that PHL
Variable may consider in determining whether to credit excess interest to
amounts allocated to the Guaranteed Interest Account and the amount thereof, are
general economic trends, rates of return currently available and anticipated on
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST ACCOUNT IN
EXCESS OF 4% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF PHL VARIABLE
AND WITHOUT REGARD TO ANY SPECIFIC FORMULA. THE CONTRACT OWNER ASSUMES THE RISK
THAT INTEREST CREDITED TO GUARANTEED INTEREST ACCOUNT ALLOCATIONS MAY NOT EXCEED
THE MINIMUM GUARANTEE FOR ANY GIVEN YEAR.
PHL Variable is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in PHL Variable's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
policyholders and contract owners.
Excess interest, if any, will be credited on the Guaranteed Interest Account
Contract Value. PHL Variable guarantees that, at any time, the Guaranteed
Interest Account Contract Value will not be less than the amount of purchase
payments allocated to the Guaranteed Interest Account, plus interest at the rate
of 4% per year, compounded annually, plus any additional interest which PHL
Variable may, in its discretion, credit to the Guaranteed Interest Account, less
the sum of all annual administrative or surrender charges, any applicable
premium taxes, and less any amounts surrendered. If the Owner surrenders the
Contract, the amount available from the Guaranteed Interest Account will be
reduced by any applicable surrender charge and annual administration charge (see
"Deductions and Charges").
IN GENERAL, ONE TRANSFER PER YEAR IS ALLOWED FROM THE GUARANTEED INTEREST
ACCOUNT. THE AMOUNT WHICH CAN BE TRANSFERRED IS LIMITED TO THE GREATER OF $1,000
AND 25% OF THE CONTRACT VALUE IN THE GUARANTEED INTEREST ACCOUNT. UNDER THE
SYSTEMATIC TRANSFER PROGRAM, TRANSFERS OF APPROXIMATELY EQUAL AMOUNTS MAY BE
MADE OVER A MINIMUM 18 MONTH PERIOD. NON-SYSTEMATIC TRANSFERS FROM THE
GUARANTEED INTEREST ACCOUNT WILL BE EFFECTUATED ON THE DATE OF RECEIPT BY
VARIABLE PRODUCTS OPERATIONS, UNLESS OTHERWISE REQUESTED BY THE CONTRACT OWNER.
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APPENDIX B
DEDUCTIONS FOR STATE PREMIUM TAXES
Qualified and Non-Qualified Annuity Contracts
Upon (1) Upon
State Purchase Annuitization Non-Qualified Qualified
- ----- -------- ------------- ------------- ---------
California X 2.35% 0.50%
D.C. X 2.25 2.25
Kansas X 2.00
Kentucky X 2.00 2.00
Maine X 2.00
Mississippi X 1.00 (2)
Nevada X 3.50
Pennsylvania X 2.00
South Dakota X 1.25
West Virginia X 1.00 1.00
Wyoming X 1.00
NOTE: The above premium tax deduction rates are as of January 1, 1995. No
premium tax deductions are made for states not listed above. However,
premium tax statutes are subject to amendment by legislative act and to
judicial and administrative interpretation, which may affect both the
above list of states and the applicable tax rates. Consequently, the
company reserves the right to deduct premium tax when necessary to reflect
changes in state tax laws or interpretation.
For a more detailed explanation of the assessment of Premium Taxes see
"Deductions and Charges, Premium Tax".
(1) "Purchase" in this chart refers to the earlier of partial withdrawal,
surrender of the Contract, payment of death proceeds or Maturity Date.
(2) The Mississippi premium tax on annuities is repealed effective July 1, 1995.
24
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PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
Variable Accumulation Annuity Contracts
issued by
PHL VARIABLE INSURANCE COMPANY
101 Munson St.
P.O. Box 910
Greenfield, Massachusetts 03102-0910
Telephone (800) 447-4312
Statement of Additional Information
This Statement of Additional Information is not a Prospectus and should be read
in conjunction with the Prospectus, dated July 31, 1995, which is available
without charge by contacting PHL Variable Insurance Company at the above address
or at the above telephone number.
July 31, 1995
Table of Contents
Page
Underwriter B-2
Calculation of Yield and Return B-2
Calculation of Annuity Payments B-2
Experts B-3
Financial Statements B-5
B-1
<PAGE>
UNDERWRITER
The offering of Contracts is made on a continuous basis by Phoenix Equity
Planning Corporation ("PEPCO"), an affiliate of PHL Variable.
PEPCO is paid an amount equal to up to 7.25% of the purchase payments under
the Contracts. PEPCO, in turn, pays any distribution organization an amount
equal to up to 7.25% of the purchase payments made under the Contracts.
CALCULATION OF YIELD AND RETURN
Yield of the Money Market Sub-account. As summarized in the Prospectus under
the heading "Performance History", the yield of the Money Market Sub-account for
a seven-day period (the "base period") will be computed by determining the "net
change in value" (calculated as set forth below) of a hypothetical account
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period return
by 365/7 with the resulting yield figure carried to the nearest hundredth of one
percent. Net changes in value of a hypothetical account will include net
investment income of the account (accrued daily dividends as declared by the
underlying funds, less daily expense charges of the account) for the period, but
will not include realized gains or losses or unrealized appreciation or
depreciation on the underlying fund shares. A mortality and expense risk charge
of 1.25% (approximately 0.40% for mortality and 0.85% for expense) and a daily
administrative fee of 0.125% are reflected.
The Money Market Sub-account yield and effective yield will vary in response
to fluctuations in interest rates and in the expenses of the Sub-account.
The current yield and effective yield reflect recurring charges at the Account
level, including the maximum annual administrative fee.
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
The method of calculating yields described above for the Money Market
Sub-account differs from the method used by the Sub-account prior to May 1,
1988. The denominator of the fraction used to calculate yield was prior, to May
1, 1988, the average unit value for the period calculated. That denominator was
thereafter the unit value of the Sub-account on the last trading day of the
period calculated.
Calculation of Total Return. As summarized in the Prospectus under the
heading "Performance History", total return is a measure of the change in value
of an investment in a Sub-account over the period covered and is computed by
finding the average annual compounded rates of return over the 1, 5 and 10 year
periods that would equate the initial amount invested to the ending redeemable
value according to a formula. The formula for total return used herein includes
four steps: (1) assuming a hypothetical $1,000 initial investment in the
Sub-account; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of units
owned at the end of the period by the unit value per unit on the last trading
day of the period; (3) assuming redemption at the end of the period and
deducting any recurring fees and any applicable contingent deferred sales charge
and (4) dividing this account value for the hypothetical investor by the initial
$1,000 investment. Total return will be calculated for one year, five years and
ten years or some other relevant periods if a Sub-account has not been in
existence for at least ten years.
Performance Comparisons:
Yield and Total Return. Each Sub-account may from time to time include its
yield and total return in advertisements or information furnished to present or
prospective Contract Owners. Each Sub-account may from time to time include in
advertisements containing total return (and yield in the case of certain
Sub-accounts) the ranking of those performance figures relative to such figures
for groups of mutual funds categorized by Lipper Analytical Services as having
the same investment objectives.
The total return and yield may also be used to compare the performance of
the Sub-accounts against certain widely acknowledged outside standards or
indices for stock and bond market performance. The Standard & Poor's Composite
Index of 500 Stocks (the "S&P 500") is a market value-weighted and unmanaged
index showing the changes in the aggregate market value of 500 stocks relative
to the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the common
stocks of a few companies listed on the American Stock Exchange or traded
over-the-counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
The manner in which total return and yield will be calculated is described in
the prospectus.
CALCULATION OF ANNUITY PAYMENTS
Variable Annuity Payments
Unless an alternative annuity payment option is elected on or before the
Contract Maturity Date, the Accumulation Value of the Contract on the Maturity
Date will automatically be applied to provide a Variable Payment Life Annuity
with Ten Year Period Certain based on the Annuitant's life under annuity payment
Option I as described in the Prospectus. Any annuity payments falling due after
the Annuitant's death during the period certain will be paid to the Beneficiary.
If the amount to be applied on the Maturity Date is less than $2,000 or would
result in monthly payments of less than $20, PHL Variable Insurance Company
shall have the right to pay such amount in one lump sum in lieu of providing the
annuity payments. PHL Variable Insurance Company will also have the right to
change the annuity payment frequency to annually if the monthly annuity payment
would otherwise be less than $20.
B-2
<PAGE>
Under the Variable Payment Life Annuity with Ten Year Period Certain (payment
Option I), the first monthly income payment is due on the Maturity Date.
Thereafter, payments are due on the same day of the month as the first payment
was due, or if such date does not fall within a particular month, then the
future payment is due on the first Valuation Date to occur in the following
month. Payments will continue during the lifetime of the Annuitant, or, if
later, until the end of the Ten Year Period Certain starting with the date the
first payment is due.
The Variable Income Table below shows the minimum amount of the first monthly
payment for each $1,000 of Accumulation Value applied. The minimum first
payments shown are based on the 1983 table, an annuity table projected to the
year 2040 with Projection Scale G, and with Projection Scale G thereafter, and
an effective assumed investment return of 4-1/2%. The actual payments will be
based on the monthly payment rate PHL Variable Insurance Company is using when
the first payment is due. They will not be less than those shown in the Variable
Income Table.
Variable Income Table
Minimum Monthly Payment Rate for First Payment for Each
$1,000 Applied. Based on 4-1/2% Assumed Investment Return.
Adjusted Age* Male Female
------------ ---- ------
40 $ 4.15 $ 4.02
45 4.29 4.12
50 4.40 4.27
55 4.73 4.46
60 5.06 4.71
65 5.51 5.05
70 6.08 5.52
75 6.79 6.17
80 7.65 6.99
85 8.57 7.98
* Age on birthday nearest due date of the first payment. Monthly payment rates
for ages not shown will be furnished on request.
In determining the amount of the first payment, the amounts held under the
Variable Payment Option in each Sub-account are multiplied by the rates PHL
Variable Insurance Company is using for the Option on the first Payment
Calculation Date. The Payment Calculation Date is the earliest Valuation Date
that is not more than 10 days before the due date of the payment. The first
payment equals the total of such figures determined for each Sub-account.
Future payments are measured in Annuity Units and are determined by
multiplying the Annuity Units in each Sub-account with assets under the
Variable Payment Option by the Annuity Unit Value for each Sub-account on the
Payment Calculation Date that applies. The number of Annuity Units in each
Sub-account with assets under a Variable Payment Option is equal to the portion
of the first payment provided from that Sub-account divided by the Annuity Unit
Value for that Sub-account on the first Payment Calculation Date. The payment
will equal the sum of such amounts from each Sub-account.
