As filed with the Securities and Exchange Commission May 11, 2000
File No. 333-95611
811-08914
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-4/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1 |X|
Post-Effective Amendment No. |_|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 |X|
(Check appropriate box or boxes.)
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PHL VARIABLE ACCUMULATION ACCOUNT
(Exact Name of Registrant)
PHL VARIABLE INSURANCE COMPANY
(Name of Depositor)
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One American Row, Hartford, Connecticut 06102-5056
(Address of Depositor's Principal Executive Offices) (Zip Code)
(800) 447-4312
(Depositor's Telephone Number, Including Area Code)
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Dona D. Young
PHL Variable Insurance Company
One American Row
Hartford, Connecticut 06102-5056
(Name and Address of Agent for Service)
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Copy to:
Edwin L. Kerr, Esq.
PHL Variable Insurance Company
One American Row
Hartford, CT 06102-5056
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Approximate date of proposed public offering:
May 15, 2000 or as soon thereafter as possible
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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.
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================================================================================
<PAGE>
PHOENIX HOME LIFE 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/SAI CAPTION
------------- ----------------------
PART A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
1. Cover Page .................................................. Cover Page
2. Definitions ................................................. Special Terms
3. Synopsis..................................................... Summary of Expenses; Contract Summary
4. Condensed Financial Information ............................. Financial Highlights
5. General Description of Registrant, Depositor and
Portfolio Companies....................................... PHL Variable and the Account; Investments of
the Account; Voting Rights
6. Deductions and Expenses ..................................... 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 Proceedings............................................ Legal Matters
14. Table of Contents of the Statement of Additional
Information............................................... SAI
PART B INFORMATION REQUIRED IN A 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......................... Not Applicable
20. Underwriters ................................................ Underwriter
21. Calculation of Performance Data.............................. Calculation of Yield and Return
22. Annuity Payments............................................. Calculation of Annuity Payments
23. Financial Statements ........................................ Financial Statements
</TABLE>
<PAGE>
PHOENIX PREMIUM EDGE
Issued by
PHL VARIABLE INSURANCE COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT:
[envelope] PHOENIX VARIABLE ANNUITY MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
[telephone] Tel. 800/541-0171
PROSPECTUS MAY 15, 2000
This prospectus describes a variable accumulation deferred annuity contract. The
contract is designed to provide you with retirement income. The contract offers
a variety of variable and fixed investment options.
You may allocate payments and contract value to one or more of the subaccounts
of the VA Account, the MVA Account ("MVA") or the Guaranteed Interest Account
("GIA"). The assets of each subaccount will be used to purchase, at net asset
value, shares of a series in the following designated funds.
THE PHOENIX EDGE SERIES FUND
- ----------------------------
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Capital Growth Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Balanced Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Oakhurst Strategic Allocation Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Phoenix-Seneca Strategic Theme Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
MANAGED BY PHOENIX VARIABLE ADVISORS, INC.
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Federated U.S. Government Bond Series
[diamond] Phoenix-J.P. Morgan Research Enhanced Index Series
[diamond] Phoenix-Janus Equity Income Series
[diamond] Phoenix-Janus Flexible Income Series
[diamond] Phoenix-Janus Growth Series
[diamond] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
-----------------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE(R) Equity Index Fund
FEDERATED INSURANCE SERIES
--------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
---------------------------------------
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
[diamond] Technology Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
----------------------------------------------------
MANAGED BY TEMPLETON GLOBAL ADVISORS LIMITED
[diamond] Templeton Growth Securities Fund--Class 2
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Strategy Fund--Class 2
[diamond] Templeton International Securities Fund--Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Securities Fund--Class 2
MANAGED BY FRANKLIN MUTUAL ADVISORS, LLC
[diamond] Mutual Shares Securities Fund--Class 2
WANGER ADVISORS TRUST
---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
1
<PAGE>
It may not be in your best interest to purchase a contract to replace an
existing annuity contract or life insurance policy. You must understand the
basic features of the proposed contract and your existing coverage before you
decide to replace your present coverage. You must also know if the replacement
will result in any tax liability.
This prospectus is valid only if accompanied or preceded by current
prospectuses for the funds and MVA.
The contract is not a deposit or obligation of, underwritten or guaranteed
by, any financial institution, credit union or affiliate. It is not federally
insured by the Federal Deposit Insurance Corporation or any other state or
federal agency. Contract investments are subject to risk, including the
fluctuation of contract values and possible loss of principal.
The Securities and Exchange Commission ("SEC") has not approved or
disapproved these securities, nor passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
This prospectus provides important information that a prospective investor
ought to know before investing. These prospectuses should be kept for future
reference. A Statement of Additional Information ("SAI") has been filed with the
SEC and is available free of charge by calling Variable Annuity Operations at
800/541-0171.
2
<PAGE>
TABLE OF CONTENTS
Heading Page
- ---------------------------------------------------------------
SPECIAL TERMS............................................. 4
SUMMARY OF EXPENSES....................................... 7
CONTRACT SUMMARY.......................................... 11
FINANCIAL HIGHLIGHTS...................................... 14
PERFORMANCE HISTORY....................................... 14
THE VARIABLE ACCUMULATION ANNUITY......................... 14
PHL VARIABLE AND THE ACCOUNT ............................. 14
INVESTMENTS OF THE ACCOUNT................................ 14
The Phoenix Edge Series Fund........................... 14
Deutsche Asset Management VIT Funds.................... 16
Federated Insurance Series............................. 16
The Universal Institutional Funds, Inc................. 16
Franklin Templeton Variable Insurance
Products Trust....................................... 16
Wanger Advisors Trust.................................. 16
Investment Advisors.................................... 17
Services of the Advisors............................... 18
MVA....................................................... 18
GIA....................................................... 18
PURCHASE OF CONTRACTS..................................... 18
DEDUCTIONS AND CHARGES.................................... 19
Deductions from the Separate Account................... 19
Premium Tax.......................................... 19
Surrender Charges.................................... 19
Mortality and Expense Risk Fee....................... 19
Administrative Fee................................... 20
Administrative Charge................................ 20
Reduced Charges, Increased Bonus Payments and
Enhanced Guaranteed Interest Rates................... 20
Market Value Adjustment................................ 20
Other Charges.......................................... 20
THE ACCUMULATION PERIOD................................... 20
Accumulation Units..................................... 20
Accumulation Unit Values............................... 21
Transfers ............................................. 21
Optional Programs and Benefits......................... 21
Dollar Cost Averaging Program........................ 21
Asset Rebalancing Program............................ 22
Surrender of Contract; Partial Withdrawals............. 22
Lapse of Contract...................................... 22
Payment Upon Death Before Maturity Date ............... 22
THE ANNUITY PERIOD........................................ 23
Variable Accumulation Annuity Contracts................ 23
Annuity Options ....................................... 24
Option A--Life Annuity with Specified Period Certain.. 24
Option B--Non-Refund Life Annuity..................... 24
Option D--Joint and Survivor Life Annuity............. 24
Option E--Installment Refund Life Annuity............. 24
Option F--Joint and Survivor Life Annuity with
10-Year Period Certain ............................ 24
Option G--Payments for Specified Period............... 24
Option H--Payments of Specified Amount................ 24
Option I--Variable Payment Life Annuity with
10-Year Period Certain ............................ 25
Option J--Joint Survivor Variable Payment Life
Annuity with 10-Year Period Certain ............... 25
Option K--Variable Payment Annuity for a
Specified Period .................................. 25
Option L--Variable Payment Life Expectancy
Annuity............................................ 25
Option M--Unit Refund Variable Payment Life
Annuity............................................ 25
Option N--Variable Payment Non-Refund Life
Annuity............................................ 25
Other Options and Rates.............................. 25
Other Conditions..................................... 25
Payment Upon Death After Maturity Date................. 25
VARIABLE ACCOUNT VALUATION PROCEDURES..................... 26
Valuation Date......................................... 26
Valuation Period....................................... 26
Accumulation Unit Value................................ 26
Net Investment Factor.................................. 26
MISCELLANEOUS PROVISIONS.................................. 26
Assignment............................................. 26
Deferment of Payment .................................. 26
Free Look Period....................................... 26
Amendments to Contracts................................ 27
Substitution of Fund Shares............................ 27
Ownership of the Contract.............................. 27
FEDERAL INCOME TAXES...................................... 27
Introduction........................................... 27
Income Tax Status...................................... 27
Taxation of Annuities in General--Non-Qualified Plans... 27
Surrenders or Withdrawals Prior to the Contract
Maturity Date...................................... 27
Surrenders or Withdrawals On or After the
Contract Maturity Date............................. 28
Penalty Tax on Certain Surrenders and Withdrawals.... 28
Additional Considerations.............................. 28
Diversification Standards ............................. 29
Individual Retirement Annuity.......................... 30
IRAs................................................. 30
Penalty Tax on Certain Surrenders and
Withdrawals from IRAs.............................. 30
Seek Tax Advice...................................... 31
SALES OF VARIABLE ACCUMULATION CONTRACTS.................. 31
STATE REGULATION.......................................... 31
REPORTS................................................... 31
VOTING RIGHTS............................................. 31
LEGAL MATTERS............................................. 32
SAI....................................................... 32
APPENDIX A--PERFORMANCE HISTORY FOR
CONTRACTS WITH:
BENEFIT OPTION 1..................................... 33
BENEFIT OPTION 2..................................... 35
APPENDIX B--DEDUCTIONS FOR PREMIUM TAXES.................. 37
<PAGE>
SPECIAL TERMS
- --------------------------------------------------------------------------------
The following is a list of terms and their meanings when used in this
prospectus.
ACCOUNT (VA ACCOUNT): PHL Variable Accumulation Account.
ACCOUNT VALUE: The value of all assets held in the Account.
ACCUMULATION UNIT: A standard of measurement for each subaccount used to
determine the value of a contract and the interest in the subaccounts prior to
the start of annuity payments.
ACCUMULATION UNIT VALUE: The value of one accumulation unit was set at $1.0000
on the date assets were first allocated to each subaccount. 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.
ADJUSTED PARTIAL WITHDRAWALS: The result of multiplying the ratio of the partial
withdrawal to the contract value and the death benefit (prior to the withdrawal)
on the date of the withdrawal.
ANNUAL STEP-UP AMOUNT (STEP-UP AMOUNT): In the first contract year the step-up
amount is the greater of (1) 100% of purchase payments less adjusted partial
withdrawals; or (2) the contract value. After that, in any following contract
year the step-up amount equals the greater of (1) the step-up amount at the end
of the prior contract year, plus 100% of premium payments, less adjusted partial
withdrawals made since the end of the last contract year; or (2) the contract
value.
ANNUITANT: The person whose life is used as the measuring life under the
contract. The annuitant will be the primary annuitant as shown on the contract's
schedule page while that person is living, and will then be the contingent
annuitant, if that person is living at the death of the primary annuitant.
ANNUITY OPTION: The provisions under which we make a series of annuity payments
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
periodic payment under the variable payment Annuity Options I, J, K, M and N.
BONUS PAYMENT: An amount we add to your contract value when a payment is
received from you. Each bonus payment will be treated as earnings under your
contract.
CLAIM DATE: The valuation date following receipt of a certified copy of the
death certificate at VAMO.
CONTRACT: The deferred variable accumulation annuity contract described in this
prospectus.
CONTRACT OWNER (OWNER, YOU, YOUR): Usually the person or entity to whom we issue
the contract. The contract owner has the sole right to exercise all rights and
privileges under the contract as provided in the contract. The owner may be the
annuitant, an employer, a trust or any other individual or entity specified in
the contract application. 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 in the
application, the annuitant will be the owner.
CONTRACT VALUE: Prior to the maturity date, the sum of all accumulation units
held in the subaccounts of the Account and the value held in the GIA and/or MVA.
FIXED PAYMENT ANNUITY: A benefit providing periodic payments of a fixed dollar
amount throughout the annuity period. This benefit does not vary with or reflect
the investment performance of any subaccount.
FUNDS: The Phoenix Edge Series Fund, Deutsche Asset Management VIT Funds,
Federated Insurance Series, The Universal Institutional Funds, Inc., Franklin
Templeton Variable Insurance Products Trust and Wanger Advisors Trust.
GIA: An investment option under which premium amounts are guaranteed to earn a
fixed rate of interest.
ISSUE DATE: The date that the initial premium payment is invested under a
contract.
MVA: An account that pays interest at a guaranteed rate if held to maturity. If
amounts are withdrawn, transferred or applied to an annuity option before the
end of the guarantee period we will make a market adjustment to the value of
that account. Assets allocated to the MVA are not part of the assets allocated
to the Account or the general account of PHL Variable. The MVA is described in a
separate prospectus.
MATURITY DATE: The date elected by the owner as to when annuity payments will
begin. The maturity date will not be any 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 PAYMENT: The amount that you pay when you purchase a contract.
We require minimum initial payments of:
[diamond] Non-qualified plans--$10,000
[diamond] Individual Retirement Annuity (Rollover IRA only)--$2,000
4
<PAGE>
MINIMUM SUBSEQUENT PAYMENT: The least amount that you may pay when you make any
subsequent payments, after the minimum initial payment (see above). The minimum
subsequent payment for all contracts is $25.
NET ASSET VALUE: Net asset value of a series' shares is computed by dividing the
value of the net assets of the series by the total number of series outstanding
shares.
PAYMENT UPON DEATH: The obligation of PHL Variable under a contract to make a
payment on the death of the owner or annuitant anytime: (a) before the maturity
date of a contract (see "Payment Upon Death Before Maturity Date") or (b) after
the maturity date of a contract (see "Payment Upon Death After Maturity Date").
PHL VARIABLE (OUR, US, WE, COMPANY): PHL Variable Insurance Company.
SERIES: A separate investment portfolio of a fund.
VAO: Variable Annuity Operations.
VALUATION DATE: A valuation date is every day the New York Stock Exchange
("NYSE") is open for trading.
VAMO: The Variable Annuity Mail Operations division of PHL Variable that
receives and processes incoming mail for Variable Annuity Operations.
VARIABLE PAYMENT ANNUITY: An annuity providing payments that vary in amounts,
according to the investment experience of the selected subaccounts.
5
<PAGE>
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
CONTRACT OWNER TRANSACTION EXPENSES ALL SUBACCOUNTS
---------------
Deferred Surrender Charges (as a percentage of amount withdrawn):(1)
<S> <C>
Age of Payment in Complete Years 0-1............................................ 8%
Age of Payment in Complete Years 1-2............................................ 8%
Age of Payment in Complete Years 2-3............................................ 8%
Age of Payment in Complete Years 3-4............................................ 7%
Age of Payment in Complete Years 4-5............................................ 6%
Age of Payment in Complete Years 5-6............................................ 5%
Age of Payment in Complete Years 6-7............................................ 4%
Age of Payment in Complete Years 7-8............................................ 3%
Age of Payment in Complete Years 8 and thereafter............................... None
ANNUAL ADMINISTRATIVE CHARGE
Maximum(2)....................................................................... $35
ANNUAL SEPARATE ACCOUNT EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Fee.................................................. 1.475%
Daily Administrative Fee........................................................ .125%
------
Total Separate Account Annual Expenses.......................................... 1.60 %
</TABLE>
1 A surrender charge is taken from the proceeds when a contract is surrendered
or when an amount is withdrawn if the payments have not been held under the
contract for a certain period of time. However, each year an amount up to 10%
of the contract value as of the end of the previous contract year may be
withdrawn without a surrender charge. See "Deductions and Charges--Surrender
Charges."