All Annuity Unit Values in each Sub-account were set at $1.0000000 on the
first Valuation Date selected by PHL Variable Insurance Company. The value of an
Annuity Unit on any date thereafter is equal to (a) the Net Investment Factor
for that Sub-account for the Valuation Period divided by (b) the sum of
1.0000000 and the rate of interest for the number of days in the Valuation
Period, based on an effective annual rate of interest equal to the assumed
investment return, and multiplied by (c) the corresponding Annuity Unit Value on
the preceding Valuation Date. The assumed investment return of 4-1/2% per year
is the annual interest rate assumed in determining the first payment. The amount
of each subsequent payment from each Sub-account will depend on the
relationship between the assumed investment return and the actual investment
performance of the Sub-account. If a 4-1/2% rate would result in a first
variable payment larger than that permitted under applicable state law, we will
select a lower rate that will comply with such law.
No partial or full surrenders, withdrawals, transfers or additional premium
payments may be made with respect to any assets held under Variable Payment
Options I and J. Although no transfers or additional premium payments may be
made with respect to assets held under Option K, under this option partial or
full surrenders may be made.
Fixed Annuity Payments
Fixed monthly annuity payments under a Contract are determined by applying
the Contract Value to the respective annuity purchase rates on the Maturity Date
of a Contract or other date elected for commencement of fixed annuity payments.
Under a Contract, the amount of the fixed annuity payment is calculated by
first multiplying the number of the Sub-accounts' Accumulation Units credited to
the Contract on the Maturity Date by the appropriate Unit Value for each
Sub-account on the Maturity Date. The dollar value for all Sub-accounts'
Accumulation Units is then aggregated, along with the dollar value of any
investment in the Guaranteed Interest Account. For each Contract the resulting
dollar value is then multiplied by the applicable annuity purchase rate, which
reflects the age (and sex for non-tax qualified plans) of the Annuitant
specified in the Contract for the Fixed Payment Annuity Option selected. This
computation determines the amount of PHL Variable Insurance Company's fixed
monthly annuity payment to the Annuitant.
The mortality table used as a basis for the applicable annuity purchase rates
is the a-49 Individual Annuity Mortality Table projected to 1985 at Projection
Scale B. An interest rate of 3-3/8% for 5 and 10 year certain periods under
Option A, for the 10 year period under Option F and for Option E; an interest
rate of 3-1/4% for the 20 year certain period under Options A and F; an interest
rate of 3-1/2% under Option B and D. Under Options G and H the guaranteed
interest rate is 3%. More favorable rates may be available on the Maturity Date
or other dates elected for commencement of fixed annuity payments.
EXPERTS
The consolidated financial statements of PHL Variable Insurance Company as
of December 31, 1994 and for the periods January 1, 1994 to May 31, 1994 and
June 1, 1994 to December
B-3
<PAGE>
31, 1994, have been examined by Price Waterhouse LLP, independent public
accountants, whose reports are set forth herein, and the financial statements
have been included upon the authority of said firm as experts in accounting and
auditing. The financial statements of Dreyfus Consumer Life Insurance Company at
December 31, 1993 and for each of the two years in the period then ended have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing. Price Waterhouse LLP, whose address is One Financial Plaza, Hartford,
Connecticut, also provides other accounting and tax-related services as
requested by PHL Variable Insurance Company from time to time. Ernst and Young
LLP is located at 787 7th Avenue, New York, New York.
Legal matters involving Federal securities laws in connection with the
Contracts have been passed upon by Jorden Burt & Berenson, Washington, D.C.
Legal matters relating to the validity of the securities being issued have
been passed upon by Patricia O. McLaughlin, Counsel, Phoenix Home Life,
Hartford, CT.
B-4
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
Financial Statements
The Sub-accounts commenced operations as of the date of this
Prospectus; therefore, data for these Sub-accounts is not yet available.
B-5
<PAGE>
PHL Variable
Insurance Company
Financial Statements
December 31, 1994
B-6
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Table of Contents
Page
Reports of Independent Accountants ..................................B-8 - B-10
Balance Sheet .............................................................B-11
Statement of Operations ...................................................B-12
Statement of Changes in Stockholder's Equity...............................B-13
Statement of Cash Flows ...................................................B-14
Notes to Financial Statements .....................................B-15 - B-18
B-7
<PAGE>
Northeast Insurance Services Telephone 203 240 2000
One Financial Plaza Facsimile 203 240 2055
Hartford, CT 06103
Price Waterhouse LLP [logo] Price Waterhouse circle [logo]
Report of Independent Accountants
February 15, 1995
To the Board of Directors
and Stockholder of
PHL Variable Insurance Company
(formerly Dreyfus Consumer Life Insurance Company)
In our opinion, the accompanying statements of operations, of changes in
stockholder's equity and of cash flows present fairly, in all material respects,
the results of operations and cash flows of Dreyfus Consumer Life Insurance
Company (Predecessor or the Company), for the period from January 1, 1994
through May 31, 1994 in conformity with generally accepted accounting
principles. 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 audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of the Dreyfus Consumer Life Insurance Company
for the years ended December 31, 1993 and 1992 were audited by other independent
accountants whose reports are presented herein.
As discussed in Note 2 to the financial statements, the Company adopted
Statement of Financial Accounting Standard No. 115, Accounting for Certain
Investments in Debt and Equity Securities, in 1994.
/s/ Price Waterhouse LLP
Offices in Boston, Burlington, Hartford, New York, Providence
B-8
<PAGE>
Northeast Insurance Services Telephone 203 240 2000
One Financial Plaza Facsimile 203 240 2055
Hartford, CT 06103
Price Waterhouse LLP [logo] Price Waterhouse circle [logo]
Report of Independent Accountants
February 15, 1995
To the Board of Directors
and Stockholder of
PHL Variable Insurance Company
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in stockholder's equity and of cash flows present fairly,
in all material respects, the financial position of PHL Variable Insurance
Company (the Company), formerly Dreyfus Consumer Life Insurance Company, at
December 31, 1994 and the results of their operations and their cash flows for
the period from June 1, 1994 through December 31, 1994 in conformity with
generally accepted accounting principles. 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 audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Offices in Boston, Burlington, Hartford, New York, Providence
B-9
<PAGE>
[logo] ERNST & YOUNG LLP (box) 787 Seventh Avenue (box) Phone: 212 773 3000
New York, New York 10019
Report of Independent Auditors
Stockholder and Board of Directors
Dreyfus Consumer Life Insurance Company
We have audited the accompanying balance sheet of Dreyfus Consumer Life
Insurance Company as of December 31, 1993, and the related statements of
operations, changes in stockholders equity, and cash flows for each of the two
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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dreyfus Consumer Life Insurance
Company at December 31, 1993, and the results of its operations and its cash
flows for each of the two years in the period then ended in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
January 27, 1994
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Balance Sheet
<TABLE>
<CAPTION>
Successor Predecessor
December 31,
1994 1993
<S> <C> <C>
Assets
Bonds
Held to maturity, at amortized cost
(fair value $6,331,000) $ 6,271,966
Available for sale, at fair value
(amortized cost $9,420,000) $ 9,250,723
Short-term investments, at amortized cost 2,029,041
Cash and cash equivalents 89,896 1,080,575
--------------- ---------------
Total cash and invested assets 9,340,619 9,381,582
Due and accrued investment income 157,863 114,731
Deferred income tax benefit 55,119
Goodwill, net of accumulated amortization 960,500 255,403
Other assets 10,846
--------------- ---------------
Total assets $ 10,514,101 $ 9,762,562
=============== ===============
Liabilities
Federal and state income taxes payable $ 62,174
Payable to former affiliate in lieu of taxes $ 99,000
Payable to former affiliate 13,304
Intercompany payable to affiliate 108,108
Accrued expenses 12,845
--------------- ---------------
Total liabilities 170,282 125,149
--------------- ---------------
Stockholder's Equity
Common stock, $1 par value,
2,000,000 shares authorized,
issued and outstanding 2,000,000 2,000,000
Additional paid-in capital 8,364,486 4,477,588
Net unrealized depreciation on investments, net of tax (109,725)
Retained earnings 89,058 3,159,825
--------------- ---------------
Total stockholder's equity 10,343,819 9,637,413
--------------- ---------------
Total liabilities and stockholder's equity $ 10,514,101 $ 9,762,562
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
B-11
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Statement of Operations
<TABLE>
<CAPTION>
Successor
Period from Predecessor
June 1, 1994 Period from
to January 1, 1994 Predecessor
December 31, to Year Ended December 31,
1994 May 31, 1994 1993 1992
<S> <C> <C> <C> <C>
Revenues
Net investment income $ 352,037 $ 136,991 $ 405,407 $ 401,970
Realized investment losses (29,100)
-------------- -------------- -------------- --------------
Total revenues 322,937 136,991 405,407 401,970
-------------- -------------- -------------- --------------
Expenses
General and administrative expenses 108,239 13,147 53,333 64,377
Amortization of goodwill 59,500 10,510 25,225 25,225
-------------- -------------- -------------- --------------
Total expenses 167,739 23,657 78,558 89,602
-------------- -------------- -------------- --------------
Income before income taxes 155,198 113,334 326,849 312,368
Provision (benefit) for income taxes 66,140 (12,964) 51,000 109,000
-------------- -------------- -------------- --------------
Net income $ 89,058 $ 126,298 $ 275,849 $ 203,368
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
B-12
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Statement of Changes in Stockholder's Equity
<TABLE>
<CAPTION>
Predecessor
Period from January 1, 1992
to May 31, 1994
Additional Net Total
Common Paid-in Retained Unrealized Stockholder's
Stock Capital Earnings Depreciation Equity
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1992 $ 2,000,000 $ 4,477,588 $ 2,680,608 $ 9,158,196
Net income 203,368 203,368
------------ ------------ ------------ ------------ --------------
Balances at December 31, 1992 2,000,000 4,477,588 2,883,976 9,361,564
Net income 275,849 275,849
------------ ------------ ------------ ------------ --------------
Balances at December 31, 1993 2,000,000 4,477,588 3,159,825 9,637,413
Adoption of FAS 115 (174,332) (174,332)
Net income 126,298 126,298
------------ ------------ ------------ ------------ --------------
Balances at May 31, 1994 $ 2,000,000 $ 4,477,588 $ 3,111,791 $ 9,589,379
============ ============ ============ ============ ==============
Successor
Period from May 31, 1994
to December 31, 1994
Additional Net Total
Common Paid-in Retained Unrealized Stockholder's
Stock Capital Earnings Depreciation Equity
Balances at May 31, 1994 $ 2,000,000 $ 4,477,588 $ 3,111,791 $ 9,589,379
Acquisition adjustment 3,886,898 (3,111,791) 775,107
------------ ------------ ------------ ------------ --------------
Balances at June 1, 1994 2,000,000 8,364,486 10,364,486
Net income 89,058 89,058
Net unrealized depreciation $ (109,725) (109,725)
------------ ------------ ------------ ------------ --------------
Balances at December 31, 1994 $ 2,000,000 $ 8,364,486 $ 89,058 $ (109,725) $ 10,343,819
============ ============ ============ ============ ==============
</TABLE>
The accompanying notes are an integral part of these statements.