2 Waived if contract value is $50,000 or more.
6
<PAGE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES (AS A PERCENTAGE OF FUND AVERAGE NET ASSETS)
====================================================================================================================================
OTHER EXPENSES TOTAL EXPENSES TOTAL EXPENSES
SERIES MANAGEMENT RULE 12b-1 BEFORE BEFORE AFTER
FEES FEES REIMBURSEMENT(1) REIMBURSEMENT REIMBURSEMENT(2)
- ------------------------------------------------------------------------------------------------------------------------------------
THE PHOENIX EDGE SERIES FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix-Aberdeen International .75% N/A .26% 1.01% 1.01%
Phoenix-Aberdeen New Asia 1.00% N/A 1.39% 2.39% 1.25%
Phoenix-Bankers Trust Dow 30 .35% N/A 1.40%(4) 1.75%(4) .50%
Phoenix-Duff & Phelps Real Estate Securities .75% N/A .56% 1.31% 1.00%
Phoenix-Engemann Capital Growth .62% N/A .06% .68% .68%
Phoenix-Engemann Nifty Fifty .90% N/A .53% 1.43% 1.05%
Phoenix-Federated U.S. Government Bond .60% N/A 1.70%(4) 2.30%(4) .75%
Phoenix-Goodwin Money Market .40% N/A .17% .57% .55%
Phoenix-Goodwin Multi-Sector Fixed Income .50% N/A .21% .71% .65%
Phoenix-Hollister Value Equity .70% N/A 1.33% 2.03% .85%
Phoenix-J.P. Morgan Research Enhanced Index .45% N/A .30% .75% .55%
Phoenix-Janus Equity Income .85% N/A 1.40%(4) 2.25%(4) 1.00%
Phoenix-Janus Flexible Income .80% N/A 1.65%(4) 2.45%(4) .95%
Phoenix-Janus Growth .85% N/A 1.05%(4) 1.90%(4) 1.00%
Phoenix-Morgan Stanley Focus Equity .85% N/A 1.30%(4) 2.15%(4) 1.00%
Phoenix-Oakhurst Balanced .54% N/A .16% .70% .70%
Phoenix-Oakhurst Growth and Income .70% N/A .31% 1.01% .85%
Phoenix-Oakhurst Strategic Allocation .58% N/A .12% .70% .70%
Phoenix-Schafer Mid-Cap Value 1.05% N/A 1.53% 2.58% 1.20%
Phoenix-Seneca Mid-Cap Growth .80% N/A 1.24% 2.04% 1.05%
Phoenix-Seneca Strategic Theme .75% N/A .22% .97% .97%
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
EAFE(R)Equity Index Fund .45% N/A .69% 1.15% .65%
FEDERATED INSURANCE SERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II .60% N/A .24% .84% .84%
Federated High Income Bond Fund II .60% N/A .19% .79% .79%
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Technology Portfolio .80% N/A 1.85%(4) 2.65%(4) 1.15%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund--Class 2(6) .60% .25%(3) .19% 1.04% 1.04%
Templeton Asset Strategy Fund--Class 2(5,6) .60% .25%(3) .18% 1.03% 1.03%
Templeton Developing Markets Securities Fund--Class 2(5,6) 1.25% .25%(3) .31% 1.81% 1.81%
Templeton Growth Securities Fund--Class 2(6) .83% .25%(3) .05% 1.13% 1.13%
Templeton International Securities Fund--Class 2(5,6) .69% .25%(3) .19% 1.13% 1.13%
WANGER ADVISORS TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty 1.00% N/A 2.45% 3.45% 1.45%
Wanger International Small Cap 1.25% N/A .24% 1.49% 1.49%
Wanger Twenty .95% N/A 1.17% 2.12% 1.35%
Wanger U.S. Small Cap .95% N/A .07% 1.02% 1.02%
====================================================================================================================================
</TABLE>
1 Other expenses after reimbursements are as follows: The Phoenix-J.P. Morgan
Research Enhanced Index Series will pay up to .10%; the Phoenix-Engemann
Capital Growth, Phoenix-Goodwin Multi-Sector Fixed Income, Phoenix-Oakhurst
Strategic Allocation, Phoenix-Goodwin Money Market, Phoenix-Engemann Nifty
Fifty, Phoenix-Oakhurst Growth and Income, Phoenix-Hollister Value Equity,
Phoenix-Schafer Mid-Cap Value, Phoenix-Bankers Trust Dow 30, Phoenix-Federated
U.S. Government, Phoenix-Janus Equity Income, Phoenix-Janus Flexible Income,
Phoenix-Janus Growth and Phoenix-Morgan Stanley Focus Equity Series will pay
up to .15%; the Phoenix-Duff & Phelps Real Estate Securities, Phoenix-Seneca
Strategic Theme, Phoenix-Aberdeen New Asia, and Phoenix-Seneca Mid-Cap Growth
Series will pay up to .25%; and the Phoenix-Aberdeen International Series will
pay up to .40%. The Wanger Foreign Forty will pay up to .45%, the Wanger U.S.
Small Cap Series will pay up to .50%, the Wanger International Small Cap will
pay up to .60%, and the Wanger Twenty will pay up to .40%.
2 Reflects the effect of any management fee waivers and reimbursement of
expenses.
3 The fund's Class 2 distribution plan or "Rule 12b-1 Plan" is described in the
fund's prospectus.
4 These figures are estimates: these series have been available for less than
six months as of the date of this prospectus.
5 On 2/8/00, shareholders approved a merger and reorganization that combined the
fund with a similar fund of the Franklin Templeton Variable Insurance Products
Trust, effective 5/1/00.
6 The table shows total expenses based on the new fees and assets as of 12/31/99
and not the assets of the combined funds. The following table estimates what
the total expenses would be based on the assets of the combined funds as of
5/1/00:
<TABLE>
<CAPTION>
====================================================================================================================================
ESTIMATED ANNUAL EXPENSES FROM 5/1/00 MANAGEMENT FEES RULE 12b-1 FEES OTHER EXPENSES TOTAL OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mutual Shares Securities Fund - Class 2 .60% .25% .19% 1.04%
Templeton Asset Strategy Fund - Class 2 .60% .25% .14% .99%
Templeton Developing Markets Securities Fund - Class 2 1.25% .25% .29% 1.79%
Templeton Growth Securities Fund - Class 2 .80% .25% .05% 1.10%
Templeton International Securities Fund - Class 2 .65% .25% .20% 1.10%
====================================================================================================================================
</TABLE>
7
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
It is impossible to show you what expenses you would incur if you purchased
a contract because there are so many different factors that affect expenses.
However, the following three tables are meant to help demonstrate how certain
decisions or choices by you could result in different levels of expense.
If you surrender your contract at the end of one of these time periods, you
would pay the following expenses on a $1,000 initial investment. We have assumed
a constant 5% annual return on the invested assets for all of the series.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Phoenix-Aberdeen International Series........................... $102 $163 $206 $309
Phoenix-Aberdeen New Asia Series................................ 114 200 268 432
Phoenix-Bankers Trust Dow 30 Series............................. 108 183 N/A N/A
Phoenix-Duff & Phelps Real Estate Securities Series............. 104 171 220 337
Phoenix-Engemann Capital Growth Series.......................... 98 153 191 277
Phoenix-Engemann Nifty Fifty Series............................. 105 174 225 348
Phoenix-Federated U.S. Government Bond Series................... 113 197 N/A N/A
Phoenix-Goodwin Money Market Series............................. 97 150 186 266
Phoenix-Goodwin Multi-Sector Fixed Income Series................ 99 154 192 280
Phoenix-Hollister Value Equity Series........................... 111 190 252 402
Phoenix-J.P. Morgan Research Enhanced Index Series.............. 99 155 194 284
Phoenix-Janus Equity Income Series.............................. 113 196 N/A N/A
Phoenix-Janus Flexible Income Series............................ 115 201 N/A N/A
Phoenix-Janus Growth Series..................................... 110 187 N/A N/A
Phoenix-Morgan Stanley Focus Equity Series...................... 112 193 N/A N/A
Phoenix-Oakhurst Balanced Series................................ 99 154 192 279
Phoenix-Oakhurst Growth and Income Series....................... 102 163 206 309
Phoenix-Oakhurst Strategic Allocation Series.................... 99 154 192 279
Phoenix-Schafer Mid-Cap Value Series............................ 116 205 276 448
Phoenix-Seneca Mid-Cap Growth Series............................ 111 190 253 403
Phoenix-Seneca Strategic Theme Series........................... 101 161 204 305
EAFE(R)Equity Index Fund......................................... 103 166 N/A N/A
Federated Fund for U.S. Government Securities II................ 100 158 N/A N/A
Federated High Income Bond Fund II.............................. 99 156 N/A N/A
Technology Portfolio............................................ 117 206 N/A N/A
Mutual Shares Securities Fund-- Class 2......................... 102 163 208 312
Templeton Asset Strategy Fund-- Class 2......................... 102 163 207 311
Templeton Developing Markets Securities Fund-- Class 2.......... 109 184 243 383
Templeton Growth Securities Fund-- Class 2...................... 103 166 212 320
Templeton International Securities Fund-- Class 2............... 103 166 212 320
Wanger Foreign Forty............................................ 124 227 312 515
Wanger International Small Cap.................................. 106 176 228 354
Wanger Twenty................................................... 112 193 256 410
Wanger U.S. Small Cap........................................... 102 163 207 310
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
If you annuitize your contract at the end of one of these time periods, you
would pay the following expenses on a $1,000 initial investment. We have assumed
a constant 5% annual return on the invested assets for all of the series.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Phoenix-Aberdeen International Series........................... $102 $163 $146 $309
Phoenix-Aberdeen New Asia Series................................ 114 200 211 432
Phoenix-Bankers Trust Dow 30 Series............................. 108 183 N/A N/A
Phoenix-Duff & Phelps Real Estate Securities Series............. 104 171 161 337
Phoenix-Engemann Capital Growth Series.......................... 98 153 130 277
Phoenix-Engemann Nifty Fifty Series............................. 105 174 166 348
Phoenix-Federated U.S. Government Bond Series................... 113 197 N/A N/A
Phoenix-Goodwin Money Market Series............................. 97 150 124 266
Phoenix-Goodwin Multi-Sector Fixed Income Series................ 99 154 131 280
Phoenix-Hollister Value Equity Series........................... 111 190 195 402
Phoenix-J.P. Morgan Research Enhanced Index Series.............. 99 155 133 284
Phoenix-Janus Equity Income Series.............................. 113 196 N/A N/A
Phoenix-Janus Flexible Income Series............................ 115 201 N/A N/A
Phoenix-Janus Growth Series..................................... 110 187 N/A N/A
Phoenix-Morgan Stanley Focus Equity Series...................... 112 193 N/A N/A
Phoenix-Oakhurst Balanced Series................................ 99 154 131 279
Phoenix-Oakhurst Growth and Income Series....................... 102 163 146 309
Phoenix-Oakhurst Strategic Allocation Series.................... 99 154 131 279
Phoenix-Schafer Mid-Cap Value Series............................ 116 205 220 448
Phoenix-Seneca Mid-Cap Growth Series............................ 111 190 195 403
Phoenix-Seneca Strategic Theme Series........................... 101 161 144 305
EAFE(R)Equity Index Fund......................................... 103 166 N/A N/A
Federated Fund for U.S. Government Securities II................ 100 158 N/A N/A
Federated High Income Bond Fund II.............................. 99 156 N/A N/A
Technology Portfolio............................................ 117 206 N/A N/A
Mutual Shares Securities Fund-- Class 2......................... 102 163 147 312
Templeton Asset Strategy Fund-- Class 2......................... 102 163 147 311
Templeton Developing Markets Securities Fund-- Class 2.......... 109 184 185 383
Templeton Growth Securities Fund-- Class 2...................... 103 166 152 320
Templeton International Securities Fund-- Class 2............... 103 166 152 320
Wanger Foreign Forty............................................ 124 227 259 515
Wanger International Small Cap.................................. 106 176 169 354
Wanger Twenty................................................... 112 193 199 410
Wanger U.S. Small Cap........................................... 102 163 146 310
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
If you leave your premiums in the contract and you do not surrender or
annuitize it, after each of these time periods you will have paid the following
expenses on a $1,000 initial investment. We have assumed a constant 5% annual
return on the invested assets for all of the series.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Phoenix-Aberdeen International Series........................... $28 $ 86 $146 $309
Phoenix-Aberdeen New Asia Series................................ 42 126 211 432
Phoenix-Bankers Trust Dow 30 Series............................. 35 107 N/A N/A
Phoenix-Duff & Phelps Real Estate Securities Series............. 31 95 161 337
Phoenix-Engemann Capital Growth Series.......................... 25 76 130 277
Phoenix-Engemann Nifty Fifty Series............................. 32 98 166 348
Phoenix-Federated U.S. Government Bond Series................... 41 123 N/A N/A
Phoenix-Goodwin Money Market Series............................. 24 72 124 266
Phoenix-Goodwin Multi-Sector Fixed Income Series................ 25 77 131 280
Phoenix-Hollister Value Equity Series........................... 38 115 195 402
Phoenix-J.P. Morgan Research Enhanced Index Series.............. 25 78 133 284
Phoenix-Janus Equity Income Series.............................. 40 122 N/A N/A
Phoenix-Janus Flexible Income Series............................ 42 128 N/A N/A
Phoenix-Janus Growth Series..................................... 37 112 N/A N/A
Phoenix-Morgan Stanley Focus Equity Series...................... 39 119 N/A N/A
Phoenix-Oakhurst Balanced Series................................ 25 76 131 279
Phoenix-Oakhurst Growth and Income Series....................... 28 86 146 309
Phoenix-Oakhurst Strategic Allocation Series.................... 25 76 131 279
Phoenix-Schafer Mid-Cap Value Series............................ 43 131 220 448
Phoenix-Seneca Mid-Cap Growth Series............................ 38 116 195 403
Phoenix-Seneca Strategic Theme Series........................... 28 84 144 305
EAFE(R)Equity Index Fund......................................... 29 90 N/A N/A
Federated Fund for U.S. Government Securities II................ 26 81 N/A N/A
Federated High Income Bond Fund II.............................. 26 79 N/A N/A
Technology Portfolio............................................ 44 133 N/A N/A
Mutual Shares Securities Fund-- Class 2......................... 28 87 147 312
Templeton Asset Strategy Fund-- Class 2......................... 28 86 147 311
Templeton Developing Markets Securities Fund-- Class 2.......... 36 109 185 383
Templeton Growth Securities Fund-- Class 2...................... 29 89 152 320
Templeton International Securities Fund-- Class 2............... 29 89 152 320
Wanger Foreign Forty............................................ 52 156 259 515
Wanger International Small Cap.................................. 33 100 169 354
Wanger Twenty................................................... 39 118 199 410
Wanger U.S. Small Cap........................................... 28 86 146 310
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The purpose of the tables above is to assist you in understanding the
various costs and expenses that your contract will bear directly or indirectly.
It is based on historical fund expenses, as a percentage of net assets for the
year ended December 31, 1999, except as indicated. The tables reflect expenses
of the Account as well as the funds. See "Deductions and Charges" in this
prospectus and in the fund prospectuses.
Premium taxes, which are not reflected in the table above, may apply. We
will charge any premium or other taxes levied by any governmental entity with
respect to your contract against the contract values based on a percentage of
premiums paid. Certain states currently impose premium taxes on the contracts
ranging from 0% to 3.5% of premiums paid. See "Deductions and Charges--Premium
Tax" and Appendix C.
The Examples should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown. See "Deductions and
Charges."
10
<PAGE>
CONTRACT SUMMARY
- --------------------------------------------------------------------------------
This summary describes the general provisions of the contract.
Certain provisions of the contract described in this prospectus may differ
in a particular state because of specific state requirements.
If there is ever a difference between the provisions within this prospectus
and the provisions of the contract, the contract provisions will prevail.
OVERVIEW
The contract offers a dynamic idea in retirement planning. It's designed to
give you maximum flexibility in obtaining your investment goals.
The contract offers a combination of investment options both variable and
fixed. Investments in the variable options provide results that vary and depend
upon the performance of the underlying fund, while investments in the GIA or MVA
provide guaranteed interest earnings subject to certain conditions. Please refer
to "Appendix B" for a detailed discussion of the GIA.
You also select a benefit option that is suitable in meeting your financial
objectives. Each benefit option differs in the amount of bonus payment you may
receive and in how the death benefit is calculated. See "The Accumulation
Period--Payment Upon Death Before the Maturity Date" for a complete description.
INVESTMENT FEATURES
FLEXIBLE PAYMENTS
[diamond] You may make payments anytime until the maturity date.
[diamond] You can vary the amount and frequency of your payments.
[diamond] Other than the minimum initial payment, there are no required
payments.
MINIMUM CONTRIBUTION
[diamond] Generally, the minimum initial payment is $10,000.
ALLOCATION OF PREMIUMS AND CONTRACT VALUE
[diamond] You may choose where your payments are invested in one or more of the
subaccounts, the GIA and the MVA.
[diamond] We add a bonus payment to each payment we receive from you. The
amount of the bonus payment we add to your payment varies based upon
the benefit option you select.
[diamond] Transfers between the subaccounts and into the GIA can be made
anytime. Transfers from the GIA are subject to rules discussed in
Appendix B and in "The Accumulation Period--Transfers."
[diamond] Transfers from the MVA may be subject to market value adjustments and
are subject to certain rules. See the MVA prospectus.
[diamond] The contract value varies with the investment performance of the
funds and is not guaranteed.
[diamond] The contract value allocated to the GIA will depend on deductions
taken from the GIA and interest accumulation at rates set by us
(minimum--3%).
WITHDRAWALS
[diamond] You may partially or fully surrender the contract anytime for its
contract value less any applicable surrender charge and premium tax.
[diamond] Each year you may withdraw part of your contract value free of any
surrender charges. During the first contract year, you may withdraw
up to 10% of the contract value as of the date of the first partial
withdrawal without surrender charges. After that, each year, 10%of
your contract value as of the last contract anniversary may be
withdrawn without surrender charges.Please refer to "Deductions and
Charges--Surrender Charges" for a complete description.
DEATH BENEFIT
The death benefit is calculated differently under each benefit option and
the amount varies based on the option selected.
DEDUCTIONS AND CHARGES
FROM THE CONTRACT VALUE
[diamond] No deductions are made from payments.
[diamond] A deduction for surrender charges may occur when you surrender your
contract or request a withdrawal if the assets have not been held
under the contract for a specified period of time.
[diamond] If we impose a surrender charge, it is on a first-in, first-out
basis.
[diamond] No surrender charges are taken upon the death of the annuitant or
owner before the maturity date.
[diamond] A declining surrender charge is assessed on withdrawals in excess of
the free withdrawal amount, based on the date the payments are
deposited:
--------------------------------------------------------------
Percent 8 8% 8% 7% 6% 5% 4% 3% 0%
--------------------------------------------------------------
Age of Payment in 0 1 2 3 4 5 6 7 8+
Complete Years
--------------------------------------------------------------
[bullet] The total deferred surrender charges on a contract will
never exceed 9% of total premium payments.
[diamond] Administrative Charge--maximum of $35 each year. Waived if contract
value is $50,000 or more.
FROM THE ACCOUNT
[diamond] Mortality and expense risk fee--1.475%. See "Charges for Mortality
and Expense Risks."
[diamond] The daily administrative fee--0.125% annually. See "Charges for
Administrative Services."
11
<PAGE>
OTHER CHARGES OR DEDUCTIONS
[diamond] Premium Taxes--taken from the contract value upon annuitization.
[bullet] PHL Variable will reimburse itself for such taxes on the
date of a partial withdrawal, surrender of the contract,
maturity date or payment of death proceeds. See "Premium
Tax."
See "Deductions and Charges" for a detailed description of contract charges.
In addition, certain charges are deducted from the assets of the funds for
investment management services. See the prospectuses for the funds for more
information.
BENEFIT OPTIONS
[diamond] The contract offers two benefit options. You select a benefit option
that best meets your financial needs. Each benefit option varies in
the method of death benefit calculation and in the amount of bonus
payment we add to your payment.
The components of each benefit option are on the Benefit Options chart on
the next page.
ADDITIONAL INFORMATION
FREE LOOK PERIOD
You have the right to review the contract. If you are not satisfied you may
return it within 10 days after you receive it and cancel the contract. You will
receive in cash the adjusted value of the initial payment, however, if
applicable state law requires, we will return the full amount of the payments
made during the Free Look Period. Note that the total amount returned to you
will not include the amount of the bonus payments we have added to payments made
by you.
See "Free Look Period" for a detailed discussion.
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.
12
<PAGE>
BENEFIT OPTIONS CHART
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2
- ------------------------------------------------------------------------------------------------------------------------------------
Component Return of Annual
Premium Step-up
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Death Benefit(1) on the date of death of The greater of: The greatest of:
the annuitant who has not yet attained
age 80
1. the sum of 100% of premium 1. the sum of 100% of premium payments
payments less adjusted partial less adjusted partial withdrawals on
withdrawals on the claim date; or the claim date; or
2. the contract value on the claim date. 2. the contract value on the claim date; or
3. the annual step-up amount on the
claim date.
- ------------------------------------------------------------------------------------------------------------------------------------
Death Benefit(1) on the date of death of The greater of: The greater of:
the annuitant who has attained age 80
1. the sum of 100% of premium payments 1. the death benefit in effect at the
less adjusted partial withdrawals on end of the immediately preceding
the claim date; or contract year prior to the annuitant
turning age 80, plus the sum of 100%
2. the contract value on the claim date. of premium payments less adjusted
partial withdrawals made since the
contract year that the annuitant
reached age 80; or
2. the contract value on the claim date.
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of bonus payment(2) 5% of each payment received from you. 4% of each payment received from you.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 See "The Accumulation Period--Payment Upon Death Before Maturity Date" for
complete details.
2 See the "Purchase of Contracts--Bonus Payments" for complete details.
13
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
FINANCIAL HIGHLIGHTS
ACCUMULATION UNIT VALUES
(SELECTED DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
The subaccounts of this contract commenced operations as of the date of this
prospectus; therefore, data for these subaccounts are not yet available.
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
We may include the performance history of the subaccounts in advertisements,
sales literature or reports. Performance information about each subaccount is
based on past performance only and is not an indication of future performance.
See Appendix A for more information.
THE VARIABLE ACCUMULATION ANNUITY
- --------------------------------------------------------------------------------
The individual deferred variable accumulation annuity contract issued by PHL
Variable is significantly different from a fixed annuity contract in that,
unless the GIA is selected, it is the owner and annuitant under a contract who
bear the risk of investment gain or loss rather than PHL Variable. To the extent
that payments are not allocated to the GIA or MVA, the amounts that will be
available for annuity payments under a contract will depend on the investment
performance of the amounts allocated to the subaccounts. Upon the maturity of a
contract, the amounts held under a contract will continue to be invested in the
Account or the GIA and monthly annuity payments will vary in accordance with the
investment experience of the investment options selected. However, a fixed
annuity may be elected, in which case PHL Variable will guarantee specified
monthly annuity payments.
You select the investment objective of each contract on a continuing basis
by directing the allocation of payments and the reallocation of the contract
value among the subaccounts, GIA or MVA.
PHL VARIABLE AND THE ACCOUNT
- --------------------------------------------------------------------------------
We are a wholly-owned indirect subsidiary of Phoenix Home Life Mutual
Insurance Company. Our executive office is located at One American Row,
Hartford, Connecticut 06102-5056 and our main administrative office is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. PHL Variable is
a Connecticut stock company formed on April 24, 1981. PHL Variable sells
variable annuity contracts through its own field force of agents and through
brokers.
On December 7, 1994, we established the Account, a separate account created
under the insurance laws of Connecticut. The Account is registered with the 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 by the SEC of the
management or investment practices or policies of the Account or of PHL
Variable.
Under Connecticut law, all income, gains or losses of the Account must be
credited to or charged against the amounts placed in the Account without regard
to the other income, gains and losses from any other business or activity of PHL
Variable. The assets of the Account may not be used to pay liabilities arising
out of any other business that we may conduct. Obligations under the contracts
are obligations of PHL Variable.
Contributions to the GIA 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 GIA, see the "GIA" section of this prospectus.
INVESTMENTS OF THE ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain subaccounts invest in corresponding series of The Phoenix Edge
Series Fund. The following series are currently available:
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
series is to seek a high total return consistent with reasonable risk. The
series invests 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
Phoenix-Aberdeen International Series provides a means for investors to invest a
portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the series is
to seek long-term capital appreciation. The series invests primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
14
<PAGE>
PHOENIX-BANKERS TRUST DOW 30 SERIES: The series seeks to track the total
return of the Dow Jones Industrial Average(SM) (the "DJIA(SM)") before fund
expenses.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the series is to seek capital appreciation and income with
approximately equal emphasis. Under normal circumstances, it invests 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.
PHOENIX-ENGEMANN CAPITAL GROWTH SERIES: The investment objective of the
series is to achieve intermediate and long-term growth of capital, with income
as a secondary consideration. The Phoenix-Engemann Capital Growth Series invests
principally in common stocks of corporations believed by management to offer
growth potential.
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the series
is to seek long-term capital appreciation by investing in approximately 50
different securities that offer the best potential for long-term growth of
capital. At least 75% of the series' assets will be invested in common stocks of
high quality growth companies. The remaining portion will be invested in common
stocks of small corporations with rapidly growing earnings per share or common
stocks believed to be undervalued.
PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES: The investment objective of
the series is to maximize total return by investing primarily in debt
obligations of the U.S. Government, its agencies and instrumentalities.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the series
is to provide maximum current income consistent with capital preservation and
liquidity. The Phoenix-Goodwin Money Market Series invests exclusively in high
quality money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the series is to seek long-term total return. The Phoenix-Goodwin
Multi-Sector Fixed Income Series seeks to achieve its investment objective by
investing in a diversified portfolio of high yield and high quality fixed income
securities.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity Series seeks to
achieve its objective by investing in a diversified portfolio of common stocks
that meet certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price.
PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES: The investment objective
of the series is to seek high total return by investing in a broadly diversified
portfolio of equity securities of large and medium capitalization companies
within market sectors reflected in the S&P 500. The series invests in a
portfolio of undervalued common stocks and other equity securities which appear
to offer growth potential and an overall volatility of return similar to that of
the S&P 500.
PHOENIX-JANUS EQUITY INCOME SERIES: The investment objective of the series
is to seek current income and long-term growth of capital.
PHOENIX-JANUS FLEXIBLE INCOME SERIES: The investment objective of the series
is to seek to obtain maximum total return, consistent with preservation of
capital.
PHOENIX-JANUS GROWTH SERIES: The investment objective of the series is to
seek long-term growth of capital, in a manner consistent with the preservation
of capital.
PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES: The investment objective of the
series is to seek capital appreciation by investing primarily in equity
securities.
PHOENIX-OAKHURST BALANCED SERIES: The investment objective of the series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Oakhurst Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
series is to seek dividend growth, current income and capital appreciation by
investing in common stocks. The Phoenix-Oakhurst Growth and Income Series seeks
to achieve its objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the United States, ranked by
market capitalization.
PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES: The investment objective of
the series is to realize as high a level of total return over an extended period
of time as is considered consistent with prudent investment risk. The
Phoenix-Oakhurst Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the investment advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the series is to seek long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value Series will
invest in common stocks of established companies having a strong financial
position and a low stock market valuation at the time of purchase, which are
believed to offer the possibility of increase in value.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the series
is to seek capital appreciation primarily through investments in equity
securities of companies that have the potential for above
15
<PAGE>
average market appreciation. The series seeks to outperform the Standard &
Poor's Mid-Cap 400 Index.
PHOENIX-SENECA STRATEGIC THEME SERIES: The investment objective of the
series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Phoenix-Seneca Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
A certain subaccount invests in a corresponding series of the Deutsche
Asset Management VIT Funds. The following series is currently available:
EAFE(R) EQUITY INDEX FUND: The series seeks to match the performance of the
Morgan Stanley Capital International EAFE(R) Index ("EAFE(R) Index"), which
emphasizes major market stock performance of companies in Europe, Australia and
the Far East. The series invests in a statistically selected sample of the
securities found in the EAFE(R) Index.
FEDERATED INSURANCE SERIES
Certain subaccounts invest in corresponding series of the Federated
Insurance Series. The following series are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the series is to seek current income by investing primarily in U.S.
government securities, including mortgage-backed securities issued by U.S.
government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the series
is to seek high current income by investing primarily in a diversified portfolio
of high-yield, lower-rated corporate bonds.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
A certain subaccount invests in a corresponding series of The Universal
Institutional Funds, Inc. The following series is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the series is to seek
long-term capital appreciation by investing primarily in equity securities of
companies that the investment advisor expects to benefit from their involvement
in technology and technology-related industries.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Certain subaccounts invest in Class 2 shares of the corresponding fund of
the Franklin Templeton Variable Insurance Products Trust. The following funds
are currently available:
MUTUAL SHARES SECURITIES FUND: The primary investment objective of the fund
is capital appreciation with income as a secondary objective. The Mutual Shares
Securities Fund invests primarily in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET STRATEGY FUND: The investment objective of the fund is a
high level of total return. The Templeton Asset Strategy Fund invests in stocks
of companies of any nation, bonds of companies and governments of any nation and
in money market instruments. Changes in the asset mix will be made in an attempt
to capitalize on total return potential produced by changing economic conditions
throughout the world, including emerging market countries.
TEMPLETON DEVELOPING MARKETS SECURITIES FUND: The investment objective of
the fund is long-term capital appreciation. The Templeton Developing Markets
Securities Fund invests primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL SECURITIES FUND: The investment objective of the
fund is long-term capital growth. The Templeton International Securities Fund
invests primarily in stocks of companies located outside the United States,
including emerging markets.
TEMPLETON GROWTH SECURITIES FUND: The investment objective of the fund is
long-term capital growth. The Templeton Growth Securities Fund invests primarily
in common stocks issued by companies in various nations throughout the world,
including the U.S. and emerging markets.
WANGER ADVISORS TRUST
Certain subaccounts invest in corresponding series of the Wanger Advisors
Trust. The following series are currently available:
WANGER FOREIGN FORTY: The investment objective of the series is to seek
long-term capital growth. The Wanger Foreign Forty invests primarily in equity
securities of foreign companies with market capitalization of $1 billion to $10
billion and focuses its investments in 40 to 60 companies in the developed
markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the series is to
seek long-term capital growth. The Wanger International Small Cap invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the series is to seek long-term
capital growth. The Wanger Twenty invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the series is to seek
long-term capital growth. The Wanger U.S. Small Cap invests primarily in
securities of U.S. companies with total common stock market capitalization of
less than $1 billion.
16
<PAGE>
Each series will be subject to market fluctuations and the risks that come
with the ownership of any security, and there can be no assurance that any
series will achieve its stated investment objective.
In addition to being sold to the Account, shares of the funds also may be
sold to other separate accounts of Phoenix or its affiliates or to the separate
accounts of other insurance companies.
It is possible that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the fund(s) simultaneously. Although neither we nor the fund(s)
trustees currently foresee any such disadvantages either to variable life
insurance policyowners or to variable annuity contract owners, the funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance policyowners and variable annuity contract
owners and to determine what action, if any, should be taken in response to such
conflicts. Material conflicts could, for example, result from (1) changes in
state insurance laws, (2) changes in federal income tax laws, (3) changes in the
investment management of any portfolio of the fund(s) or (4) differences in
voting instructions between those given by variable life insurance policyowners
and those given by variable annuity contract owners. We will, at our own
expense, remedy such material conflicts, including, if necessary, segregating
the assets underlying the variable life insurance policies and the variable
annuity contracts and establishing a new registered investment company.
INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
[bullet] Phoenix-Goodwin Money Market Series
[bullet] Phoenix-Goodwin Multi-Sector Fixed Income Series
[bullet] Phoenix-Hollister Value Equity Series
[bullet] Phoenix-Oakhurst Balanced Series
[bullet] Phoenix-Oakhurst Growth and Income Series
[bullet] Phoenix-Oakhurst Strategic Allocation Series
Based on subadvisory agreements with the fund, PIC as an investment advisor
delegates certain investment decisions and research functions to subadvisors for
the following series:
[diamond] Phoenix-Aberdeen International Advisors, LLC ("PAIA")
[bullet] Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Capital Growth Series
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[bullet] Phoenix-Seneca Strategic Theme Series
Phoenix Variable Advisors, Inc. ("PVA") is also an investment advisor to The
Phoenix Edge Series Fund. Based on subadvisory agreements with the fund, PVA
delegates certain investment decisions and research functions to the following
subadvisors for the series listed:
[diamond] Bankers Trust Company
[bullet] Phoenix-Bankers Trust Dow 30 Series
[diamond] Federated Investment Management Company
[bullet] Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix-J.P. Morgan Research Enhanced Index Series
[diamond] Janus Capital Corporation
[bullet] Phoenix-Janus Equity Income Series
[bullet] Phoenix-Janus Flexible Income Series
[bullet] Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management
[bullet] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is PAIA.
Pursuant to subadvisory agreements with the fund, PAIA delegates certain
investment decisions and research functions with respect to the Phoenix-Aberdeen
New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect less than wholly owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix Home Life Mutual Insurance Company and by Aberdeen Fund
Managers, Inc. PVA is a wholly owned subsidiary of PM Holdings, Inc.
The additional investment advisors and their respective funds are:
[diamond] Bankers Trust Company
[bullet] EAFE(R) Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Franklin Mutual Advisers, LLC
[bullet] Mutual Shares Securities Fund
[diamond] Morgan Stanley Asset Management
[bullet] Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Securities Fund
[diamond] Templeton Global Advisors Limited
[bullet] Templeton Growth Securities Fund
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[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Strategy Fund
[bullet] Templeton International Securities Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The advisors continually furnish an investment program for each series and
manage the investment and reinvestment of the assets of each series subject at
all times to the authority and supervision of the Trustees. A detailed
discussion of the investment advisors and subadvisors, and the investment
advisory and subadvisory agreements, is contained in the accompanying prospectus
for the funds.
MVA
- --------------------------------------------------------------------------------
The MVA is an account that pays interest at a guaranteed rate if held to
maturity. If amounts are withdrawn, transferred or applied to an annuity option
before the end of the guarantee period, a market value adjustment will be made.
Assets allocated to the MVA are not part of the assets allocated to the Account
or to the general account of PHL Variable. The MVA is more fully described in a
separate prospectus.
For additional information concerning the funds and the MVA, please see the
accompanying prospectuses, which should be read carefully before investing.
GIA
- --------------------------------------------------------------------------------
In addition to the Account, you may allocate premium or transfer policy
value to the GIA. Amounts you allocate or transfer to the GIA become part of PHL
Variable's general account assets. You do not share in the investment experience
of those assets. Rather, we guarantee a 3% rate of return on your allocated
amount. Although we are not obligated to credit interest at a higher rate than
the minimum, we will credit any excess interest as determined by us based on
expected investment yield information.
Because of exemptive and exclusionary provisions, we have not registered
interests in our general account under the Securities Act of 1933. Also, we have
not registered our general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
of its interests are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities law
regarding accuracy and completeness of statements made in this prospectus.
We reserve the right to limit total deposits to the GIA, including
transfers, to no more than $250,000 during any one-week period per policy.
In general, you can make only one transfer per year from the GIA. The amount
that can be transferred out is limited to the greater of $1,000 or 25% of the
contract value in the GIA as of the date of the transfer. If you elect the
Dollar Cost Averaging Program, approximately equal amounts may be transferred
out of the GIA. Also, the total policy value allocated to the GIA may be
transferred out to one or more of the subaccounts over a consecutive 4-year
period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the GIA and among the subaccounts may be made at any time.
Transfers from the GIA are subject to the rules discussed above and in "The
Accumulation Period--Transfers and Dollar Cost Averaging Program."
PURCHASE OF CONTRACTS
- --------------------------------------------------------------------------------
MINIMUM PAYMENTS
Generally, we require minimum payments of:
MINIMUM MINIMUM
PLAN TYPE INITIAL SUBSEQUENT
PAYMENT PAYMENT *
- ------------------------ ------------------- -------------------
Non-qualified
plans $10,000 $500
- ------------------------ ------------------- -------------------
Individual Retirement
Annuity ("IRA") $2,000 $100
- ------------------------ ------------------- -------------------
* You may authorize your bank to draw from your personal checking account
monthly to purchase units in any available subaccount, or for deposit in the
GIA or MVA. The amount you designate will be automatically invested on the
date the bank draws on your account. If you elect a bank draft program, the
minimum subsequent payment is $25.
In certain circumstances we may reduce the initial or subsequent premium
payment amount we accept for a contract. Factors in determining qualifications
for any such reduction include:
(1) the make-up and size of the prospective group;
(2) the method and frequency of premium payments; and
(3) the amount of compensation to be paid to Registered Representatives on
each premium payment.
Any reduction will not unfairly discriminate against any person. We will
make any such reduction according to our own rules in effect at the time the
premium payment is received. We reserve the right to change these rules from
time to time.
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BONUS PAYMENT
We add a bonus payment to your contract value each time we receive a
purchase payment from you. The bonus payment is made from our general account.
The bonus payment is allocated among the subaccounts, MVA or GIA according to
the same allocation schedule in effect for purchase payments. If you return the
contract under the right to cancel provision (Free Look) the amount returned to
you will not include the amount of any bonus payments made by us.
The amount of the bonus payment varies depending upon which benefit option
you selected. The amount of bonus payment under the benefit option elected is a
percentage of each purchase payment and are as follows:
- -------------------------------- ------------------------------
OPTION 1 - RETURN OF OPTION 2 - ANNUAL
PREMIUM STEP-UP
- -------------------------------- ------------------------------
5% of purchase payment 4% of purchase payment
- -------------------------------- ------------------------------
Bonus payments are treated as an increase in the "investment in the
contract" (gain) for tax purposes.
PAYMENT ALLOCATION
Payments received under the contracts will be allocated in any combination
to any subaccount, GIA or MVA, in the proportion specified in the application
for the contract or as otherwise indicated by you from time to time. Changes in
the allocation of payments will be effective as of receipt by VAMO of notice of
election in a form satisfactory to us (either in writing or by telephone) and
will apply to any payments accompanying such notice or made subsequent to the
receipt of the notice, unless otherwise requested by you.
GENERAL
Usually, a contract may not be purchased for a proposed annuitant who is 81
years of age or older. Total payments in excess of $1,000,000 cannot be made
without our permission. While the annuitant is living and the contract is in
force, payments may be made anytime before the maturity date of a contract.
We reserve the right not to accept future purchase payments. We will provide
you 60 days written notice if we choose not to accept a payment.
DEDUCTIONS AND CHARGES
- --------------------------------------------------------------------------------
DEDUCTIONS FROM THE SEPARATE ACCOUNT
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, our
status within those states and the insurance tax laws of those states. Premium
taxes on contracts currently range from 0% to 3.5%. We will pay any premium tax
due and will reimburse Phoenix only upon the earlier of either full or partial
surrender of the contract, the maturity date or payment of death proceeds. For a
list of states and premium taxes, see Appendix C to this prospectus.
SURRENDER CHARGES
A deduction for surrender charges for this contract may be taken from
proceeds of partial withdrawals from, or complete surrender of the contract. The
amount (if any) of a surrender charge depends on whether your premium payments
are held under the contract for a certain period of time. The surrender charge
schedule is shown in the chart below. No surrender charge will be taken from
death proceeds. No surrender 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 surrender charge is imposed on a first-in,
first-out basis.
Each year you may withdraw part of your contract value free of any surrender
charges. During the first contract year, you may withdraw up to 10% of the
contract value as of the date of the first partial withdrawal without surrender
charges. After that, each year you may withdraw up to 10% of your contract value
as of the last contract anniversary without surrender charges.
The deduction for surrender charges, expressed as a percentage of the amount
withdrawn in excess of the 10% allowable amount, is as follows:
- ---------------------------------------------------------------
Percent 8% 8% 8% 7% 6% 5% 4% 3% 0%
- ---------------------------------------------------------------
Age of Payment in 0 1 2 3 4 5 6 7 8+
Complete Years
- ---------------------------------------------------------------
If the annuitant or owner dies before the maturity date of the contract, the
surrender charge described in the table above will not apply.
The total deferred surrender charges on a contract will never exceed 9% of
total payments, and the applicable level of surrender charge cannot be changed
with respect to outstanding contracts. Surrender charges imposed in connection
with partial surrenders will be deducted from the subaccounts, GIA and MVA on a
pro rata basis. Any distribution costs not paid for by surrender charges will be
paid by PHL Variable from the assets of the General Account.
MORTALITY AND EXPENSE RISK FEE
We make a daily deduction from each subaccount for the mortality and expense
risk charge. The fee is based on an annual rate of 1.475% and is taken against
the daily net assets of the subaccounts. Although you bear the investment risk
of the series in which you invest, once you begin receiving annuity payments
that carry life contingencies the annuity payments are guaranteed by us to
continue for as long as the annuitant lives. We assume the risk that annuitants
as a class may live longer than expected (requiring a greater number of annuity
payments) and that our actual expenses may be higher than the expense charges
provided for in the contract.
In assuming the mortality risk, we promise to make these lifetime annuity
payments to the owner or other payee
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for as long as the annuitant lives according to the annuity tables and other
provisions of the contract.
No mortality and expense risk charge is deducted from the GIA or MVA. If the
charges prove insufficient to cover actual administrative costs, then the loss
will be borne by us; conversely, if the amount deducted proves more than
sufficient, the excess will be a profit to us. Any such profit may be used, as
part of our General Account assets, to meet sales expenses, if any, which are in
excess of sales commission revenue generated from any surrender charges.
ADMINISTRATIVE FEE
We make a daily deduction from account value to cover the costs of
administration. This fee is based on an annual rate of 0.125% and is taken
against the net assets of the subaccounts. It compensates the Company for
administrative expenses that exceed revenues from the Administrative Charge
described below. (This fee is not deducted from the GIA or MVA.)
ADMINISTRATIVE CHARGE
We deduct an administrative charge from the contract value. This charge is
used to reimburse us for some of the administrative expenses we incur in
establishing and maintaining the contracts.
The maximum administrative maintenance charge under a contract is $35. This
charge is deducted annually on the contract anniversary date. It is deducted on
a pro rata basis from the subaccounts, GIA or MVA in which you have an interest.
If you fully surrender your contract, the full administrative fee if applicable,
will be deducted at the time of withdrawal. The administrative charge will not
be deducted (either annually or upon withdrawal) if your contract value is
$50,000 or more on the day the administrative charge is due. This charge may be
decreased but will never increase. If you elect Payment Options I, J, K, M or N,
the annual administrative charge after the maturity date will be deducted from
each annuity payment in equal amounts.
REDUCED CHARGES, INCREASED BONUS PAYMENTS AND ENHANCED GUARANTEED INTEREST RATES
We may reduce or eliminate the mortality and expense risk fee and the
surrender or annual administrative charge, credit increased bonus payments, or
grant enhanced Guaranteed Interest Rates when sales of the contracts are made to
certain individuals or groups of individuals that result in savings of sales
expenses. We will consider the following characteristics:
(1) the size and type of the group of individuals to whom the contract is
offered;
(2) the amount of anticipated premium payments;
(3) whether there is a preexisting relationship with the Company such as being
an employee of the Company or its affiliates and their spouses; or to
employees or agents who retire from the Company or its affiliates or Phoenix
Equity Planning Corporation ("PEPCO"), or its affiliates or to registered
representatives of the principal underwriter and registered representatives
of broker-dealers with whom PEPCO has selling agreements;
(4) internal transfers from other contracts issued by the Company or an
affiliate, or making transfers of amounts held under qualified plans
sponsored by the Company or an affiliate; and
(5) the amount of compensation to be paid to Registered Representatives on each
purchase payment.
Any reduction or elimination of charges or increases in bonus payments or
Guaranteed Interest Rate enhancements will not be unfairly discriminatory
against any person. We will make any such adjustment according to our own rules
in effect at the time the contract is issued. We reserve the right to change
these rules from time to time.
MARKET VALUE ADJUSTMENT
Any withdrawal from your MVA will be subject to a market value adjustment.
See the accompanying MVA prospectus for information relating to this option.
OTHER CHARGES
As compensation for investment management services, the Advisors are
entitled to a fee, payable monthly and based on an annual percentage of the
average daily net asset values of each series. These fund charges and other fund
expenses are described more fully in the accompanying fund prospectuses.
THE ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
The accumulation period is that time before annuity payments begin during
which your payments into the contract remain invested.
ACCUMULATION UNITS
Your Initial payments will be applied within two days of our receipt if the
application for a contract is complete. If an incomplete application is
completed within five business days of receipt by VAMO, your payment will be
applied within two days of the completion of the application. If VAMO does not
accept the application within five business days or if an order form is not
completed within five business days of receipt by VAMO, then your payment will
be immediately returned unless you request us to hold it while the application
is completed. Additional payments allocated to the GIA or MVA are deposited on
the date of receipt of payment at VAMO. Additional payments allocated to
subaccounts are used to purchase accumulation units of the subaccount(s), at the
value of such units next determined after the receipt of the payment at VAMO.
The number of accumulation units of a subaccount purchased with a specific
payment will be determined by dividing the payment by the value of an
accumulation unit in that subaccount next determined after receipt of the
payment. The value of the accumulation units of a subaccount will
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vary depending upon the investment performance of the applicable series of the
funds, the expenses charged against the fund and the charges and deductions made
against the subaccount.
ACCUMULATION UNIT VALUES
On any date before the maturity date of the contract, the total value of the
accumulation units in a subaccount can be computed by multiplying the number of
such units by the value of an accumulation unit on that 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
credited to you in each subaccount and their current value will be reported to
you at least annually.
TRANSFERS
You may at anytime prior to the maturity date of your contract, elect to
transfer all or any part of the contract value among one or more subaccounts,
the GIA or MVA. A transfer from a subaccount will result in the redemption of
accumulation units and, if another subaccount is selected, in the purchase of
accumulation units. The exchange will be based on the values of the accumulation
units next determined after the receipt by VAMO of written notice of election in
a form satisfactory to us. A transfer among subaccounts, the GIA or MVA does not
automatically change the payment allocation schedule of your contract.
You may also request transfers and changes in payment allocations among
available subaccounts, the GIA or MVA by calling VAO at 800/541-0171 between the
hours of 8:30 a.m. and 4:00 p.m. Eastern Time on any valuation date. Unless you
elect in writing not to authorize telephone transfers or allocation changes,
telephone transfer orders and allocation changes will also be accepted on your
behalf from your registered representative. We will employ reasonable procedures
to confirm that telephone instructions are genuine. We will require verification
of account information and will record telephone instructions on tape. All
telephone transfers and allocation changes will be confirmed in writing to you.
To the extent that procedures reasonably designed to prevent unauthorized
transfers are not followed, we may be liable for following telephone
instructions for transfers that prove to be fraudulent. However, you will bear
the risk of loss resulting from instructions entered by an unauthorized third
party we reasonably believe to be genuine. These telephone exchange and
allocation change privileges may be modified or terminated at any time. In
particular, during times of extreme market volatility, telephone privileges may
be difficult to exercise. In such cases you should submit written instructions.