B-13
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Statement of Cash Flows
<TABLE>
<CAPTION>
Successor
Period from Predecessor
June 1, 1994 Period from
to January 1, 1994 Predecessor
December 31, to Year Ended December 31,
1994 May 31, 1994 1993 1992
<S> <C> <C> <C> <C>
Cash Flow from Operating Activities
Net income $ 89,058 $ 126,298 $ 275,849 $ 203,368
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization of premium and
discount on bonds 9,100 (2,423) 184,788
Realized investment losses 29,100
Amortization of goodwill 59,500 10,510 25,225 25,225
(Increase) decrease in
due and accrued investment
income (67,030) 23,898 (47,721) 115,138
(Increase) in deferred income
tax benefit (55,119)
Decrease (increase) in other assets 10,846 (1,059) 15,230
Increase (decrease) in federal and
state income taxes payable 62,174 (67,000)
(Decrease) increase in payables
to former affiliate (112,304) 16,779 (26,246)
Increase in intercompany
payable to affiliate 108,108
Decrease in accrued expenses (12,845) (1,738) (1,070)
------------- ----------- -------------- ------------
Net cash provided by
operating activities 225,791 55,503 197,912 516,433
------------- ----------- -------------- ------------
Cash Flow from Investing Activities
Investment purchases (44,044,597) (2,724,420) (7,887,954) (8,824,427)
Proceeds from investment maturities 43,473,572 2,023,472 7,767,645 8,784,757
------------- ----------- -------------- ------------
Net cash used in investing activities (571,025) (700,948) (120,309) (39,670)
------------- ----------- -------------- ------------
Net (decrease) increase in cash and
cash equivalents (345,234) (645,445) 77,603 476,763
Cash and cash equivalents at beginning
of period 435,130 1,080,575 1,002,972 526,209
------------- ----------- -------------- ------------
Cash and cash equivalents at end
of period $ 89,896 $ 435,130 $ 1,080,575 $ 1,002,972
============= =========== ============== ============
Supplemental disclosure of cash flow
information
Income taxes paid, net of refunds $ 63,725 $ 32,403 $ 113,500 $ 112,500
============= =========== ============== ============
</TABLE>
The accompanying notes are an integral part of these statements.
B-14
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Notes to Financial Statements
1. Operations
On May 31, 1994, PM Holdings, Inc. (PM Holdings) acquired Dreyfus Consumer
Life Insurance Company from The Dreyfus Corporation and renamed the
company, PHL Variable Insurance Company (PHL Variable or the Company). PM
Holdings has accounted for the acquisition of the Company under the
purchase method of accounting. The assets and liabilities of the Company
have been recorded at their fair value as of the date of acquisition and
goodwill has been pushed-down to the Company from PM Holdings. The Company
was incorporated under the laws of Connecticut on April 24, 1981 and has
obtained licensing in 36 states and plans to offer variable annuities to
the public in 1995. PHL Variable's parent, PM Holdings is a wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company (Phoenix Home
Life).
Phoenix Home Life provides services and facilities to the Company and is
reimbursed through a cost allocation process. Investment related expenses
are allocated to the Company from PM Holdings.
2. Summary of Significant Accounting Policies
The significant accounting policies which are used by the Company in the
preparation of its financial statements are described below.
Basis of presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. Certain reclassifications have
been made to the 1993 and 1992 amounts to conform with the 1994
presentation.
The financial statements as of December 31, 1994 and for the period from
June 1, 1994 through December 31, 1994 are those of PHL Variable Insurance
Company (the Successor). The financial statements for the period from
January 1, 1994 through May 31, 1994 and the years ended December 31, 1993
and 1992 are those of Dreyfus Consumer Life Insurance Company (the
Predecessor) before its business and net assets were acquired by PM
Holdings.
New accounting pronouncements
In 1994, PHL Variable adopted Statement of Financial Accounting Standard
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. This statement required PHL Variable to segregate its debt
securities into three categories: held to maturity, available for sale or
trading. All debt securities held by the Company at December 31, 1994 are
classified as available for sale and are recorded at their fair value with
corresponding changes in fair value recorded through stockholder's equity.
The effect of implementing SFAS 115 resulted in a decrease in investment
assets and stockholder's equity of $174,332. Such bonds were previously
carried at amortized cost.
Cash and cash equivalents
Short-term investments with a maturity of three months or less at the time
of purchase are reported as cash equivalents.
Goodwill
Effective June 1, 1994, goodwill arising from the acquisition of the
Company is amortized using the straight-line method over a period of 10
years, the expected period of benefit from the acquisition. Prior to June
1, 1994, goodwill was amortized over a period of 20 years.
Investments
At December 31, 1994, investments in bonds are generally available for sale
and carried at fair value. At December 31, 1993, investments in bonds were
carried at amortized cost and short-term investments were carried at
amortized cost, which approximated market value.
Realized investment gains and losses are determined using the specific
identification method.
B-15
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
Income taxes
For the period January 1, 1994 through May 31, 1994 and the years ended
December 31, 1993 and 1992, the former Dreyfus Consumer Life Insurance
Company (DCLIC) was included in the consolidated federal income tax return
filed by The Dreyfus Corporation (the Corporation). All participants in the
consolidated federal income tax return were severally liable for the full
amount of any taxes payable by the group. In accordance with an income tax
apportionment agreement with the Corporation, the provision for DCLIC's
federal income tax was computed on a separate return basis.
PHL Variable is included in a life/nonlife consolidated federal income tax
return with Phoenix Home Life and its eligible affiliates for the period
June 1, 1994 through December 31, 1994. The Company entered into a federal
income tax allocation agreement with PM Holdings, Inc. which requires the
Company's tax provision be determined based upon income taxes that would be
paid or refunded if the Company filed a separate federal income tax return.
3. Investments
Additional information pertaining to the Company's investments and realized
investment gains and losses follows:
Bonds
Bonds classified as available for sale are carried at fair value. Fair
value on bonds includes amounts for publicly traded bonds that are based on
quoted market prices, where available, or quoted market prices on
comparable instruments.
The gross unrealized (depreciation) as of December 31, 1994 for investments
in bonds available for sale (carried at fair value) is set forth below.
Amortized Fair
Cost (Depreciation) Value
(in thousands)
Bonds
U.S. Treasury bonds and
obligations of U.S. Government
corporations and agencies $ 9,247 $ (166) $ 9,081
Obligations of states and
political subdivisions
- non-taxable 173 (3) 170
-------- -------- --------
Total bonds $ 9,420 $ (169) $ 9,251
======== ======== ========
The gross unrealized appreciation (depreciation) as of December 31, 1993
for investments in bonds held to maturity (carried at amortized cost) is
set forth below.
<TABLE>
<CAPTION>
Amortized Fair
Cost Appreciation (Depreciation) Value
(in thousands)
<S> <C> <C> <C> <C>
Bonds
U.S. Treasury bonds and
obligations of U.S. Government
corporations and agencies $ 5,999 $ 44 $ (2) $ 6,041
Obligations of states and
political subdivisions 273 17 290
---------- ---------- ---------- -----------
Total bonds $ 6,272 $ 61 $ (2) $ 6,331
========== ========== ========== ===========
</TABLE>
B-16
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Notes to Financial Statements
3. Investments (continued)
Bonds (continued)
The fair value and amortized cost basis of bonds at December 31, 1994, by
contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties. The
bond issuers have the right to prepay obligations in some instances
without prepayment penalties.
Fair Amortized
Value Cost
(in thousands)
Due in one year or less $ 1,519 $ 1,523
Due after one year through five years 7,472 7,632
Due after five years through ten years 140 143
Due after ten years 120 122
--------- ---------
$ 9,251 $ 9,420
========= =========
Investments in bonds held by various state insurance departments to satisfy
statutory requirements at December 31, 1994 and 1993 were $950,000 (at fair
value) and $1,265,701 (at amortized cost), respectively.
Net unrealized appreciation (depreciation) of investments
Net unrealized depreciation of $168,808 as of December 31, 1994 on
investments that are carried at fair value is included as a separate
component of stockholder's equity, net of deferred income tax benefits of
$59,083. The net unrealized appreciation of $58,808 as of December 31, 1993
on investments that were carried at amortized cost was not recorded in the
financial statements.
4. General and Administrative Expenses
General and administrative expenses are summarized below.
<TABLE>
<CAPTION>
Successor
Period from Predecessor
June 1, 1994 Period from
to January 1, 1994 Predecessor
December 31, to Year Ended December 31,
1994 May 31, 1994 1993 1992
<S> <C> <C> <C> <C>
License renewal, filing and
examination fees $ 38,857 $ 13,147 $ 24,835 $ 27,384
Legal, accounting and
consulting expense 64,399 13,742 21,413
Other, various 4,983 14,756 15,580
-------------- -------------- -------------- --------------
$ 108,239 $ 13,147 $ 53,333 $ 64,377
============== ============== ============== ==============
</TABLE>
5. Goodwill
Upon acquisition of the Company by PM Holdings on May 31, 1994, the excess
purchase price over the fair value of the Company's net assets of
$1,020,000 was recorded as goodwill by the Company.
6. Stockholder's equity
At December 31, 1994 and 1993, stockholder's equity determined in
accordance with statutory accounting practices aggregated $7,477,718 and
$9,431,000, respectively. There were no practices not prescribed by the
Insurance Department of the State of Connecticut. The Connecticut Insurance
Holding Act limits the maximum amount of annual dividends or other
distributions available to stockholders of Connecticut insurance companies
without prior approval of the Insurance Commissioner. Under current law,
the maximum dividend distribution which may be made by the Company during
1995 without prior approval is subject to restrictions relating to
statutory surplus.
B-17
<PAGE>
PHL Variable Insurance Company
(a wholly-owned subsidiary of PM Holdings, Inc.)
(formerly Dreyfus Consumer Life Insurance Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
7. Income taxes
For the period from June 1, 1994 through December 31, 1994, the Successor
recognized an income tax provision of $66,140. For the period from January
1, 1994 through May 31, 1994 and the years ended December 31, 1993 and
1992, the Predecessor recognized income tax (benefits) provisions of
$(12,964), $51,000 and $109,000, respectively. The Company's current income
tax liabilities at December 31, 1994 and 1993 were $62,174 and $99,000,
respectively. Effective January 1, 1993, the statutory tax rate was
increased by the Omnibus Budget Reconciliation Act of 1993 from 34% to 35%.
The Company's federal tax return is not currently being examined.
Management does not believe that there are pending tax matters which will
have a material adverse effect on the financial statements.