Unless we otherwise agree or unless the Dollar Cost Averaging Program has
been elected, (see below), you may make only one transfer per contract year from
the GIA. Nonsystematic transfers from the GIA and MVA will be made on the date
of receipt by VAMO except as you may otherwise request. For nonsystematic
transfers, the amount that may be transferred from the GIA at any one time
cannot exceed the greater of $1,000 or 25% of the contract value in the GIA at
the time of transfer. For nonsystematic transfers from the MVA, the market value
adjustment may be applied. See the accompanying MVA prospectus for more
information.
Because excessive trading can hurt fund performance and harm all contract
owners, we reserve the right to temporarily or permanently terminate exchange
privileges or reject any specific order from anyone whose transactions seem to
follow a timing pattern, including those who request more than one exchange out
of a subaccount within any 30-day period. We will not accept batch transfer
instructions from registered representatives (acting under powers of attorney
for multiple contract owners), unless we have entered into a third-party
transfer service agreement with the registered representative's broker-dealer
firm.
No surrender charge will be assessed when a transfer is made. The date a
payment was originally credited for the purpose of calculating the surrender
charge will remain the same. Currently, there is no charge for transfers;
however, we reserve the right to charge a transfer fee of $10 per transfer after
the first two transfers in each contract year to defray administrative costs.
Currently, unlimited transfers are permitted; however, we reserve the right to
change our policy to limit the number of transfers made during each contract
year. However, you will be permitted at least six transfers during each contract
year. There are additional restrictions on transfers from the GIA as described
above and in Appendix B. See the MVA prospectus for information regarding
transfers from the MVA.
We reserve the right to limit the number of subaccounts you may elect to a
total of 18 over the life of the contract unless changes in federal and/or state
regulation, including tax, securities and insurance law require us to impose a
lower limit.
Currently, contracts in the annuity period are not able to make transfers
between subaccounts.
OPTIONAL PROGRAMS AND BENEFITS
DOLLAR COST AVERAGING PROGRAM
You also may elect to transfer funds automatically among the subaccounts or
GIA on a monthly, quarterly, semiannual or annual basis under the Dollar Cost
Averaging Program. Generally, the minimum initial and subsequent transfer
amounts are $25 monthly, $75 quarterly, $150 semiannually or $300 annually. You
must have an initial value of $2,000 in the GIA or in the subaccount from which
funds will be transferred (sending subaccount), and if the value in that
subaccount or the GIA drops below the amount to be transferred, the entire
remaining balance will be transferred and no more systematic transfers will be
processed. Also, payments of $1,000,000 or more require
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our approval before we will accept them for processing. Funds may be transferred
from only one sending subaccount or from the GIA but may be allocated to
multiple receiving subaccounts. Under the Dollar Cost Averaging Program, you may
transfer approximately equal amounts from the GIA over a period of 6 months or
longer. Transfers under the Dollar Cost Averaging Program are not subject to the
general restrictions on transfers from the GIA. This program is not available
for the MVA.
Upon completion of the Dollar Cost Averaging Program, you must notify VAO at
800/541-0171 or in writing to VAO to start another Dollar Cost Averaging
Program.
All transfers under the Dollar Cost Averaging Program will be executed on
the basis of values as of the first of the month rather than on the basis of
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.
The Dollar Cost Averaging Program is not available to individuals who invest
via a bank draft program or while the Asset Rebalancing Program is in effect.
Dollar Cost Averaging does not ensure a profit nor guarantee against a loss
in a declining market. There is no charge associated with participation in this
program.
ASSET REBALANCING PROGRAM
Under the Asset Rebalancing Program, we transfer funds among the subaccounts
to maintain the percentage allocation you have selected among these subaccounts.
At your election, we will make these transfers on a monthly, quarterly,
semiannual or annual basis.
Asset Rebalancing does not permit transfers to or from the GIA or the MVA.
The Asset Rebalancing Program does not ensure a profit nor guarantee against
a loss in a declining market. There is no charge associated with participation
in this program.
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. Prior to the maturity date, you may withdraw up to 10%
of the contract value in a contract year, either in a lump sum or by multiple
scheduled or unscheduled partial withdrawals, without the imposition of a
surrender charge. During the first contract year, the 10% withdrawal without a
surrender charge will be determined based on the contract value at the time of
the first partial withdrawal. In all subsequent years, the 10% will be based on
the previous contract anniversary value. A signed written request for withdrawal
must be sent to VAMO. If you have not yet reached age 59 1/2, a 10% penalty tax
may apply on taxable income withdrawn. See "Federal Income Taxes." The
appropriate number of accumulation units of a subaccount will be redeemed at
their value next determined after the receipt by VAMO of a written notice in a
form satisfactory to us. accumulation units redeemed in a partial withdrawal
from multiple subaccounts will be redeemed on a pro rata basis unless you
designate otherwise. Contract values in the GIA or MVA will also be withdrawn on
a pro rata basis unless you designate otherwise. Withdrawals from the MVA may be
subject to the market value adjustment. See the accompanying MVA prospectus for
more information. 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." A deduction for surrender charges may be imposed on partial
withdrawals from, and complete surrender of, a contract. See "Surrender
Charges." Any surrender 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 Phoenix Variable Annuity Mail Operations, PO Box 8027,
Boston, Massachusetts 02266-8027.
LAPSE OF CONTRACT
The contract will terminate and lapse without value, if on any valuation
date:
[diamond] The contract value is zero; or
[diamond] The annual Administrative Charge or premium tax reimbursement due on
either a full or partial surrender is greater than or equal to the
contract value (unless any contract value has been applied under one
of the variable payment options).
PHL Variable will notify you in writing that the contract has lapsed.
PAYMENT UPON DEATH BEFORE MATURITY DATE
WHO RECEIVES PAYMENT
[diamond] DEATH OF AN OWNER/ANNUITANT
If the owner/annuitant dies before the contract maturity date, the
death benefit will be paid under the contract to the annuitant's
beneficiary.
[diamond] DEATH OF AN ANNUITANT WHO IS NOT THE OWNER
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.
[diamond] DEATH OF AN OWNER WHO IS NOT THE ANNUITANT
Upon the death of an owner who is not the annuitant, provided that
there is no surviving joint owner, the death proceeds will be paid to
the owner's beneficiary.
[diamond] SPOUSAL BENEFICIARY CONTRACT CONTINUANCE
If the spousal beneficiary continues the contract at the death of the
an owner/annuitant or owner who is not
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also the annuitant, the spousal beneficiary becomes the annuitant.
The benefit option in effect at the death of an owner/annuitant or an
owner will also apply to the spousal beneficiary.
[diamond] CONTINGENT ANNUITANT CONTRACT CONTINUANCE
Upon the death of the annuitant who is not the owner provided a
contingent annuitant was named prior to the death of the annuitant
the contract will continue with the contingent annuitant becoming the
annuitant. The benefit option in effect at the death of the annuitant
will also apply to the contingent annuitant.
[diamond] OWNERSHIP OF THE CONTRACT BY A NON-NATURAL PERSON
If the owner is not an individual, the death of the annuitant is
treated as the death of the owner.
AMOUNT OF PAYMENT BEFORE AGE 80
Upon the death of the annuitant or owner/annuitant who has not yet reached
age 80.
[diamond] OPTION 1--RETURN OF PREMIUM
The greater of:
a) 100% of payments, less adjusted partial withdrawals; and
b) the contract value on the claim date.
[diamond] OPTION 2--ANNUAL STEP-UP
The greater of:
a) 100% of payments, less adjusted partial withdrawals; or
b) the contract value on the claim date; and
c) the annual step-up amount on the claim date.
AMOUNT OF PAYMENT AFTER AGE 80
After the annuitant's 80th birthday, the death benefit (less any deferred
premium tax) equals:
[diamond] OPTION 1--RETURN OF PREMIUM
The greater of:
a) the sum of 100% of premium payments less adjusted partial
withdrawals on the claim date; or
b) the contract value on the claim date.
[diamond] OPTION 2--ANNUAL STEP-UP
The greater of:
a) the death benefit in effect prior to the annuitant turning age 80,
plus the sum of 100% of premium payments less adjusted partial
withdrawals made since the contract year that the annuitant
reached age 80; or
b) the contract value on the claim date.
[diamond] DEATH OF AN OWNER WHO IS NOT THE ANNUITANT
The amount of death benefit payable is equal to the greater of:
[bullet] 100% of payments, less withdrawals; and
[bullet] the contract value on the claim date.
BECAUSE THE DEATH BENEFIT IN THIS SITUATION EQUALS THE GREATER OF PREMIUMS
PAID AND THE CONTRACT VALUE, AN OWNER WHO IS NOT THE ANNUITANT SHOULD
SERIOUSLY CONSIDER WHETHER BENEFIT OPTION 2 IS SUITABLE FOR THEIR
CIRCUMSTANCES
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." See also "Distribution at Death" under "Federal Income Taxes."
We reserve the right to discontinue offering any one of the available death
benefit options in the future.
THE ANNUITY PERIOD
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The annuity period is that period of time beginning after the end of the
accumulation period and during which payments to you are made.
VARIABLE ACCUMULATION ANNUITY CONTRACTS
Annuity payments will begin on the contract's maturity date if the annuitant
is alive and the contract is still in force. Beginning on the maturity date,
investment in the Account is continued unless a Fixed Payment Annuity is
elected. No surrender charge is taken. Each contract will provide, at the time
of its issuance, for a Variable Payment Life Expectancy Annuity (Option L)
unless you elect a different annuity option. See "Annuity Options." Under a
Variable Payment Life Expectancy Annuity, annuity payments are made on a monthly
basis over the annuitant's annually recalculated life expectancy or the annually
recalculated life expectancy of the annuitant and joint annuitant. A contract
owner may at anytime request unscheduled withdrawals representing part or all of
the remaining contract value. 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.
If the amount to be applied on the maturity date is less than $2,000, we 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, we may
make a single sum payment equal to the total contract value on the date the
initial payment would be payable, or make periodic payments quarterly,
semiannually or annually in place of monthly payments.
Each contract specifies a provisional maturity date at the time of its
issuance. You may subsequently elect a different maturity date. The maturity
date may not be earlier than the fifth contract anniversary or later than the
contract anniversary nearest the annuitant's 95th birthday unless the contract
is issued in connection with certain qualified plans. Generally, under
Individual Retirement Accounts, the maturity date must be such that
distributions begin no later
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than April 1st of the calendar year following the year in which the employee
attains age 70 1/2.
The maturity date election must be made by written notice and must be
received by VAMO 30 days before the provisional maturity date. If you do not
elect a maturity date, which is different from the provisional maturity date,the
provisional maturity date becomes the maturity date. Particular care should be
taken in electing the maturity date of a contract issued under an IRA plan. See
"Individual Retirement Accounts."
ANNUITY OPTIONS
You may choose among the available annuity options by written request.
Contract owners should direct their choice of annuity option in writing to:
Phoenix Variable Products Operations, P.O. Box 8027, Boston, MA 02266-8027. If
we do not receive written instruction satisfactory to us on or before the
maturity date, we will apply your contract value to Option L, described below.
The options allow you to choose:
[diamond] Fixed Payments (Options A, B, D, E, F, G, H): PHL Variable guarantees
a minimum rate of return for these options.
[diamond] Variable Payments (Options I, J, K, L, M, N): Payments under these
options depend on subaccount investment performance. There is no
guaranteed minimum payment or rate of return.
The level of annuity payments will depend on the option selected and such
factors as the age of the annuitant, the form of annuity, annuity payment rates,
and the frequency of payments. The contract and the SAI provide additional
information on the methods used for calculating annuity payments.
The assumed investment rate for variable options is 4.5% on an annual basis.
The assumed rate is used to calculate the first annuity payment under variable
payment options I, J, K, M and N.
We make daily deductions from contract values held in subaccounts for
mortality and expense risk charges and an administrative fee. These charges
affect all the variable payment options. Note that even though PHL Variable
assumes no mortality risk under Option K, a mortality charge is still deducted.
The following descriptions should allow you to compare the basic differences
of the currently available annuity options. You should contact VAMO well in
advance of the date you wish to elect an option for payment estimates under each
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 10-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.
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 for the life of
the survivor. The amount to be paid 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 surviving 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 annuitant's
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 for the life of
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
five 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
annuitant's beneficiary until the end of the elected period certain.
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OPTION I--VARIABLE PAYMENT LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
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 annuitant's beneficiary until the end of the 10-year period. The
10-year period provides a total of 120 monthly payments. Payments will vary as
to dollar amount, based on the investment experience of the subaccounts in which
proceeds are invested.
OPTION J--JOINT SURVIVOR VARIABLE PAYMENT LIFE ANNUITY WITH 10-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 10-year period
certain. Payments will vary as to dollar amount, based on the investment
experience of the subaccounts in which proceeds are invested. 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. This option is not available for payment of any death benefit under
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 at anytime request
unscheduled withdrawals representing part or all of the remaining contract value
less any applicable contingent deferred surrender charge.
OPTION L--VARIABLE PAYMENT LIFE EXPECTANCY ANNUITY
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 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 at anytime request
unscheduled withdrawals representing part or all of the remaining contract value
less any applicable contingent deferred surrender charge. 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
We may offer other annuity options at the time a contract reaches its
maturity date. In addition, in the event that annuity payment rates for
contracts are at that time more favorable than the applicable rates guaranteed
under the contract, the then current settlement rates shall be used in
determining the amount of any annuity payment under the Annuity Options above.
OTHER CONDITIONS
Federal income tax requirements also provide that participants in regular or
SIMPLE IRAs must begin minimum distributions by April 1 of the year following
the year in which they attain age 70 1/2. Minimum distribution requirements do
not apply to Roth IRAs. Any required minimum 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 IRA participants. Any annuity options
elected under regular or Simple IRA contracts must also meet federal income tax
distribution requirements. Requests to elect this program must be made in
writing.
Under the LED program, regardless of contract year, amounts up to the
required minimum distribution may be withdrawn without a deduction for surrender
charges, even if the minimum distribution exceeds the 10% allowable amount. See
"Surrender Charges." Any amounts withdrawn that have not been held under a
contract for at least six years and are in excess of both the minimum
distribution and the 10% free available amount will be subject to any applicable
surrender charge.
If the initial monthly annuity payment under an Annuity Option would be less
than $20, we 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, semiannually
or annually in place of monthly payments.
Currently, transfers between subaccounts are not available for amounts
allocated to any of the variable payment annuity options.
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 us, we 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, we will pay any remaining annuity payments to the
annuitant's beneficiary according to the
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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, we 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
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VALUATION DATE
A valuation date is every day the NYSE is open for trading. The NYSE is
scheduled to be closed on the following days: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The Board of Directors of the
NYSE reserves the right to change this schedule as conditions warrant. On each
valuation date, the value of the Account is determined at the close of the NYSE
(currently 4:00 p.m. Eastern Time).
VALUATION PERIOD
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 a subaccount. 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. After the first valuation
period, the accumulation unit value reflects the cumulative investment
experience of that subaccount.
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 depending on whether the assets gained
or lost value that day. To determine the net investment rate for any valuation
period for the funds allocated to each subaccount, the following steps are
taken: (a) the aggregate accrued investment income and capital gains and losses,
whether realized or unrealized, of the subaccount 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 subaccount at the beginning of the valuation
period.
MISCELLANEOUS PROVISIONS
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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 VAMO 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 to us.