At December 31, 1994, the Company has a deferred income tax benefit of
$55,119 resulting primarily from unrealized investment losses due to the
application of SFAS 115. The Company had no differences between the
financial and tax basis of assets and liabilities at December 31, 1993 and
hence, there was no provision for deferred income taxes.
A reconciliation of the effective rate to the statutory rate is as follows:
<TABLE>
<CAPTION>
Successor
Period from Predecessor
June 1, 1994 Period from
to January 1, 1994 Predecessor
December 31, to Year Ended December 31,
1994 May 31, 1994 1993 1992
<S> <C> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0% 34.0%
State taxes 9.2 (20.5)
Amortization of goodwill 2.7 2.9
Other (1.6) (46.4) (1.6) (2.0)
---- ---- ---- ----
Effective income tax rate 42.6% (11.4)% 15.6% 34.9%
==== ==== ==== ====
</TABLE>
8. Phoenix Home Life guarantee
Effective June 20, 1994, Phoenix Home Life guaranteed the net worth of the
Company for the period it remains a wholly-owned subsidiary or until such
earlier time as: (1) the Company requests a separate rating from the rating
agencies; or (2) any of such rating agencies on their own initiative
determine that the Company requires a separate rating.
B-18
<PAGE>
PART C
OTHER INFORMATION
Registrant hereby represents that, in imposing certain restrictions upon
withdrawals from some annuity contracts, it is relying upon the no-action letter
given to the American Council of Life Insurance (publicly available November 28,
1988) (Ref. No. 1P-6-88) regarding compliance with Section 403(b) (ii) of the
Internal Revenue Code and that it is in compliance with the conditions for
reliance upon that letter set forth therein.
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
The financial statements are included in Part B and consolidated
financial information is included in Part A.
(b) Exhibits
(1) Resolution of the Board of Directors of PHL Variable
Insurance Company establishing the PHL Variable
Accumulation Account.*
(2) Not Applicable.
(3) Distribution of Policies
(a) Form of Underwriting Agreement between PHL Variable
Insurance Company and Phoenix Equity Planning
Corporation.**
(b) Form of Agreement between Phoenix Equity Planning
Corporation with respect to the sale of Contracts.**
(4) Form of Variable Annuity Contract*
(5) Form of Application**
(6) (a) Charter of PHL Variable Insurance Company*
(b) By-Laws of PHL Variable Insurance Company*
(7) Not Applicable.
(8) Not Applicable.
(9) See Item 10(c) below.
(10)(a) Written Consent of Jorden Burt & Berenson**
(10)(b) Written Consent of Price Waterhouse LLP**
(10)(c) Written Consent of Ernst & Young LLP**
(10)(d) Written Consent of Counsel as to Legality of Securities
Being Registered**
(11) Not Applicable
(12) Not Applicable
(13)(a) Explanation of Yield and Effective Yield Calculation**
(b) Explanation of Total Return Calculation**
(14) Not Yet Applicable
(15) Powers of Attorney**
** Previously Filed.
** Filed herewith.
C-1
<PAGE>
Item 25. Directors and Executive Officers of the Depositor
<TABLE>
<CAPTION>
Name Principal Business Address Position with Depositor
---- -------------------------- -----------------------
<S> <C> <C>
Richard H. Booth* Director and Executive
Vice President
Robert W. Fiondella* Director, Chairman and
President
Joseph E. Kelleher** Director and Senior Vice
President
Philip R. McLoughlin* Director and Executive
Vice President
Charles J. Paydos** Director and Executive
Vice President
David W. Searfoss* Director, Executive Vice
President, Chief Financial
Officer and Treasurer
Simon Y. Tan* Director and Senior Vice
President
Dona D. Young* Director and Executive
Vice President
Robert G. Lautensack* Senior Vice President
Lisa-Lynn Bassi* Vice President
</TABLE>
* The principal business address of each of these individuals is PHL Variable
Insurance Company, One American Row, Hartford, Connecticut 06115.
** The principal business address of each of these individuals is PHL Variable
Insurance Company, 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
Item 26. Not Applicable
Item 27. Number of Contractowners
As of the date of this registration statement, no Contracts have been sold.
Item 28. Indemnification
Section 5.9 of the Connecticut Corporation Law & Practice, provides that a
corporation may indemnify any director or officer of the corporation made, or
threatened to be made, a party to an action or proceeding other than one by or
in the right of the corporation to procure a judgment in its favor, whether
civil or criminal, including an action by or in the right of any other
corporation of any type or kind, by reason of the fact that he, his testator or
intestate, served such other corporation in any capacity at the request of the
indemnifying corporation.
Article III Section 14 of the By-Laws of the Company provides: "Each Director,
officer or employee of the Company, and his heirs, executors or administrators,
shall be indemnified or reimbursed by the Company for all expenses necessarily
incurred by him in connection with the defense or reasonable settlement of any
action, suit or proceeding in which he is made a party by reason of his being or
having been a Director, officer or employee of the Company, or of any other
company which he was serving as a Director or officer at the request of the
Company, except in relation to matters as to which such Director, officer or
employee is finally adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of his duties as such Director,
officer or employee. The foregoing right of indemnification or reimbursement
shall not be exclusive of any other rights to which he may be entitled under any
statute, by-law, agreement, vote of shareholders or otherwise."
C-2
<PAGE>
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.
Item 29. Principal Underwriter
1. Phoenix Equity Planning Corporation ("PEPCO")
(a) PEPCO currently distributes securities of the Phoenix Funds, and
Phoenix Home Life Variable Universal Life Account and Phoenix Home Life Variable
Accumulation Account in addition to those of the Registrant.
(b) Directors and Officers of PEPCO
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Underwriter
------------------ ---------------------
<S> <C>
Robert W. Fiondella* Director
Martin J. Gavin** Director and Executive Vice President
Philip R. McLoughlin* Director and President
Charles J. Paydos** Director
Dona D. Young* Director
Richard C. Shaw* Executive Vice President, Offshore Investment Funds
Leonard J. Saltiel** Senior Vice President
William R. Moyer** Senior Vice President, Finance, and Treasurer
G. Jeffrey Bohne* Vice President, Transfer Agent Operations
Nancy G. Curtiss*** Vice President, Fund Accounting
James M. Dolan** Vice President and Compliance Officer; Assistant Secretary
Elizabeth R. Sadowinski** Vice President, Field and Investor Services
Maris Lambergs* Vice President/National Sales Manager
Keith D. Robbins* Secretary
Eugene A. Charon** Controller
Michael Litwinka* Assistant Secretary
Patricia O. McLaughlin* Assistant Secretary
Richard J. Wirth* Assistant Secretary
Ellen R. Moody* Assistant Treasurer
</TABLE>
* The principal business address of each of these individuals is One American
Row, Hartford, Connecticut 06115.
** The principal business address of each of these individuals is 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
*** The principal business address of each of these individuals is 56 Prospect
Street, Hartford, Connecticut 06115.
(c) As the Registrant was not in existence prior to this Registration
Statement, no compensation was received by PEPCO from the
Registrant during the last fiscal year:
C-3
<PAGE>
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 are maintained at the administrative
offices of PHL Variable Insurance Company located at 100 Bright Meadow
Boulevard, Enfield, Connecticut, 06083-1900 and 101 Munson Street, Greenfield,
Massachusetts, 01302-0810.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements contained therein are never more than 16 months old for so
long as payments under the Contracts may be accepted;
(b) to include as part of any application to purchase a Contract offered
by the prospectus, a space that an applicant can check to request a
Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this form promptly upon
written or oral request.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Pre-Effective Amendment No. 1 to its
Registration Statement to be signed on its behalf, in the City of Hartford,
State of Connecticut on the 13th day of July, 1995.
PHL VARIABLE INSURANCE COMPANY
By: *Robert W. Fiondella
------------------------------------------
Robert W. Fiondella
President
PHL VARIABLE ACCUMULATION ACCOUNT
By: *Robert W. Fiondella
------------------------------------------
Robert W. Fiondella
President of PHL Variable Insurance Company
As required by the Securities Act of 1933, this Pre-Effective Amendment No. 1
to its Registration Statement has been signed below by the following persons in
the capacities with PHL Variable Insurance Company and on the date indicated.
Signature Title Date
--------- ----- ----
_________________________ Director July 13, 1995
*Richard H. Booth
Director, Chairman and
President
_________________________ (Principal Executive Officer) July 13, 1995
*Robert W. Fiondella
_________________________ Director July 13, 1995
*Joseph E. Kelleher
_________________________ Director July 13, 1995
*Philip R. McLoughlin
_________________________ Director July 13, 1995
*Charles J. Paydos
S-1(c)
<PAGE>
_________________________ Director July 13, 1995
*David W. Searfoss
_________________________ Director July 13, 1995
*Simon Y. Tan
_________________________ Director July 13, 1995
*Dona D. Young
By: /s/ Patricia O. McLaughlin Dated: July 13, 1995
--------------------------
*Patricia O. McLaughlin, as Attorney in Fact Pursuant to Powers of Attorney,
copies of which are filed herewith.
phl/457
S-2(c)
EXHIBIT 3(a)
Form of Underwriting Agreement between PHL Variable Insurance Company
and Phoenix Equity Planning Corporation
<PAGE>
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
This Agreement, made this __ day of __________, 1995, by and among PHL
Variable Insurance Company ("PHL Variable"), a Connecticut stock company, PHL
Accumulation Account (the "Account"), and Phoenix Equity Planning Corporation
("PEPCO"), a Connecticut corporation.
WHEREAS, PHL Variable offers for sale variable annuity contracts funded
through Separate Accounts of PHL Variable registered as unit investment trusts
under the Investment Company Act of 1940 ("1940 Act") including, in the case of
certain variable annuity contracts, the Account, pursuant to a registration
statement filed with the Securities and Exchange Commission under the Securities
Act of 1933 ("Securities Act"), and listed on Schedule A of this Agreement (the
"Contracts"), and
WHEREAS, PEPCO is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("1934
Act") and is a member of the National Association of Securities Dealers, Inc.
("NASD"), and
WHEREAS, PHL Variable desires to engage PEPCO to perform certain
services with respect to the books and records to be maintained in connection
with the sale of Contracts and certain administrative and other functions as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
I. Services of PEPCO
A. Appointment. PHL Variable hereby appoints PEPCO, and PEPCO hereby
accepts the appointment as, Master Service and Distributor of the Contracts.
B. Duties. PEPCO shall perform certain administrative, compliance and
other services with respect to the Contracts as described herein. PEPCO agrees
to use its best efforts in performing the activities outlined in paragraphs I. C
and I. E of this Agreement.
C. Written Agreements. PEPCO shall enter into Agreements with
broker-dealer firms whose registered representatives have been or shall be
properly licensed, including variable annuity licensed if required, and
appointed as life insurance agents of PHL Variable. PHL Variable shall pay all
fees associated with the insurance appointment of such selected representatives
as insurance agents of PHL Variable. Such written Agreements with broker-dealers
shall provide that such broker-dealer shall cause applications to be solicited
for the purchase of the Contracts. Such Agreements shall include such terms and
conditions as PEPCO may determine not inconsistent with this Agreement,
provided, however, that any broker-dealer with whom PEPCO has entered into a
written Agreement must:
<PAGE>
-2-
(a) be a registered broker-dealer under the 1934 Act and be a member
of the NASD; and
(b) agree that, in connection with the solicitation of applications
for the purchase of Contracts, the broker-dealer will in all
respects conform to the requirements of all state and federal
laws and the Rules of Fair Practice of the NASD relating to the
sale of the Contracts and will indemnify and hold harmless PEPCO
and PHL Variable from any damage or expense on account of the
negligence, misconduct or wrongful act of such broker-dealer or
any employee, representative or agent of such broker-dealer.
In obtaining and entering into written Agreements with broker-dealers,
PEPCO will in all respects conform to the requirements of all state and federal
law, and the Rules of Fair Practice of the NASD.
D. Recordkeeping. PEPCO shall maintain and preserve, or cause to be
maintained and preserved, such accounts, books, and other documents as are
required of it under this Agreement, the 1934 Act and any other applicable laws
and regulations, including without limitation and to the extent applicable,
Rules 17a-3 and 17a-4 under the 1934 Act. The books, accounts and records of
PEPCO as to services provided hereunder, shall be maintained so as to disclose
clearly and accurately the nature and details of the transactions.
E. Sales Assistance to Agents/Registered Representatives. PEPCO shall
provide sales assistance with respect to, and cause applications to be solicited
for the purchase of, the Contracts by agents of PHL Variable who have been
appointed by PHL Variable. PEPCO shall also prepare sales promotional materials
for the Contracts and assist the agents in utilizing the materials. In addition,
PEPCO shall provide broker-dealers and agents with reasonable quantities of
sales promotional materials, prospectuses, sample Contracts, applications and
any necessary service forms.
F. Supervision. PEPCO shall select persons associated with it who are
trained and qualified persons to solicit applications for purchase of Contracts
in conformance with applicable state and federal laws. Any such person shall be
a registered representative of PEPCO in accordance with the rules of the NASD,
be licensed to offer the Contract in accordance with the insurance laws of any
jurisdiction in which such person solicits applications, be licensed with and
appointed by PHL Variable as an insurance agent to solicit applications for the
Contracts and have entered into the appropriate Variable Contract Insurance
Commission Agreement with PHL Variable. PEPCO will train and supervise its
registered representatives to insure that the purchase of a Contract is not
recommended to an applicant in the absence of reasonable grounds to believe that
the purchase of the Contract is suitable for that applicant. PEPCO shall pay the
fees to regulatory authorities in connection with obtaining necessary securities
licenses and authorizations for its registered representatives to solicit
applications for the purchase of Contracts. PEPCO is not responsible for
<PAGE>
-3-
fees in connection with the appointment of registered representatives as
insurance agents of PHL Variable.
G. Sales Materials and Other Documents.
(a) PEPCO's Responsibilities. PEPCO shall be responsible for:
(i) the design, preparation and printing of all promotional
material to be used in the distribution of the Contracts:
(ii) the approval of promotional material by the SEC and the
NASD, where required; and
(iii) the prompt forwarding of all Contract applications
received by PEPCO along with other documents, if any, and
any payments received with such applications.
(b) PHL Variable's Responsibilities.
(i) PHL Variable shall provide PEPCO with sufficient
quantities of prospectuses regarding the Contracts.
(ii) PHL Variable shall be responsible for the approval of
promotional material by state and other local insurance
regulatory authorities.
(iii) PHL Variable shall, on behalf of any broker-dealer with
whom PEPCO has entered into a written Agreement, confirm
the issuance of the Contract to the Contract Owner.
(c) Right to Approve. PEPCO shall not print, publish or distribute
any advertisement, circular or any document relating to the
Contracts or relating to PHL Variable unless such advertisement,
circular or document shall have been approved in writing by PHL
Variable. Neither PHL Variable nor any of its agents or
affiliates shall print, publish or distribute any advertisement,
circular or any document relating to the Contracts or relating
to PEPCO unless such advertisement, circular or document shall
have been approved in writing by PEPCO. However, nothing herein
shall prohibit any party from advertising annuities or life
insurance in general or on a generic basis. Each party reserves
the right to require modification of any such material to comply
with applicable laws, rules and regulations and agrees to
provide timely responses regarding material submitted to it by
the other party.
<PAGE>
-4-
H. Payments to Broker-Dealers. PEPCO shall serve as paying agent for
amounts due broker-dealers for sales commissions. PHL Variable shall forward to
PEPCO any such amounts due broker-dealers and PEPCO shall be responsible to pay
such amounts to the persons entitled thereto as set forth in the applicable
written Agreements with such broker-dealers. PEPCO shall reflect such amounts on
its books and records as required by Paragraph D hereto.
I. Compliance. PEPCO shall, at all times, when performing its functions
under this Agreement, be registered as a securities broker-dealer with the SEC
and the NASD and be licensed or registered as a securities broker-dealer in any
jurisdiction where the performance of the duties contemplated by this Agreement
would require such licensing or registration. PEPCO represents and warrants that
it shall otherwise comply with provisions of federal and state law in performing
its duties hereunder.
J. Payment of Expenses by PEPCO. PEPCO shall pay the expenses incurred
in connection with its provision of services hereunder and the distribution of
the Contracts, including those expenses incurred in connection with the
preparation and distribution of sales literature and promotional materials for
the Contracts and the sale and delivery of the Contracts.
II. General Provisions
A. Inspection of Books and Records. PEPCO and PHL Variable agree that
all records relating to services provided hereunder shall be subject to
reasonable periodic, special or other audit or examination by the SEC, NASD, or
any state insurance commissioner or any other regulatory body having
jurisdiction. PEPCO and PHL Variable agree to cooperate fully in any securities,
insurance or judicial regulatory investigation, inspection, inquiry or
proceeding arising in connection with the services provided under this
Agreement, or with respect to PEPCO or PHL Variable or their affiliates, to the
extent related to the distribution of the Contracts. PEPCO and PHL Variable will
notify each other promptly of any customer compliant or notice of regulatory
proceeding, and, in the case of a customer complaint, will cooperate in arriving
at a mutually satisfactory response.
B. Indemnification. PEPCO will indemnify and hold harmless PHL Variable
and the Account, from expenses, losses, claims, damages or liabilities
(including attorney fees) incurred by reason of any material misrepresentation
in sales literature or promotional materials developed by PEPCO for the
Contracts and not pre-approved in writing by PHL Variable, or on account of any
other misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of PEPCO, including any employee of PEPCO, to comply with the
terms of this Agreement, but PEPCO shall not be required to indemnify for any
expenses, losses, claims, damages or liabilities which have resulted from the
negligence, misconduct or wrongful act of the party seeking indemnification.
PEPCO shall also hold harmless and indemnify PHL Variable and Account for any
expenses, losses, claims, damages, or liability (including attorneys fees)
arising from any misrepresentation, wrongful or unauthorized act or omission,
negligence of, or failure of a broker-dealer or its employees, agents
<PAGE>
-5-
or registered representatives, to comply with the terms of the written agreement
entered into between PEPCO and such broker-dealer but only to the extent that
PEPCO is indemnified by the broker-dealer under the terms of the written
agreement. PHL Variable will indemnify and hold harmless PEPCO, for any
expenses, losses, claims, damages or liabilities (including attorneys fees)
incurred by reason of any material misrepresentation or omission in a
registration statement or prospectus for the Contracts, or on account of any
other misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of PHL Variable, including any employee of PHL Variable, to
comply with the terms of this Agreement, but PHL Variable shall not be required
to indemnify for any expenses, losses, claims, damages or liabilities which have
resulted from the negligence, misconduct or wrongful act of the party seeking
indemnification.
C. Compensation. PHL Variable shall compensate PEPCO for the services
PEPCO performs hereunder as the parties shall agree from time to time and as
listed on Schedule A of this Agreement. In addition, PHL Variable shall
reimburse PEPCO for its expenses incurred under Paragraph I. J. of this
Agreement. PEPCO agrees to return promptly to PHL Variable all compensation
received for any Contract returned within the "free look" period as specified in
the Contract.
D. Termination. This Agreement shall become effective on the date of
this Agreement and shall continue to be in effect, except that:
(a) Any party hereto may terminate this Agreement on any date by
giving the other party at least thirty (30) days' prior written
notice of such termination specifying the date fixed therefor.
(b) This Agreement may not be assigned by PEPCO without the consent
of PHL Variable.
E. Registration. PHL Variable and the Account agree to use their best
efforts to effect and maintain the registration of the Contracts under the
Securities Act and the Account under the 1940 Act, and to qualify the Contracts
under the state securities and insurance laws, and to qualify the Contracts as
annuities under the Internal Revenue Code. PHL Variable will pay or cause to be
paid expenses (including the fees and disbursements of its own counsel) of the
registration and maintenance of the Contracts under the Securities Act and of
the Account under the 1940 Act, and to qualify the Contracts under the state
securities and insurance laws.
F. Authority. PEPCO shall have authority hereunder only as expressly
granted in this Agreement.
G. Miscellaneous. PHL Variable agrees to advise PEPCO immediately in
the case of an issuance by the SEC of any stop order suspending the
effectiveness of the Prospectus for the Contracts, of all action of the SEC with
respect to any amendments to the registration statement(s)
<PAGE>
-6-
which may from time to time be filed with the SEC and of any material event
which makes untrue any statement made in the registration statement for the
Contracts, or which requires the making of a change in the registration
statement in order to make the statement therein not misleading. PHL Variable
agrees to advise PEPCO in the event that formal administrative proceedings are
instituted against PHL Variable by the SEC, or any state securities or insurance
department or any other regulatory body regarding PHL Variable's duties under
this Agreement, unless PHL Variable determines in its sole judgment exercised in
good faith, that any such administrative proceeding will not have a material
adverse effect upon its ability to perform its obligations under this Agreement.
PEPCO agrees to advise PHL Variable in the event that formal administrative
proceedings are instituted against PEPCO by the SEC, NASD, or any state
securities or insurance department or any other regulatory body regarding
PEPCO's duties under this Agreement, unless PEPCO determines in its sole
judgment exercised in good faith, that any such administrative proceedings will
not have a material adverse effect upon its ability to perform its obligations
under this Agreement.
H. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the
date first above written.