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 VAMO. However, we may postpone payment
of the value of any accumulation units at times (a) when the NYSE is closed,
other than customary weekend and holiday closings, (b) when trading on the NYSE
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
practicable to determine the contract value or (d) when a governmental body
having jurisdiction over us 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
We may mail the contract to you or we may deliver it to you in person. You
may surrender a contract for any reason within 10 days after you receive it and
receive in cash the adjusted value of your initial payment calculated without
regard to any bonus payment. (A longer Free Look Period may be required by your
state.) You may receive more or less than your initial payment depending on
investment experience within the subaccounts during the Free Look Period. If a
portion or all of your initial payment has been allocated to the GIA, we also
will refund any earned interest. If a portion or all of your initial payment has
been allocated to the MVA, we will apply the market value adjustment that can
increase or decrease your initial payment. If applicable state law requires, we
will return the full amount of any payments we received from you or on your
behalf.
If you return the contract under the right to cancel provision (Free Look)
the amount returned to you will be determined as if there had been no bonus
payments made by us.
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During periods of extreme market volatility, we reserve the right to make
the Temporary Money Market Allocation Amendment available. In states that
require return of premium during the Free Look Period, we will allocate those
portions of your initial payment designated for the subaccounts to the
Phoenix-Goodwin Money Market subaccount and those portions designated for the
GIA and MVA will be allocated to those Accounts. At the expiration of the Free
Look Period, the value of the accumulation units held in the Phoenix-Goodwin
Money Market subaccount will be allocated among the available subaccounts in
accordance with your allocation instructions on the application.
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 that necessitates a corresponding change
in the prospectus or the SAI must be filed with the SEC.
SUBSTITUTION OF FUND SHARES
Although we believe it to be highly unlikely, it is possible that in the
judgment of our 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, we may seek to substitute the shares of
another series or the shares of an entirely different 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 advisor should be consulted
before any such transfer is attempted.
FEDERAL INCOME TAXES
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INTRODUCTION
The contracts are designed for use with retirement plans which may or may
not be tax-qualified plans under the provisions of the Internal Revenue Code of
1986, (the "Code"). The contracts may be used to establish regular, Simple and
Roth IRAs. The contracts will not be issued in connection with other
tax-qualified plans such as employer-sponsored or tax-sheltered annuity plans.
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 our 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. The income tax rules are complicated and this discussion can only make
you aware of the issues. Each person concerned should consult a professional tax
advisor. 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 our 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 "IRS"). We do not guarantee the tax status of the
contracts. Purchasers bear the complete risk that the contracts may not be
treated as "annuity contracts" under federal income tax laws. For a discussion
of federal income taxes as they relate to the funds, please see the accompanying
prospectuses for the funds.
INCOME TAX STATUS
We are taxed as a life insurance company under Part 1 of Subchapter 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 Subchapter 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 us. We reserve the right to make a deduction for taxes should
they be imposed on us 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. However, in certain cases 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."
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 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 payments
(premiums paid) by or on behalf of an individual under a contract that have not
been excluded from the individual's gross income. However,
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under most regular and all Simple IRAs there will 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. For Roth IRAs, there will generally be no
taxable amount on distributions made after age 59 1/2 and after five years from
the contract issue date. The taxable portion is taxed as ordinary income in an
amount equal to the value of the amount received on account of a total or
partial surrender of a contract. 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.
SURRENDERS OR WITHDRAWALS ON OR AFTER THE CONTRACT MATURITY DATE
Upon receipt of a lump sum payment under the contract, the recipient is
taxed on the portion of the payment that exceeds the investment in the contract.
Ordinarily, such taxable portion is taxed as ordinary income.
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. For certain regular IRAs and all Simple IRAs, there may be no
investment in the contract resulting in the full amount of the payments being
taxable. A simplified method of determining the exclusion ratio is effective
with respect to qualified plan annuities starting after November 18, 1996.
Withholding of federal income taxes on all distributions may be required
unless the recipient elects not to have any amounts withheld and properly
notifies VAMO of that election.
PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS
Amounts surrendered or distributed before the taxpayer reaches age 59 1/2
are subject to a penalty tax 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 or her beneficiary; (iv) allocable to
investment in the contract before August 14, 1982; (v) under a qualified funding
asset (as defined in Code Section 130(d)); (vi) under an immediate annuity
contract (as defined in Code Section 72(u)(4)); or (vii) 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, but only if the
modification takes place: (a) within 5 years from the date of the first payment,
or (b) before the taxpayer reaches age 59 1/2.
Separate tax withdrawal penalties apply to IRAs. See "Penalty Tax on
Surrenders and Withdrawals from IRAs."
ADDITIONAL CONSIDERATIONS
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 generally must
be distributed within five (5) years after the date of death, or if payable to a
designated beneficiary, may be annuitized over the life or life expectancy of
that beneficiary and payments must begin 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.
Similar distribution requirements apply to annuity contracts under IRAs (other
than Roth IRAs). However, a number of restrictions, limitations and special
rules apply to IRAs and contract owners should consult with their tax adviser.
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 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 primary
annuitant is treated as the death of the contract owner. In addition, when the
contract owner is not an
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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,
distribution will be required at the death of the first of the contract owners.
If the contract owner or a joint contract owner dies on or after the
maturity date, the remaining payments, if any, under the Annuity Option selected
will be made at least as rapidly as under the method of distribution in effect
at the time of death.
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.
CONTRACTS OWNED BY NON-NATURAL PERSONS
If a non-natural person (for example, a corporation) holds the contract 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 an IRA, where the contract is a qualified funding asset for
structured settlements, or where the contract is purchased on behalf of an
employee upon termination of a qualified plan, and nor if the annuity contract
is an immediate annuity.
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 generally 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 are, in a Code Section 1035 exchange, 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.
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
DIVERSIFICATION REGULATIONS
To comply with the diversification regulations under Code Section 817(h)
("Diversification Regulations"), after a start-up period, each series of the
funds will be required to diversify its investments. The Diversification
Regulations generally require that, on the last day of each calendar quarter
that the series' assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
series as an asset of the Account, and each series of the funds are 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.
The U.S. Treasury Department has indicated that the Diversification
Regulations do not provide guidance regarding the circumstances in which
contract owner control of the investments of the Account will cause the contract
owner to be treated as the owner of the assets of the Account, thereby resulting
in the loss of favorable tax treatment for the contract. At this time, it cannot
be determined whether additional guidance will be provided and what standards
may be contained in such guidance. The amount of contract owner control which
may be exercised under the contract is different in some respects from the
situations addressed in published rulings issued by the IRS in which was held
that the policyowner was not the owner of the assets of the separate account. It
is unknown whether these differences, such as the contract owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the contract owner to be considered as the owner of the
assets of the Account resulting in the imposition of federal income tax to
29
<PAGE>
the contract owner with respect to earnings allocable to the contract prior to
receipt of payments under the contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling generally will be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the contract
owner being retroactively determined to be the owner of the assets of the
Account.
Due to the uncertainty in this area, we reserve the right to modify the
contract in an attempt to maintain favorable tax treatment.
We represent that we intend to comply with the Diversification Regulations
to assure that the contracts continue to be treated as annuity contracts for
federal income tax purposes.
DIVERSIFICATION REGULATIONS AND QUALIFIED PLANS
Code Section 817(h) applies to a variable annuity contract other than a
pension plan contract. The Diversification Regulations reiterate that the
diversification requirements do not apply to a pension plan contract. The IRAs
(described below) are defined as "pension plan contracts" for these purposes.
Notwithstanding the exception of IRA contracts from application of the
diversification rules, all investments of the PHL Variable IRA contracts (i.e.,
the funds) will be structured to comply with the diversification standards
because the funds serve as the investment vehicle for non-qualified contracts as
well as IRA contracts.
INDIVIDUAL RETIREMENT ANNUITY
The contracts may be used with several types of IRAs. The tax rules
applicable to IRAs vary according to the type of IRAs. No attempt is made here
to provide more than general information about the use of the contracts with the
various types of IRAs.
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The contracts sold by PHL Variable in connection
with certain IRAs which are considered sponsored by an employer for its
employees will utilize annuity tables which do not differentiate on the basis of
sex. Such annuity tables also will be available for use in connection with
certain non-qualified deferred compensation plans.
IRAS
Code Sections 408 and 408A permit 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 certain other types of qualified plans may be placed on a
tax-deferred basis into an IRA. Effective January 1, 1997, employers may
establish a new type of IRA called SIMPLE (Savings Incentive Match Plan for
Employees). Special rules apply to participants' contributions to and
withdrawals from SIMPLE IRAs. Also effective January 1, 1997, salary reduction
IRAs (SARSEP) no longer may be established. Effective January 1, 1998,
individuals may establish Roth IRAs. Special rules also apply to contributions
to and withdrawals from Roth IRAs.
PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS FROM IRAS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion
of certain early distribution from IRAs qualified under Code The penalty is
increased to 25% instead of 10% for SIMPLE IRAs if distribution occurs within
the first two years of the contract owner's participation in the SIMPLE IRA. To
the extent amounts are not includable in gross income because they have been
properly rolled over to an IRA or to another eligible IRA or qualified plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
contract owner or annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the contract owner or
annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the contract owner or annuitant (as applicable) or the joint
lives (or joint life expectancies) of such contract owner or annuitant (as
applicable) and his or her designated beneficiary; (d) distributions made to the
contract owner or annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
contract owner or annuitant (as applicable) for amounts paid during the taxable
year for medical care; (e) distributions from an IRA for the purchase of medical
insurance (as described in Section 213(d)(1)(D) of the Code) for the contract
owner and his or her spouse and dependents if the contract owner has received
unemployment compensation for at least 12 weeks. This exception will no longer
apply after the contract owner has been reemployed for at least 60 days and (f)
distributions for first-time home purchase expenses (maximum $10,000) or certain
qualified educational expenses of the contract owner, spouse, children or
grandchildren of the contract owner.
Roth IRAs are subject to the early distribution penalties described above.
In addition, Roth IRAs, which contain amounts converted from regular or Simple
IRAs, are subject to a 10% penalty if made prior to the expiration of the
five-year holding period beginning with the year of the conversion.
Generally, distributions from regular and Simple IRAs must commence no
later than April 1 of the calendar year following the year in which the contract
owner attains age
30
<PAGE>
70 1/2. The required distribution rules do not apply to Roth IRAs provided Roth
IRA rules regarding age and holding periods have been met. Required
distributions must be over a period not exceeding the life expectancy of the
individual or the joint lives or life expectancies of the individual and his or
her designated beneficiary. If the required minimum distributions are not made,
a 50% penalty tax is imposed as to the amount not distributed.
SEEK TAX ADVICE
The above description of federal income tax consequences of the different
types of IRAs which may be funded by the contracts offered by this prospectus is
only a brief summary meant to alert you to the issues and is not intended as tax
advice. The rules governing the provisions of IRAs are extremely complex and
often difficult to comprehend. 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 an IRA 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 IRA.
SALES OF VARIABLE ACCUMULATION CONTRACTS
- --------------------------------------------------------------------------------
The principal underwriter of the contracts is PEPCO. contracts may be
purchased through registered representatives of W.S. Griffith & Company, Inc.
("WSG") who are licensed to sell PHL Variable annuity contracts. WSG is an
indirect wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company.
PEPCO is an indirect, majority owned subsidiary of Phoenix Home Life Mutual
Insurance Company. contracts also 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.
In addition to reimbursing PEPCO for its expenses, we pay PEPCO an amount
equal to up to 7.25% of the payments made under the contract. PEPCO pays any
qualified distribution organization an amount, which may not exceed 7.25% of the
payments under the contract. We will pay any such amount paid with respect to
contracts sold through other broker-dealers to or through PEPCO. The amounts
paid are not deducted from the payments. Deductions for surrender charges (as
described under "Surrender Charges") may be used as reimbursement for commission
payments.
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.
STATE REGULATION
- --------------------------------------------------------------------------------
We are 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. We also are 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 that 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 to you at least annually.
VOTING RIGHTS
- --------------------------------------------------------------------------------
As stated above, all of the assets held in an available subaccount will be
invested in shares of a corresponding series of the funds. We are the legal
owner of those shares and as such has the right to vote to elect the Board of
Trustees of the funds, 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 shareholder' meeting. However, we intend to vote the shares of
the funds at regular and special meetings of the shareholders of the funds in
accordance with instructions received from owners of the contracts.
We currently intend to vote fund shares attributable to any of our assets
and fund shares held in each subaccount for which no timely instructions from
owners are received in the same proportion as those shares in that subaccount
for which instructions are received. In the future, to the extent applicable
federal securities laws or regulations permit us 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 a fund; (2) ratification of
the independent accountant for a fund; (3) approval or amendment of the
investment advisory agreement for the series of the fund corresponding to the
owner's selected subaccount(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 a 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.
31
<PAGE>
The number of votes that you have the right to cast will be determined by
applying your percentage interest in a subaccount to the total number of votes
attributable to the subaccount. In determining the number of votes, fractional
shares will be recognized. The number of votes for which you may give us
instructions will be determined as of the record date for fund shareholders
chosen by the Board of Trustees of a fund. We will furnish you with proper forms
and proxies to enable them to give these instructions.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel, Phoenix Home Life Mutual Insurance Company, has
provided advice on certain matters relating to the federal securities and income
tax laws in connection with the contracts described in this prospectus.
SAI
- --------------------------------------------------------------------------------
The SAI contains more specific information and financial statements relating
to the Account and PHL Variable. The Table of Contents of the SAI is set forth
below:
Underwriter
Calculation of Yield and Return
Calculation of Annuity Payments
Experts
Financial Statements
Contract owner inquiries and requests for a SAI should be directed, in
writing, to Phoenix Variable Annuity Mail Operations at P.O. Box 8027, Boston,
Massachusetts 02266-8027, or by calling VAO at 800/541-0171.
32
<PAGE>
APPENDIX A-1
PERFORMANCE HISTORY FOR CONTRACTS WITH BENEFIT OPTION 1
- --------------------------------------------------------------------------------
From time to time, the Account may include the performance history of any or
all subaccounts in advertisements, sales literature or reports. Performance
information about each subaccount is based on past performance only and is not
an indication of future performance. Performance information may be expressed as
yield and effective yield of the Phoenix-Goodwin Money Market Subaccount, as
yield of the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total
return of any subaccount. For the Phoenix-Goodwin Multi-Sector Fixed Income
Subaccount, 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 subaccount advertises its total return, it usually will be calculated
for 1 year, 5 years and 10 years or since inception if the subaccount has not
been in existence for at least 10 years. Total return is measured by comparing
the value of a hypothetical $1,000 investment in the subaccount 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.
For those subaccounts within the Account that have not been available for
one of the quoted periods, the standardized average annual total return
quotations may show the investment performance such subaccount would have
achieved (reduced by the applicable charges) had it been available to invest in
shares of the fund for the period quoted.
THE SUBACCOUNTS FOR PHOENIX PREMIUM EDGE COMMENCED OPERATIONS AS OF THE DATE
OF THIS PROSPECTUS, THEREFORE, TOTAL RETURN DATA ARE NOT AVAILABLE.
33
<PAGE>
Current yield for the Phoenix-Goodwin Money Market Subaccount is based upon
the income earned by the subaccount over a 7-day period and then annualized,
i.e., the income earned in the period is assumed to be earned every 7 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 subaccount units and thus compounded in the
course of a 52-week period. Yield and effective yield reflect the recurring
charges on the Account level excluding the annual administrative fee.
Yield calculations of the Phoenix-Goodwin Money Market subaccount used for
illustration purposes are based on the consideration of a hypothetical contract
owner's account having a balance of exactly 1 unit at the beginning of a 7-day
period, which period will end on the date of the most recent financial
statements. The yield for the subaccount during this 7-day period will be the
change in the value of the hypothetical contract owner's account's original
unit. The following is an example of how these yield quotations are calculated.
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 7-day period:............ 1.001003
Calculation:
Ending account value.............................. 1.001003
Less beginning account value...................... 1.000000
Net change in account value....................... 0.001003
Base period return:
(adjusted change/beginning account value)......... 0.001003
Current yield = return x (365/7) =.................. 5.23%
Effective yield = [(1 + return)(365/7)] -1 =........ 5.37%
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 subaccount'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 AverageSM, the Standard & Poor's 500 Composite Stock Price Index
("S&P 500"), and the Europe Australia Far East Index, and also may be compared
to the performance of the other variable annuity 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 subaccount's performance also may be compared to that of other
investment or savings vehicles.