PHL VARIABLE INSURANCE COMPANY
AND
PHL VARIABLE ACCUMULATION ACCOUNT
By: ______________________________________
Title:
PHOENIX EQUITY PLANNING CORPORATION
By: ______________________________________
Title:
phl\560
<PAGE>
Schedule A
PEPCO has been appointed by PHL Variable to perform certain administrative,
compliance and other services with respect to the following variable annuity
contracts ("Contracts") issued by PHL Variable Insurance Company:
The Big Edge Choice - Individual Deferred Variable Accumulation Annuity
Contracts issued by the PHL Variable Accumulation Account of PHL
Variable Insurance Company ("PHLV"). PEPCO shall receive payments for
services performed under this Agreement equal to 6.25% of purchase or
premium payments made under The Big Edge Choice contracts. In addition,
upon the submission of documentation satisfactory to PHLV, PEPCO shall
receive reimbursement from PHLV for any payments made to broker-dealers
who act as wholesalers in introducing The Big Edge Choice to
broker-dealers or financial institutions.
EXHIBIT 3(b)
Form of Agreement between Phoenix Equity Planning Corporation
with respect to the sale of Contracts
<PAGE>
[Phoenix Home Life logo] Broker-Dealer Variable Contract
Supervisory and Service Agreement
Phoenix Equity Planning Corporation ("PEPCO"), the master servicer and
distributor for the Contracts hereunder described and the undersigned
broker-dealer (the "Broker-Dealer"), enter into this Agreement as of the date
indicated, for the purpose of appointing the Broker-Dealer to perform the
services hereunder described, subject to the following provisions:
1. Except as provided below, PEPCO hereby appoints the Broker-Dealer to provide
sales assistance with respect to, and to cause applications to be solicited
for the purchase of variable annuity contracts and/or variable life policies
issued by Phoenix Home Life Mutual Insurance Company and/or PHL Variable
Insurance Company (the "Insurer") through Separate Accounts including the
Phoenix Home Life Variable Accumulation Account, Phoenix Home Life Variable
Universal Life Account and PHL Variable Accumulation Account and listed on
Schedules A and B. Broker-Dealer accepts such appointment and agrees to use
its best efforts to provide sales assistance to producers of the Insurer and
to cause applications for the purchase of Contracts to be solicited by such
producers. Broker-Dealer agrees to pay a commission to such producers.
2. The Broker-Dealer will promptly forward to the appropriate office of Phoenix
Home Life, or its authorized designee, all Contract applications along with
other documents, if any, and any payments received with such applications and
will have no rights of set off for any reason. Any Contract application which
is rejected, together with any payment made and other documents submitted,
shall be returned to the Broker-Dealer.
3. PEPCO shall pay the Broker-Dealer service payments relating to applications
submitted by Broker-Dealer. The amount to be paid by PEPCO is specified on
Schedule A or B of this Agreement. The Broker-Dealer agrees to return
promptly to PEPCO, all compensation received for any Contract returned within
the "free look" period as specified in the Contract.
4. The Broker-Dealer represents that it is a registered broker-dealer under the
Securities Exchange Act of 1934, a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), and is registered as a
broker-dealer under state law to the extent required in order to provide the
services described in this Agreement. Broker-Dealer agrees to abide by all
rules and regulations of the NASD, including its Rules of Fair Practice, and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of the
Contracts, including the prospectus delivery requirements under the
Securities Act of 1933 for the Contracts and any underlying mutual fund. The
Broker-Dealer agrees to notify PEPCO promptly of any change, termination, or
suspension of its status. Broker-Dealer shall immediately notify PEPCO with
respect to i) the initiation and disposition of any form of disciplinary
action by the NASD or any other agency or instrumentality having jurisdiction
with respect to the subject matter hereof against Broker-Dealer or any of its
employees or agents; ii) the issuance of any form of deficiency notice by the
NASD or any such agency regarding Broker-Dealer's training, supervision or
sales practices; and/or iii) the effectuation of any consensual order with
respect thereto.
5. In connection with the solicitation of applications for the purchase of
Contracts, Broker-Dealer agrees to indemnify and hold harmless PEPCO and the
Insurer from any damage or expense as a result of (a) the negligence,
misconduct or wrongful act of Broker-Dealer or any employee, representative
or agent of the Broker-Dealer and/or (b) any actual or alleged violation of
any securities or insurance laws, regulations or orders. Any indebtedness or
obligation of the Broker-Dealer to PEPCO or the Insurer, whether arising
hereunder or otherwise, and any liabilities incurred or monies paid by PEPCO
or the Insurer to any person as a result of any misrepresentation, wrongful
or unauthorized act or omission, negligence of, or failure of Broker-Dealer
or its employees, producers, and registered representatives to comply with
this Agreement, shall be set off against any compensation payable under this
Agreement. Notwithstanding the foregoing, Broker-Dealer shall not indemnify
and hold harmless PEPCO and the Insurer from any damage or expense on account
of the negligence, misconduct or wrongful act of
1
HO 3272 2-95
<PAGE>
Broker-Dealer or any employee, representative or producer of Broker-Dealer if
such negligence, misconduct or wrongful act arises out of or is based upon
any untrue statement or alleged untrue statement of material fact, or the
omission or alleged omission of a material fact in: (i) any registration
statement, including any prospectus or any post-effective amendment thereto;
or (ii) any material prepared and/or supplied by PEPCO or the Insurer for use
in conjunction with the offer or sale of Contracts; or (iii) any state
registration or other document filed in any state or jurisdiction in order to
qualify any Contract under the securities laws of such state or jurisdiction.
The terms of this provision shall not be impaired by termination of this
Agreement.
In connection with the solicitation of applications for the purchase of
Contracts, PEPCO and the Insurer agree to indemnify and hold harmless
Broker-Dealer from any damage or expense on account of the negligence,
misconduct or wrongful act of PEPCO or the Insurer or any employee,
representative or producer of PEPCO or the Insurer, including but not limited
to, any damage or expense which arises out of or is based upon any untrue
statement or alleged untrue statement of material fact, or the omission or
alleged omission of a material fact in: (i) any registration statement,
including any prospectus or any post-effective amendment thereto; or (ii) any
material prepared and/or supplied by PEPCO or the Insurer for use in
conjunction with the offer or sale of the Contracts; or (iii) any state
registration or other document filed in any state or other jurisdiction in
order to qualify any Contract under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by
termination of this Agreement.
6. The Broker-Dealer will itself be, or will select persons associated with it
who are, trained and qualified to solicit applications for purchase of
Contracts in conformance with applicable state and federal laws. Any such
persons shall be registered representatives of the Broker-Dealer in
accordance with the rules of the NASD, be licensed to offer the Contract in
accordance with the insurance laws of any jurisdiction in which such person
solicits applications, be licensed with and appointed by the Insurer to
solicit applications for the Contracts and have entered into the appropriate
Variable Contracts Insurance Commission Agreement with the Insurer, if
applicable. Under the Variable Contracts Insurance Commission Agreement, the
Insurer will make payments to insurance producers. Broker-Dealer will train
and supervise its representatives to insure that purchase of a Contract is
not recommended to an applicant in the absence of reasonable grounds to
believe that the purchase of a Contract is suitable for that applicant.
Broker-Dealer shall pay the fees to regulatory authorities in connection with
obtaining necessary securities licenses and authorizations for registered
representatives to solicit applications for the purchase of contracts.
Broker-Dealer is not responsible for fees in connection with the appointment
of registered representatives as insurance agents of the Insurer.
7. The activities of all producers referred to in Paragraph 6 will be under the
direct supervision and control of the Broker-Dealer. The right of such
producers to solicit applications for the purchase of Contracts is subject to
their continued compliance with the rules and procedures which may be
established by the Broker-Dealer, PEPCO or the Insurer, including those set
forth in this Agreement.
8. The Broker-Dealer shall ensure that applications for the purchase of
Contracts are solicited only in the states where the Contracts are qualified
for sale, and only in accordance with the terms and conditions of the then
current prospectus applicable to the Contracts and will make no
representations not included in the prospectus, Statement of Additional
Information, or in any authorized supplemental material supplied by PEPCO.
With regard to the Contracts, the Broker-Dealer shall not use or permit its
producers to use any sales promotion materials or any form of advertising
other than that supplied or approved by PEPCO. Broker-Dealer shall ensure
that the prospectus delivery requirements under the Securities Act of 1933
and all other applicable securities and insurance laws, rules and regulations
are met and that delivery of any prospectus for the Contracts will be
accompanied by delivery of the prospectus for the underlying mutual funds.
9. The Broker-Dealer understands and agrees that in performing the services
covered by this Agreement, it is acting in the capacity of an independent
contractor and not as an agent or employee of PEPCO, and that it is not
authorized to act for, or make any representation on behalf of, PEPCO or the
Insurer except as specified herein. Broker-Dealer understands and agrees that
PEPCO shall execute telephone transfer orders only in accordance with the
terms and conditions of the then current prospectus
2
<PAGE>
applicable to the Contracts and agrees that, in consideration for the
Broker-Dealer's right to exercise the telephone transfer privilege, neither
PEPCO nor the Insurer will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be held responsible for the
authenticity of, any telephone instructions containing unauthorized,
incorrect or incomplete information. Broker-Dealer agrees to indemnify and
hold harmless PEPCO and the Insurer against any loss, injury or damage
resulting from any telephone exchange instruction containing unauthorized,
incorrect or incomplete information received from Broker-Dealer or any of
its registered representatives. (Telephone instructions are recorded on
tape.)
10. This Agreement may not be assigned by the Broker-Dealer without the prior
consent of PEPCO. Any party hereto may cancel this Agreement at any time
upon written notice. This Agreement shall automatically terminate if the
Broker-Dealer voluntarily or involuntarily ceases to be or is suspended from
being, a member in good standing of the NASD. Provided further, PEPCO
reserves the right to terminate this Agreement in the event that any
employee or agent of Broker-Dealer is suspended, disciplined or found to be
in violation of governing insurance or securities laws, rules or
regulations. Furthermore, PEPCO reserves the right to revise the payments
for services described in this Agreement as set forth in Paragraph 3 at any
time upon the mailing of written notice to the Broker-Dealer. Failure of any
party to terminate this Agreement for any of the causes set forth in this
Agreement shall not constitute a waiver of the right to terminate this
Agreement at a later time for any such causes.
11. This Agreement on the part of the Broker-Dealer runs to PEPCO and the
Insurer and is for the benefit of and enforceable by each. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Connecticut. This Agreement supersedes any agreement in effect prior to
May 1, 1995. Your first contract/policy sale after receipt of this Agreement
shall constitute your acceptance of its terms. If Agreement is not returned,
"default" Commission Option 1 will be applied. If you do not wish to
participate in solicitating applications for one of the available products,
you must complete Section 12.