Advertisements, sales literature and other communications may contain
information about any series' or advisors' current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Series may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the series may separate their
cumulative and average annual returns into income results and capital gains or
losses; or cite separately as a return figure the equity or bond portion of a
series' portfolio; or compare a series' equity or bond return figure to
well-known indices of market performance including, but not limited to, the S&P
500, Dow Jones Industrial AverageSM, First Boston High Yield Index and Solomon
Brothers Corporate and Government Bond Indices.
EACH FUND'S ANNUAL REPORT, AVAILABLE UPON REQUEST AND WITHOUT CHARGE,
CONTAINS A DISCUSSION OF THE PERFORMANCE OF THE FUNDS AND A COMPARISON OF THAT
PERFORMANCE TO A SECURITIES MARKET INDEX.
34
<PAGE>
APPENDIX A-2
PERFORMANCE HISTORY FOR CONTRACTS WITH BENEFIT OPTION 2
- --------------------------------------------------------------------------------
From time to time, the Account may include the performance history of any or
all subaccounts in advertisements, sales literature or reports. Performance
information about each subaccount is based on past performance only and is not
an indication of future performance. Performance information may be expressed as
yield and effective yield of the Phoenix-Goodwin Money Market Subaccount, as
yield of the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total
return of any subaccount. For the Phoenix-Goodwin Multi-Sector Fixed Income
Subaccount, 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 subaccount advertises its total return, it usually will be calculated
for 1 year, 5 years and 10 years or since inception if the subaccount has not
been in existence for at least 10 years. Total return is measured by comparing
the value of a hypothetical $1,000 investment in the subaccount 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.
For those subaccounts within the Account that have not been available for
one of the quoted periods, the standardized average annual total return
quotations may show the investment performance such subaccount would have
achieved (reduced by the applicable charges) had it been available to invest in
shares of the fund for the period quoted.
THE SUBACCOUNTS FOR PHOENIX PREMIUM EDGE COMMENCED OPERATIONS AS OF THE DATE
OF THIS PROSPECTUS, THEREFORE, TOTAL RETURN DATA ARE NOT AVAILABLE.
35
<PAGE>
Current yield for the Phoenix-Goodwin Money Market Subaccount is based upon
the income earned by the subaccount over a 7-day period and then annualized,
i.e., the income earned in the period is assumed to be earned every 7 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 subaccount units and thus compounded in the
course of a 52-week period. Yield and effective yield reflect the recurring
charges on the Account level excluding the annual administrative fee.
Yield calculations of the Phoenix-Goodwin Money Market Subaccount used for
illustration purposes are based on the consideration of a hypothetical contract
owner's account having a balance of exactly 1 unit at the beginning of a 7-day
period, which period will end on the date of the most recent financial
statements. The yield for the subaccount during this 7-day period will be the
change in the value of the hypothetical contract owner's account's original
unit. The following is an example of how these yield quotations are calculated.
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 7-day period:............ 1.001003
Calculation:
Ending account value.............................. 1.001003
Less beginning account value...................... 1.000000
Net change in account value....................... 0.001003
Base period return:
(adjusted change/beginning account value)......... 0.001003
Current yield = return x (365/7) =.................. 5.23%
Effective yield = [(1 + return)(365/7)] -1 =........ 5.37%
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 subaccount'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 AverageSM, the Standard & Poor's 500 Composite Stock Price Index
("S&P 500"), and the Europe Australia Far East Index, and also may be compared
to the performance of the other variable annuity 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 subaccount's performance also may be compared to that of other
investment or savings vehicles.
Advertisements, sales literature and other communications may contain
information about any series' or advisors' current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the series may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the series may separate their
cumulative and average annual returns into income results and capital gains or
losses; or cite separately as a return figure the equity or bond portion of a
series' portfolio; or compare a series' equity or bond return figure to
well-known indices of market performance including, but not limited to, the S&P
500, Dow Jones Industrial AverageSM, First Boston High Yield Index and Solomon
Brothers Corporate and Government Bond Indices.
EACH FUND'S ANNUAL REPORT, AVAILABLE UPON REQUEST AND WITHOUT CHARGE, CONTAINS A
DISCUSSION OF THE PERFORMANCE OF THE FUNDS AND A COMPARISON OF THAT PERFORMANCE
TO A SECURITIES MARKET INDEX.
36
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
DEDUCTIONS FOR PREMIUM TAXES
QUALIFIED AND NON-QUALIFIED ANNUITY CONTRACTS
- ------------------------------------------------------------------------------------------------------------------------------------
UPON UPON
STATE PURCHASE(1) ANNUITIZATION NON-QUALIFIED QUALIFIED
- ----- ----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
California .......................................... X 2.35% 0.50%
Kentucky(2)..........................................
Maine................................................ X 2.00
Nevada............................................... X 3.50
South Dakota......................................... X 1.25
West Virginia........................................ X 1.00 1.00
Wyoming.............................................. X 1.00
Commonwealth of Puerto Rico.......................... X 1.00% 1.00%
</TABLE>
NOTE: The above premium tax deduction rates are as of January 1, 2000. 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, we
reserve 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 Effective January 1, 2000, Kentucky no longer imposes Premium Tax on variable
annuities.
37
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PHL VARIABLE INSURANCE COMPANY
HOME OFFICE: PHOENIX VARIABLE ANNUITY
One American Row MAIL OPERATIONS ("VAMO")
Hartford, Connecticut P.O. Box 8027
Boston, Massachusetts 02266-8027
PHL VARIABLE ACCUMULATION ACCOUNT
VARIABLE ACCUMULATION DEFERRED ANNUITY CONTRACT
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus, dated May 1, 2000. You may obtain a copy of
the prospectus without charge by contacting PHL Variable Insurance Company at
the above address and telephone number.
TABLE OF CONTENTS
PAGE
----
Underwriter............................................................. B-2
Calculation of Yield and Return......................................... B-2
Calculation of Annuity Payments ........................................ B-3
Experts ................................................................ B-4
Financial Statements.................................................... B-5
B-1
<PAGE>
UNDERWRITER
- --------------------------------------------------------------------------------
PEPCO, an affiliate of PHL Variable, offers these contracts on a continuous
basis. No contracts were sold during the fiscal years ended December 31, 1997,
1998 and 1999; therefore PEPCO was not paid for sales of these contracts and
retained $0.
CALCULATION OF YIELD AND RETURN
- --------------------------------------------------------------------------------
Yield of the Phoenix-Goodwin Money Market Subaccount. We summarize the
following information in the prospectus under the heading "Performance History."
We calculate the yield of the Phoenix-Goodwin Money Market Subaccount for a
7-day "base period" by determining the "net change in value" of a hypothetical
pre-existing account. We assume the hypothetical account had an initial balance
of one share at the beginning of the base period. We then determine what the
value of the hypothetical account would have been at the end of the 7-day base
period. The end value minus the initial value gives us the net change in value
for the hypothetical account. The net change in value can then be divided by the
initial value giving us the base period return (one week's return). To find the
equivalent annual return we multiply the base period return by 365/7. The
equivalent effective annual yield differs from the annual return because we
assume all returns are reinvested in the subaccount. We carry results to the
nearest hundredth of one percent.
The net change in value of the hypothetical account includes the daily net
investment income of the account (after expenses), but does not include realized
gains or losses or unrealized appreciation or depreciation on the underlying
fund shares.
The yield/return calculations include a mortality and expense risk charge
equal to 1.475% on an annual basis, and a daily administrative fee equal to
0.125% on an annual basis.
The Phoenix-Goodwin Money Market Subaccount return and effective yield will
vary in response to fluctuations in interest rates and in the expenses of the
subaccount.
We do not include the maximum annual administrative fee in calculating the
current return and effective yield. Should such a fee apply to your account,
current return and/or effective yield for your account could be reduced.
Example Calculation:
The following is an example of how return/yield calculations for the
Phoenix-Goodwin Money Market Subaccount are calculated:
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 charges) at 1.001003
the end of the 7-day period:..................
Calculation:
Ending account value.......................... 1.001003
Less beginning account value.................. 1.000000
Net change in account value................... 0.001003
Base period return:
(adjusted change/beginning account value)..... 0.001003
Current yield = return x (365/7) =............... 5.23%
Effective yield = [(1 + return)(365/7)] -1 =..... 5.37%
Yields and total returns may be higher or lower than in the past and there
is no assurance that any historical results will continue.
Calculation of Total Return. We summarize the following information in the
prospectus under the heading, "Performance History." Total return measures the
change in value of a subaccount investment over a stated period. We compute
total returns 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
includes the following steps:
(1) We assume a hypothetical $1,000 initial investment in the subaccount;
(2) We determine the value the hypothetical initial investment would have were
it redeemed at the end of each period. All recurring fees and any applicable
contingent deferred sales charge are deducted. This figure is the ending
redeemable value (ERV in the formula given below);
(3) We divide this value by the initial $1,000 investment, resulting in ratio of
the ending redeemable value to the initial value for that period;
(4) To get the average annual total return we take the nth root of the ratio
from step (3), where n equals the number of years in that period (e.g. 1, 5,
10), and subtract one.
B-2
<PAGE>
The formula in mathematical terms is:
R = ((ERV / II)(1/n)) - 1
Where:
II = a hypothetical initial payment of $1,000
R = average annual total return for the period
n = number of years in the period
ERV = ending redeemable value of the hypothetical
$1,000 for the period [see (2) and (3) above]
We normally calculate total return for 1-year, 5-year and 10-year periods
for each subaccount. If a subaccount has not been available for at least 10
years, we will provide total returns for other relevant periods.
PERFORMANCE INFORMATION
Advertisements, sale literature and other communications may contain
information about series' or advisor's current investment strategies and
management style. An advisor may alter investment strategies and style in
response to changing market and economic conditions. A fund may wish to make
known a series' specific portfolio holdings or holdings in specific industries.
A fund may also separately illustrate the income and capital gain portions of a
series' total return. Performance might also be advertised by breaking down
returns into equity and debt components. A series may compare its equity or bond
return figure to any of a number of well-known benchmarks of market performance,
including, but not limited to:
The Dow Jones Industrial Average(SM)(1)
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
The Standard & Poor's 500 Index (S&P 500)(2)
Each subaccount may include its yield and total return in advertisements or
communications with current or prospective contract owners. Each subaccount may
also include in such advertisements, its ranking or comparison to similar mutual
funds by such organizations as:
Lipper Analytical Services
Morningstar, Inc.
Thomson Financial
A fund may also compare a series' performance to other investment or savings
vehicles (such as certificates of deposit) and may refer to results published in
such publications as:
Barrons
Business Week
Changing Times
Forbes
Fortune
Consumer Reports
Investor's Business Daily
Financial Planning
Financial Services Weekly
Financial World
Money
The New York Times
Personal Investor
Registered Representative
Stanger's Investment Adviser
The Stanger Register
U.S. News and World Report
The Wall Street Journal
A fund may also illustrate the benefits of tax deferral by comparing taxable
investments with investments through tax-deferred retirement plans.
The total return and yield may be used to compare the performance of the
subaccounts with certain commonly used standards for stock and bond market
performance. Such indexes include, but are not limited to:
The Dow Jones Industrial Average(SM)(1)
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
The S&P 500(2)
CALCULATION OF ANNUITY PAYMENTS
- --------------------------------------------------------------------------------
See your prospectus in the section titled "The Annuity Period" for a
description of the annuity options.
You may elect a payment option by written request as described in your
prospectus. If you do not elect an option, amounts held under the contract will
be applied to provide a Variable Payment Life Expectancy Annuity (Option L) on
the maturity date. You may not change your election after the first annuity
payment.
FIXED ANNUITY PAYMENTS
Fixed annuity payments are determined by the total dollar value for all
subaccounts' accumulation units, all amounts held in the GIA and the MVA
Account. For each contract the resulting dollar value is then multiplied by the
applicable annuity purchase rate, which reflects the age (and sex for
nontax-qualified plans) of the annuitant or annuitants, for the fixed payment
annuity option selected. The guaranteed annuity payment rates will be no less
favorable than the following:
Under Options A, B, D, E and F rates are based on the a-49 Annuity Table(4)
projected to 1985 with Projection Scale B. We use an interest rate of 3-3/8% for
5- and 10-year certain periods under Option A, for the 10-year certain 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 Options B
and D. Under Options G and H the guaranteed interest rate is 3%.
It is possible that we may have more favorable (i.e. higher-paying) rates in
effect on the settlement date.
B-3
<PAGE>
VARIABLE ANNUITY PAYMENTS
Under all variable options except Option L, the first payment is based on an
assumed annual investment rate of 4-1/2%. All subsequent payments may be higher
or lower depending on investment experience of the subaccounts.
Under Options I, J, K, M and N, we determine the first payment by
multiplying the amounts held under the selected option in each subaccount by the
applicable payment option rate, which reflects the age (and sex for
nontax-qualified plans) of the annuitant or annuitants. The first payment equals
the total of such amounts determined for each subaccount. We determine future
payments under these options by multiplying the contract value in each
subaccount (Number of Annuity Units times the Annuity Unit Value) by the
applicable payment option's rate on the payment calculation date. The payment
will equal the sum of the amounts provided by each subaccount investment.
Under Option L, we determine the amount of the annual distribution by
dividing the amount of contract value held under this option on December 31 of
the previous year by the life expectancy of the annuitant or the joint life
expectancy of the annuitant and joint annuitant at that time.
Under Options I, J, M and N, the applicable options rate used to determine
the first payment amount will not be less than the rate based on the 1983 Table
A (1983 IAM)(4) projected with Projection Scale G to the year 2040, and with
continued projection thereafter, and on the assumed investment rate. Under
Option K, the rate will be based on the number of payments to be made during the
specified period and the assumed investment rate.
We deduct a daily charge for mortality and expense risks and a daily
administrative fee from contract values held in the subaccounts. See your
prospectus in the section titled "Deductions and Charges." Electing Option K
will result in a mortality risk deduction being made even though we assume no
mortality risk under that option.
EXPERTS
- --------------------------------------------------------------------------------
The financial statements of PHL Variable Insurance Company as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999 included herein have been so included in reliance on the respective
report of PricewaterhouseCoopers LLP, independent accountants, given on
authority of said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP, whose address is 100 Pearl Street, Hartford,
Connecticut 06103, also provides other accounting and tax-related services as
requested by PHL Variable from time to time.
Edwin L. Kerr, Counsel, Phoenix Home Life Mutual Insurance Company, has
provided advice on certain matters relating to the federal securities and income
tax laws in connection with the contracts described in this prospectus.
1 The Dow Jones Industrial Average(SM) (DJIA(SM)) is an unweighted(3) index of
30 industrial "blue chip" U.S. stocks. It is the oldest continuing U.S. market
index. The 30 stocks now in the DJIA(SM) are both widely-held and a major
influence in their respective industries. The average is computed in such a
way as to preserve its historical continuity and account for such factors as
stock splits and periodic changes in the components of the index. The editors
of The Wall Street Journal select the component stocks of the DJIA(SM).
2 The S&P 500 is a market-value weighted(3) index composed of 500 stocks chosen
for market size, liquidity, and industry group representation. It is one of
the most widely used indicators of U.S. Stock Market performance. As of
December 31, 1999 it contained 376 industrial, 41 utility, 72 financial and 11
transportation issues. The composition of the S&P 500 changes from time to
time. Standard & Poor's Index Committee makes all decisions about the S&P 500.
3 Weighted and unweighted indexes: A market-value, or capitalization, weighted
index uses relative market value (share price multiplied by the number of
shares outstanding) to "weight" the influence of a stock's price on the index.