12. Applications for the following products will not be solicited by any
representative, employee or agent of the Broker-Dealer:
A. [ ] Phoenix Home Life Mutual Insurance Company
[ ] Variable Annuities
[ ] Variable Universal Life
B. [ ] PHL Variable Insurance Company
[ ] Variable Annuities
Broker-Dealer Firm:
Name of Firm: _________________________________________________
By: ___________________________________________________________
Print Name & Title: ___________________________________________
Date: ____________________________ NASD Card Number ________
Phoenix Equity Planning Corporation
By: __________________________________________________________
Title: ________________________________________________________
Date: ________________________________________________________
3
<PAGE>
[Phoenix Home Life logo] Schedule B
PHL Variable Insurance Company
The Big Edge Choice - Individual Deferred Variable Annuity Contract (Form D601)
issued by the PHL Variable Accumulation Account of PHL Variable Insurance
Company. PEPCO, as paying agent for PHL Variable Insurance Company, shall pay
the Broker-Dealer a service payment from one of the three Commission Options
available as described below. If more than one Commission Option is chosen,
Broker-Dealer agrees that its representatives may select from the specified
Commission Options at the time a Contract is purchased. Once an option has been
selected, it cannot be changed in the future. Broker-Dealer may also allow
specified representatives to utilize a Commission Option other than what is
selected below on a contract by contract basis by completing the section on the
Commission Election form titled, "Exception." If more than one Commission Option
is selected below, the "default" Commission Option shall be Option 1.
Please check one or more of the following Commission Options.
Please check Option
one or more: Number: Option Description:
[box] 1 6.00% of premiums paid
[box] 2 5% of premiums paid plus an annual trail
commission of .30% of Contract Value
beginning the 2nd year and increasing to
.50% beginning the 8th year
[box] 3 3% of premiums paid plus an annual trail
commission of .50% of Contract Value
beginning the 2nd year and increasing to
1.00% beginning the 8th year
Trail commissions will be paid on the contract value on a calendar quarter basis
on deposits held under the Contract for a year or more.
HO 3272 B 2-95
EXHIBIT 5
Form of Application
<PAGE>
[Phoenix Home Life logo] Variable Annuity Application
[box] Phoenix Home Life Mutual Insurance Company
[box] PHL Variable Insurance Company
For Main Administrative Office Use Only: Case Contract Number _____________
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Primary Annuitant Contingent Annuitant (Use if Annuitant & Owner are different)
------------------------------------------------------------------------------------------------------
Name Name
------------------------------------------------------------------------------------------------------
1 Annuitant(s) Address (No., Street) Address (No., Street)
If no Contract Owner ------------------------------------------------------------------------------------------------------
is specified below, (City, State, Zip Code) (City, State, Zip Code)
the Annuitant will be ------------------------------------------------------------------------------------------------------
the Contract Owner. Phone Social Security Number Phone Social Security Number
------------------------------------------------------------------------------------------------------
Sex Date of Birth Sex Date of Birth
[box]Male [box] Female [box]Male [box]Female
- -----------------------------------------------------------------------------------------------------------------------------------
Contract Owner Joint Owner (Between spouses only)
2 Contract ------------------------------------------------------------------------------------------------------
Owner(s) Name Name
Complete only if ------------------------------------------------------------------------------------------------------
different from Address (No., Street) Address (No., Street)
Annuitant. ------------------------------------------------------------------------------------------------------
(City, State, Zip Code) (City, State, Zip Code)
------------------------------------------------------------------------------------------------------
Phone Social Security Number Phone Social Security Number
------------------------------------------------------------------------------------------------------
Sex Date of Birth Sex Date of Birth
[box] Male [box] Female [box] Male [box] Female
- ---------------------------------------------------------------------------------------------------------------------------
Annuitant's Primary Beneficiary Relationship to Annuitant
(If Corporate Plan, must be Trustee)
3 Beneficiary Annuitant's Contingent Beneficiary Relationship to Annuitant
Designations -------------------------------------------------------------------------------------------------------
Owner's Beneficiary (Complete Relationship to Owner
ONLY if owner differs from annuitant)
-------------------------------------------------------------------------------------------------------
Owner's Contingent Beneficiary Relationship to Owner
- ------------------------------------------------------------------------------------------------------------------------------------
[box] Non-Qualified [box] Qualified [box] Qualified Replacement (Complete Section 9)
[box[ IRA: [box] Regular Contributory [box] Direct Rollover [box] Transfer
Tax year to which contributions apply __________________ [box] Owner acknowledges receipt of
PHL Disclosure Statement
[box] Simplified Employee Pension IRA (attach IRS Form 5305-SEP or Phoenix Prototype)
[box[ Owner acknowledges receipt of PHL
4 Type of Plan Disclosure Statement
[box] Section 401 Corporate Plan (Include Form PT 352); [box] Corp, [box] Keogh,
[box] Profit Sharing, [box] Money Purchase
[box] Section 403(b) TSA - Employer must sign as Applicant and states that it is an educational
organization as described in Internal Revenue Code section 170(b)(1)(A)(ii); a tax-exempt organization
as described in Code section 501(c)(3); or a State, political subdivision of a State or an agency or
instrumentality of one of the foregoing. (The Employer further states that only amounts deferred by the
Owner/Annuitant under a salary reduction agreement with the Employer will be applied to this annuity
contract.)
[box] Section 457 Deferred Compensation Plan - Owner states that it is an "eligible employer," as
defined in (section symbol)457(e)(1) of the Internal Revenue Code, and will remain the sole owner of
any contract issued under this application until distributed under the terms of the plan.
- -----------------------------------------------------------------------------------------------------------------------------------
[box] Deferred [box] Immediate: Maturity Date _______________ Payout Option ________________
Initial Purchase Payment: $ __________________
Subsequent purchase payments will be flexible unless otherwise noted as follows: $_____________
5 Annuity Type & [box] Annual [box] Semi-Annual [box] Quarterly [box] Monthly [box] Check-O-Matic
Purchase [box] Billing Notices are requested. Send bills to:
Payments; Name: ____________________________________________________________________________
Annual Address: _________________________________________________________________________
Administrative Note: If Check-O-Matic has been elected, please complete the authorization form and include a void
Charge check.
-------------------------------------------------------------------------------------------------------
The Annual Administrative Charge is due at the end of each year on the anniversary date. A reminder
notice will be sent only if no other billing notices have been requested above and if the following box
is checked.
[box] Please send a reminder notice for annual administrative charge in lieu of any other billing
notice.
- ------------------------------------------------------------------------------------------------------------------------------------
OL 2115 1-95
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
6 Sub-Account ________ % Growth ________ % Total Return ________ % GIA ________ % Other
Allocation ________ % International ________ % Balanced ________ % Other ________ % Other
Use full percentages ________ % Money Market ________ % Bond ________ % Other ________ % Other
(Must equal 100%).
TEMPORARY MONEY MARKET ALLOCATION [box] Yes [box] No If yes, I elect to temporarily allocate my
premiums to the Money Market sub-account until termination of the Right to Cancel period as stated in
the policy.
- ------------------------------------------------------------------------------------------------------------------------------------
a. Transfer Amount $ _____________ ($2,000 Minimum in sending Sub-account) over a _____________ month
period (18 months minimum if GIA).
b. Select one deposit sub-account: that transfers will be made from:
[box] Growth [box] Money Market [box] Balanced [box] GIA
7 Dollar Cost [box] International [box Total Return [box] Bond [box] Other ________________________
Averaging c. Indicate Frequency of Transfer [box] Monthly [box] Quarterly [box] Semi-Annual [box] Annual
d. Select the Sub-accounts that will receive Transfers
Sub-Account Transfer Amount Sub-Account Transfer Amount
_________________ $___________________ _______________ $____________________
_________________ $___________________ _______________ $____________________
_________________ $___________________ _______________ $____________________
_________________ $___________________ _______________ $____________________
- -----------------------------------------------------------------------------------------------------------------------------------
8 Telephone [box] Yes [box] No Telephone transfers and changes in payment allocation are subject to the terms
Transfers and of the Prospectus. If you check the "yes" box, telephone orders will be accepted from you and your
Change in registered representative and you agree that, because we cannot verify the authenticity of telephone
Payment instructions, we will not be liable for any loss caused by our acting on telephone instructions, unles
Allocation caused by our gross negligence.
- ------------------------------------------------------------------------------------------------------------------------------------
9 Replacement Will the proposed contract replace any existing annuity or life insurance? [box] Yes [box] No.
If yes, list company name, plan and year issued in Section 12.
- ------------------------------------------------------------------------------------------------------------------------------------
10 Maturity Date The Maturity Date shall be the latest date allowed under the terms of the contract unless earlier date
(Optional) noted as follows (the latest allowable date for IRA and TSA qualified plans is age 70-1/2): __________
- -----------------------------------------------------------------------------------------------------------------------------------
11 Statement of Additional Information - [box] Please send a Statement of Additional Information
- -----------------------------------------------------------------------------------------------------------------------------------
12 Miscellaneous ______________________________________________________________________________________________________
Instructions/ ______________________________________________________________________________________________________
Comments ______________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
13 Any contract issued hereunder in the state of Missouri or Oklahoma shall be considered a Missouri or
Oklahoma contract respectively and its terms, including those concerning the receiving of information
by the agent, shall be construed in accordance with the laws of the state of Missouri or Oklahoma
respectively.
- ------------------------------------------------------------------------------------------------------------------------------------
All statements on this application are true to the best of our knowledge and belief. Any person who,
with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an
application or files a claim containing a false or deceptive statement is guilty of insurance fraud. We
14 Statement of agree that this application shall be part of the annuity contract. We hereby verify our understanding
Owner/ that all payments and values provided by the contract, when based on investment experience of the Fund,
Applicant and are variable and not guaranteed. We acknowledge receipt of current prospectuses for the Variable
Annuitant Annuity and the Fund.
Signed at _______________________________________________________ On _________________________________
(CITY, STATE) (DATE)
Under penalty of perjury, I (the owner) certify that my Social Security/Taxpayer ID number is correct
as it appears on this application.
Signature of Annuitant _______________________________________________________________________________
Signature of Owner or Applicant (if other than annuitant). ___________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Will this contract replace any existing insurance or annuity? [box] Yes [box] No
This replacement is meant to be a tax-free exchange under Section 1035: [box] Yes [box] No
15 Statement of If "yes", please give particulars above in #12. The Agent hereby certifies that the Owner signed this
Representative application in his/her presence; he/she has truly and accurately recorded on this form the information
supplied by the proposed annuitant; and that he/she is qualified and authorized to discuss the contract
herein applied for.
_________________________________________________________ _______________________________________
REPRESENTATIVE'S SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
Representative's Name Rep # _______________ % Share ____________
Representative's Name Rep # _______________ % Share ____________
16 Representative Representative's Name Rep # _______________ % Share ____________
Information Use Service Address: _____________________________________________________
full percentages (City, State, Zip Code) ______________________________________ Rep. Tel. No. (_____)____________
(Must equal 100%) Broker/Dealer Name ______________________________________ Broker/Dealer # ________________
Broker/Dealer (City, State) _____________________________ Agency # __________ Branch # __________
- ------------------------------------------------------------------------------------------------------------------------------------
Send completed form - with a check payable to Phoenix Home Life Companies to: Variable Products Operations, Phoenix Home Life, P.O.
Box 942, Greenfield, MA 01302-0942
</TABLE>
EXHIBIT 10(a)
Written Consent of Jorden Burt & Berenson
<PAGE>
[JORDEN BURT & BERENSON letterhead]
July 20, 1995
PHL Variable Insurance Company
One American Row
Hartford, CT 06115
Re: PHL Variable Insurance Company
PHL Variable Accumulation Account
Pre-Effective Amendment No. 1 to Form N-4
File No. 33-87376
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectus contained in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4 for PHL Variable Insurance Company and PHL
Variable Accumulation Account filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 and Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt & Berenson
Jorden Burt & Berenson
EXHIBIT 10(b)
Written Consent of Price Waterhouse LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 to the registration
statement on Form N-4 (the "Registration Statement") of our reports dated
February 15, 1995, relating to the financial statements of PHL Variable
Insurance Company, which appear in such Statement of Additional Information,
and to the incorporation by reference of our report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Statement of Additional
Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
July 14, 1995
EXHIBIT 10(c)
Written Consent of Ernst & Young LLP
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 27, 1994, with respect to the financial
statements of Dreyfus Consumer Life Insurance Company included in Pre-Effective
Amendment No. 1 to the Registration Statement (Form N-4 No. 33-87376) of PHL
Variable Insurance Company and the PHL Variable Accumulation Account.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
July 13, 1995
EXHIBIT 10(d)
Written Consent of Counsel as to
Legality of Securities Being Registered
<PAGE>
[Phoenix Home Life letterhead]
[Logo] Phoenix Home Life
July 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: PHL Variable Accumulation Account
Registration Statement No. 33-87376
Dear Sirs:
As Counsel to the depositor, I have participated in the development of and
am familiar with the variable annuity contracts (the "Contracts") which are the
subject of the above-captioned Registration Statement on Form N-4.
In connection with this opinion, I have reviewed the Contracts, the
Registration Statement, the Charter and By-Laws of the Company, relevant
proceedings of the Board of Directors, and the provisions of Connecticut
insurance law relevant to the issuance of the Contracts.
Based upon this review, I am of the opinion that each of the Contracts,
when issued, will have been validly issued, and will constitute a legal and
binding obligation of PHL Variable Insurance Company.
I further consent to the use of this opinion as an exhibit to the above-
captioned Registration Statement and to my being named as an expert under
"Experts" therein.
Very truly yours,
/s/Patricia O. McLaughlin
Patricia O. McLaughlin
phl/548
EXHIBIT 13(a)
Explanation of Yield and
Effective Yield Calculation
<PAGE>
EXPLANATION OF YIELD AND EFFECTIVE YIELD CALCULATION
Money Market Sub-Account
The following is an example of this yield calculation for the Sub-account
based on actual Money Market Series yield for a seven day period ending
December 31, 1994.
Contracts
assessing
.85% expense
charge
------------
Assumptions:
Value of a hypothetical pre-existing account
with exactly one unit at the beginning of
the period 1.000000
Value of the same account (excluding capital
changes) at the end of the seven day period 1.000774
Calculation:
Ending account value 1.000774
Less beginning account value 1.000000
Net change in account value 0.000774
Base period return:
(adjusted change/beginning account value) 0.000774
Current yield = return x (365/7) = 4.03%
Effective yield = [(1 + return)365/7] - 1 = 4.12%
EXHIBIT 13(b)
Explanation of Total Return Calculation
<PAGE>
EXPLANATION OF TOTAL RETURN CALCULATION
One Year
<TABLE>
<CAPTION>
Number of Units Withdrawn Ending
Initial Units per to Pay Annual Unit Value Surrender Rear End Redemption
Sub-Account Payment Initial Pmt Policy Fees** 12/31/94 = Value Less(-) Load* Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balanced $1,000 860.87 1.54 $1.113220 $956.62 $51.66 $904.96
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL RETURN FORMULA
[graphic of math equation]
Where: P = a hypothetical initial payment (of $1,000) invested on 12/31/93.
T = average annual total return assuming reinvestment of monthly
dividend, distributions and annual capital gains distributions.
N = number of years
ERV = ending redeemable value
* Assumes Rear End Load of 7% in year one, decreasing through year 7 when the
load is waived. (For this example, the year 1 load is $51.66 or 6% on 90% of
the surrender value). (See "Sales Charges" section in the Prospectus.)
** Represents the average charge for administrative fees per $1000 invested.
(For this example, the administrative fee is $1.75.) ($35 divided by average
account dollars x $1000). Fees are paid each year through the redemption
of units.
<PAGE>
EXPLANATION OF TOTAL RETURN CALCULATION
One Year
<TABLE>
<CAPTION>
Number of Units Withdrawn Ending
Initial Units per to Pay Annual Unit Value Surrender Rear End Redemption
Sub-Account Payment Initial Pmt Policy Fees** 12/31/94 = Value Less(-) Load* Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
International $1,000 792.18 1.366 $1.245810 $985.24 $53.20 $932.04
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL RETURN FORMULA
[graphic of math equation]
Where: P = a hypothetical initial payment (of $1,000) invested on 12/31/93.
T = average annual total return assuming reinvestment of monthly
dividend, distributions and annual capital gains distributions.
N = number of years
ERV = ending redeemable value
* Assumes Rear End Load of 7% in year one, decreasing through year 7 when the
load is waived. (For this example, the year 1 load is $53.20 or 6% on 90% of
the surrender value). (See "Sales Charges" section in the Prospectus.)
** Represents the average charge for administrative fees per $1000 invested.
(For this example, the administrative fee is $1.75.) ($35 divided by average
account dollars x $1000). Fees are paid each year through the redemption
of units.
<PAGE>
EXPLANATION OF TOTAL RETURN CALCULATION
Five Year
<TABLE>
<CAPTION>
Number of Units Withdrawn Ending
Initial Units per to Pay Annual Unit Value Surrender Rear End Redemption
Sub-Account Payment Initial Pmt Policy Fees** 12/31/94 = Value Less(-) Load* Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth $1,000 304.22 1.92 $6.106731 $1,846.06 $33.23 $1,812.83
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL RETURN FORMULA
[graphic of math equation]
Where: P = a hypothetical initial payment (of $1,000) invested on 12/31/89.
T = average annual total return assuming reinvestment of monthly
dividend, distributions and annual capital gains distributions.
N = number of years
ERV = ending redeemable value
* Assumes Rear End Load of 7% in year one, decreasing through year 7 when the
load is waived. (For this example, the year 5 load is $33.23 or 2% on 90% of
the surrender value). (See "Sales Charges" section in the Prospectus.)
** Represents the average charge for administrative fees per $1000 invested.
(For this example, the administrative fee is $1.75.) ($35 divided by average
account dollars x $1000). Fees are paid each year through the redemption
of units.
<PAGE>
EXPLANATION OF TOTAL RETURN CALCULATION
Five Year
<TABLE>
<CAPTION>
Number of Units Withdrawn Ending
Initial Units per to Pay Annual Unit Value Surrender Rear End Redemption
Sub-Account Payment Initial Pmt Policy Fees** 12/31/94 = Value Less(-) Load* Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bond $1,000 536.26 3.79 $2.642065 $1,406.82 $25.32 $1381.50
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL RETURN FORMULA
[graphic of math equation]
Where: P = a hypothetical initial payment (of $1,000) invested on 12/31/89.
T = average annual total return assuming reinvestment of monthly
dividend, distributions and annual capital gains distributions.
N = number of years
ERV = ending redeemable value
* Assumes Rear End Load of 7% in year one, decreasing through year 7 when the
load is waived. (For this example, the year 5 load is $25.32 or 2% on 90% of
the surrender value). (See "Sales Charges" section in the Prospectus.)
** Represents the average charge for administrative fees per $1000 invested.
(For this example, the administrative fee is $1.75.) ($35 divided by average
account dollars x $1000). Fees are paid each year through the redemption
of units.
<PAGE>
EXPLANATION OF TOTAL RETURN CALCULATION
Five Year
<TABLE>
<CAPTION>
Number of Units Withdrawn Ending
Initial Units per to Pay Annual Unit Value Surrender Rear End Redemption
Sub-Account Payment Initial Pmt Policy Fees** 12/31/94 = Value Less(-) Load* Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Return $1,000 534.27 3.60 $2.895089 $1536.34 $27.65 $1,508.69
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL RETURN FORMULA
[graphic of math equation]
Where: P = a hypothetical initial payment (of $1,000) invested on 12/31/89.
T = average annual total return assuming reinvestment of monthly
dividend, distributions and annual capital gains distributions.
N = number of years
ERV = ending redeemable value
* Assumes Rear End Load of 7% in year one, decreasing through year 7 when the
load is waived. (For this example, the year 5 load is $27.65 or 2% on 90% of
the surrender value). (See "Sales Charges" section in the Prospectus.)
** Represents the average charge for administrative fees per $1000 invested.
(For this example, the administrative fee is $1.75.) ($35 divided by average
account dollars X $1000). Fees are paid each year through the redemption
of units.
EXHIBIT 15
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Richard H. Booth Director July 12, 1995
___________________
Richard H. Booth
phl\552
<PAGE>
POWER OF ATTORNEY
I, the undersigned Chairman of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacities indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/ Robert W. Fiondella Chairman of the Board July 12, 1995
_______________________ and President
Robert W. Fiondella PHL Variable Insurance Company
phl\553
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Joseph E. Kelleher Director July 12, 1995
_____________________
Joseph E. Kelleher
phl\554
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Philip R. McLoughlin Director July 12, 1995
_______________________
Philip R. McLoughlin
phl\551
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Charles J. Paydos Director July 12, 1995
____________________
Charles J. Paydos
phl\550
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/David W. Searfoss Director July 12, 1995
____________________
David W. Searfoss
phl\555
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Simon Y. Tan Director July 12, 1995
_______________
Simon Y. Tan
phl\556
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board Directors of PHL Variable Insurance
Company, hereby constitute and appoint Keith D. Robbins and Patricia O.
McLaughlin my true and lawful attorneys and agents with full power to sign for
me in the capacity indicated below, any or all Registration Statements or
amendments thereto filed with the Securities and Exchange Commission under the
Securities Act of 1933 and/or the Investment Company Act of 1940 relating to
variable annuity contracts issued or sold by PHL Variable Insurance Company or
any of its separate accounts, and hereby ratify and confirm my signature as it
may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
/s/Dona D. Young Director July 12, 1995
________________
Dona D. Young
phl/557