Simply put, larger companies' stock prices influence the index more than
smaller companies' stock prices. An unweighted index (such as the Dow Jones
Industrial Average(SM)) uses stock price alone to determine the index value. A
company's relative size has no bearing on its impact on the index.
4 The Society of Actuaries developed these tables to provide payment rates for
annuities based on a set of mortality tables acceptable to most regulating
authorities.
B-4
<PAGE>
PHL VARIABLE
ACCUMULATION ACCOUNT
FINANCIAL STATEMENTS
THE SUBACCOUNTS COMMENCED OPERATIONS
AS OF THE DATE OF THIS PROSPECTUS; THEREFORE,
DATA FOR THESE SUBACCOUNTS ARE NOT YET
AVAILABLE.
B-5
<PAGE>
PHL VARIABLE
INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1999
B-6
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants ...........................................B-8
Balance Sheet at December 31, 1999 and 1998 .................................B-9
Statement of Income, Comprehensive Income and Equity for the Years Ended
December 31, 1999, 1998 and 1997 ..........................................B-10
Statement of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 ..........................................B-11
Notes to Financial Statements ......................................B-12 - B-23
B-7
<PAGE>
PRICEWATERHOUSECOOPERS [logo]
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
100 Pearl Street
Hartford CT 06103-4508
Telephone(860) 241 7000
Facsimile(860) 241 7590
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
PHL Variable Insurance Company
In our opinion, the accompanying balance sheet and the related statements of
income, comprehensive income and equity and cash flows present fairly, in all
material respects, the financial position of PHL Variable Insurance Company at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States. 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 of these statements in accordance with
auditing standards generally accepted in the United States, 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 audits provide a reasonable basis
for the opinion expressed above.
/s/PRICEWATERHOUSECOOPERS LLP
February 15, 2000
B-8
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Held-to-maturity debt securities, at amortized cost $ 10,298 $ 3,840
Available-for-sale debt securities, at fair value 55,840 36,480
Policy loans 522 249
Other invested assets 1,052 1,064
----------- ---------
Total investments 67,712 41,633
Cash and cash equivalents 23,039 7,320
Accrued investment income 786 511
Deferred policy acquisition costs 61,806 36,686
Deferred income taxes 2,178
Deferred and uncollected premiums 6,300 1,872
Other assets 4,394 1,860
Goodwill 451 553
Separate account assets 1,257,947 782,496
----------- ---------
Total assets $ 1,422,435 $ 875,109
=========== =========
LIABILITIES
Contractholders' funds at interest $ 64,230 $ 39,690
Reserves for future policy benefits 13,910 2,736
Deferred income taxes 209
Other liabilities 7,950 6,077
Separate account liabilities 1,257,947 782,496
----------- ---------
Total liabilities 1,344,246 830,999
----------- ---------
EQUITY
Common stock, $5,000 par value (1,000
shares authorized, 500 shares issued and outstanding) 2,500 2,500
Additional paid-in capital 64,864 35,864
Retained earnings 11,538 5,539
Accumulated other comprehensive (loss) income (713) 207
----------- ---------
Total equity 78,189 44,110
----------- ---------
Total liabilities and equity $ 1,422,435 $ 875,109
=========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
B-9
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Premiums $ 9,838 $ 6,280 $ 230
Insurance and investment product fees 20,948 10,998 5,050
Net investment income 3,891 2,458 1,543
Net realized investment gains 7 40
---------- ----------- ---------
Total revenues 34,684 19,776 6,823
---------- ----------- ---------
BENEFITS, LOSSES AND EXPENSES
Policy benefits and payments 9,248 3,964 1,092
Policy acquisition expenses 5,126 4,006 1,310
Other operating expenses 11,081 5,359 2,915
---------- ----------- ---------
Total benefits, losses and expenses 25,455 13,329 5,317
---------- ----------- ---------
INCOME BEFORE INCOME TAXES 9,229 6,447 1,506
Income taxes 3,230 2,257 553
---------- ----------- ---------
NET INCOME 5,999 4,190 953
---------- ----------- ---------
OTHER COMPREHENSIVE (LOSS) INCOME,
NET OF INCOME TAXES
Unrealized (losses) gains on securities
arising during period (913) 166 37
Reclassification adjustment for
losses included in net income (7) (40)
---------- ----------- ---------
Total other comprehensive (loss) income (920) 126 37
---------- ----------- ---------
COMPREHENSIVE INCOME 5,079 4,316 990
Capital contributions 29,000 17,000 5,000
---------- ----------- ---------
NET INCREASE IN EQUITY 34,079 21,316 5,990
EQUITY, BEGINNING OF YEAR 44,110 22,794 16,804
---------- ----------- ---------
EQUITY, END OF YEAR $ 78,189 $ 44,110 $ 22,794
========= =========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
B-10
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 5,999 $ 4,190 $ 953
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH USED FOR OPERATING ACTIVITIES
Net realized investment gains (7) (40)
Amortization 102 107 96
Deferred income taxes 2,883 (987) (916)
Increase in accrued investment income (275) (254) (49)
Increase in deferred policy acquisition costs (24,137) (15,815) (11,453)
Increase (decrease) in other assets/liabilities 6,085 1,881 (973)
Other, net (209)
---------- --------- ---------
Net cash used for operating activities (9,350) (10,918) (12,551)
---------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales, maturities or repayments of
available-for-sale debt securities 11,664 14,133 4,665
Proceeds from maturities or repayments of
held-to-maturity debt securities 623 634 212
Purchase of available-for-sale debt securities (33,397) (28,360) (11,003)
Purchase of held-to-maturity debt securities (7,000) (1,216) (1,529)
Increase in policy loans (273) (249)
Investment in separate accounts (1,000)
Other, net (88) (177)
---------- --------- ---------
Net cash used for investing activities (28,471) (15,235) (8,655)
---------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contributions from parent 29,000 17,000 5,000
Increase in contractholder funds 24,540 14,759 16,098
---------- --------- ---------
Net cash provided by financing activities 53,540 31,759 21,098
---------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,719 5,606 (108)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 7,320 1,714 1,822
---------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 23,039 $ 7,320 $ 1,714
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 3,338 $ 1,711 $ 2,044
</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.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
PHL Variable Insurance Company (PHL Variable) offers variable annuity and
non-participating life insurance products in the United States. PHL
Variable is a wholly-owned subsidiary of PM Holdings, Inc. PM Holdings is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company
(Phoenix).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States (GAAP). The preparation
of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates used in
determining insurance and contractholder liabilities, related reinsurance
recoverables, income taxes and valuation allowances for investment assets
are discussed throughout the Notes to Financial Statements. Certain
reclassifications have been made to the 1998 and 1997 amounts to conform
with the 1999 presentation.
VALUATION OF INVESTMENTS
Investments in debt securities include bonds, mortgage-backed and
asset-backed securities. PHL Variable classifies its debt securities as
either held-to-maturity or available-for-sale investments. Debt securities
held-to-maturity consist of private placement bonds reported at amortized
cost, net of impairments, that management intends and has the ability to
hold until maturity. Debt securities available-for-sale are reported at
fair value with unrealized gains or losses included in equity and consist
of public bonds that management may not hold until maturity. Debt
securities are considered impaired when a decline in value is considered to
be other than temporary.
Short-term investments are carried at amortized cost, which approximates
fair value.
Realized investment gains and losses, other than those related to separate
accounts for which PHL Variable does not bear the investment risk, are
determined by the specific identification method and reported as a
component of revenue. A realized investment loss is recorded when an
investment valuation reserve is determined. Valuation reserves are netted
against the asset categories to which they apply and changes in the
valuation reserves are included in realized investment gains and losses.
Unrealized investment gains and losses on debt securities
available-for-sale are included as a separate component of equity, net of
deferred income taxes and deferred policy acquisition costs.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and money market
instruments.
B-12
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, underwriting,
distribution and policy issue expenses, all of which vary with and are
primarily related to the production of new business, are deferred. Deferred
policy acquisition costs are subject to recoverability testing at the time
of policy issue and loss recognition at the end of each accounting period.
For universal life insurance policies, limited pay and investment type
contracts, deferred policy acquisition costs are amortized in proportion to
total estimated gross profits over the expected average life of the
contracts using estimated gross margins arising principally from
investment, mortality and expense margins and surrender charges based on
historical and anticipated experience, updated at the end of each
accounting period.
GOODWILL
Goodwill represents the excess of the cost of businesses acquired over the
fair value of their net assets. The costs are amortized on the
straight-line method over a period of 10 years, the expected period of
benefit from the acquisition. Management periodically reevaluates the
propriety of the carrying value of goodwill by comparing estimates of
future undiscounted cash flows to the assets. Assets are considered
impaired if the carrying value exceeds the expected future undiscounted
cash flows.
SEPARATE ACCOUNTS
Separate account assets and liabilities are funds maintained in accounts to
meet specific investment objectives of contractholders who can either
choose to bear the full investment risk or can choose guaranteed investment
earnings subject to certain conditions.
For contractholders who bear the investment risk, investment income and
investment gains and losses accrue directly to such contractholders. The
assets of each account are legally segregated and are not subject to claims
that arise out of any other business of PHL Variable. The assets and
liabilities are carried at market value. Net investment income and realized
investment gains and losses for these accounts are excluded from revenues,
and the related liability increases are excluded from benefits and
expenses. Amounts assessed to the contractholders for management services
are included in PHL Variable's revenues.
For Market Value Adjusted separate accounts, contractholders receive
interest at a guaranteed rate if the account is held until maturity. In
these separate accounts, appreciation or depreciation of assets,
undistributed net investment income and investment or other sundry expenses
is reflected as net income or loss in PHL Variable's interest in the
separate accounts. Contractholders receive a distribution of interest at a
guaranteed interest rate on this annuity option provided funds are not
withdrawn from the separate account before the end of their elected
guarantee period.
CONTRACTHOLDERS' FUNDS AT INTEREST
Contractholder deposit funds consist of deposits received from customers
and investment earnings on their fund balances, less administrative
charges.
B-13
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCT FEES
Revenues for investment-type products consist of net investment income and
contract charges assessed against the fund values (fees). Related benefit
expenses primarily consist of net investment income credited to the fund
values after deduction for investment and risk charges.
POLICY LIABILITIES AND ACCRUALS
Reserves for future policy benefits are liabilities for life insurance
products. Such liabilities are established in amounts adequate to meet the
estimated future obligations of policies in force. Policy liabilities for
traditional life insurance are computed using the net level premium method
on the basis of actuarial assumptions as to assumed rates of interest,
mortality, morbidity and withdrawals. Liabilities for universal life
policies include deposits received from customers and investment earnings
on their fund balances, less administrative charges. Universal life fund
balances are also assessed mortality charges.
PREMIUM AND FEE REVENUE AND RELATED EXPENSES
Term life insurance premiums are recorded as premium revenue on a pro-rata
basis over each policy year. Benefits, losses and related expenses are
matched with premiums over the related contract periods. Revenues for
variable annuity products consist of net investment income and contract
charges assessed against the fund values. Related benefit expenses
primarily consist of net investment income credited to the fund values
after deduction for investment and risk charges. Revenues for universal
life products consist of net investment income and mortality,
administration and surrender charges assessed against the fund values
during the period. Related benefit expenses include universal life benefit
claims in excess of fund values and net investment income credited to
universal life fund values.
INCOME TAXES
For the tax year ended December 31, 1999, PHL Variable will file a separate
federal income tax return as required under Internal Revenue Code Section
1504(c). PHL Variable has been filing on a separate company basis since
December 31, 1996.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from policy
liabilities, accruals and surrenders, policy acquisition expenses and
unrealized gains or losses on investments.
EMPLOYEE BENEFIT PLANS
Phoenix sponsors pension and savings plans for its employees and agents,
and those of its subsidiaries. The multi-employer qualified plans comply
with requirements established by the Employee Retirement Income Security
Act of 1974 (ERISA) and excess benefit plans provide for that portion of
pension obligations which is in excess of amounts permitted by ERISA.
Phoenix also provides certain health care and life insurance benefits for
active and retired employees. PHL Variable incurs applicable employee
benefit expenses through the process of cost allocation by Phoenix.
Applicable information regarding the actuarial present value of vested and
non-vested accumulated plan benefits, and the net assets of the plans
available for benefits is omitted,
B-14
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
as the information is not separately calculated for PHL Variable's
participation in the plans. The amount of such allocated benefits is not
significant to the financial statements. However, with respect to the
Phoenix Home Life Mutual Insurance Company employee pension plan, the total
assets of the plan exceeded the actuarial present value of vested benefits
at January 1, 1999, the date of the most recent actuarial valuation.
RECENT ACCOUNTING PRONOUNCEMENTS
In June, 1999, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS
No. 133." Because of the complexities associated with transactions
involving derivative instruments and their prevalent use as hedging
instruments and, because of the difficulties associated with the
implementation of Statement 133, the effective date of SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" was delayed
until fiscal years beginning after June 15, 2000. SFAS No. 133, initially
issued on June 15, 1998, requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair
value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as
part of a hedge transaction and, if it is, the type of hedge transaction.
For fair-value hedge transactions in which PHL Variable is hedging changes
in an asset's, liability's or firm commitment's fair value, changes in the
fair value of the derivative instrument will generally be offset in the
income statement by changes in the hedged item's fair value. For cash-flow
hedge transactions, in which PHL Variable is hedging the variability of
cashflows related to a variable-rate asset, liability, or a forecasted
transaction, changes in the fair value of the derivative instrument will be
reported in other comprehensive income. The gains and losses on the
derivative instrument that are reported in other comprehensive income will
be reclassified as earnings in the period in which earnings are impacted by
the variability of the cash flows of the hedged item. The ineffective
portion of all hedges will be recognized in current period earnings.
PHL Variable has not yet determined the impact that the adoption of SFAS
No. 133 will have on its earnings or statement of financial position.
PHL Variable adopted SFAS No. 130, "Reporting Comprehensive Income," as of
January 1, 1998. This statement establishes standards for the reporting and
display of comprehensive income and its components in a full set of
financial statements. This statement defines the components of
comprehensive income as those items that were previously reported only as
components of equity and were excluded from net income.
On January 1, 1999, PHL Variable adopted Statement of Position (SOP) 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments." SOP 97-3 provides guidance for assessments related to
insurance activities. The adoption of SOP 97-3 did not have a material
impact on the Company's results from operations or financial position.
In 1998, the NAIC adopted the Codification of Statutory Accounting
Principles guidance, which will replace the current Accounting Practices
and Procedures manual as the NAIC's primary guidance on statutory
accounting. The Codification provides guidance for areas where statutory
accounting has been silent and changes current statutory accounting in some
areas, e.g., deferred income taxes are recorded.
B-15
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The State of Connecticut Insurance Department has adopted the Codification
guidance, effective January 1, 2001. The Company has not estimated the
potential effect of the Codification guidance.
3. INVESTMENTS
Information pertaining to PHL Variable's investments, net investment income
and realized and unrealized investment gains and losses follows:
DEBT SECURITIES
The amortized cost and fair value of investments in debt securities as of
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY:
Corporate securities $ 10,298 $ 136 $ (169) $ 10,265
========= ======= ======== =========
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $ 6,475 $ 3 $ (156) $ 6,322
State and political subdivision bonds 10,366 (343) 10,023
Corporate securities 16,637 (983) 15,654
Mortgage-backed or
asset-backed securities 24,194 (353) 23,841
--------- ------- -------- ---------
Total $ 57,672 $ 3 $ (1,835) $ 55,840
========= ======= ======== =========
</TABLE>
The amortized cost and fair value of investments in debt securities as of
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HELD-TO-MATURITY:
Corporate securities $ 3,840 $ 27 $ (126) $ 3,741
-------- ------- -------- --------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $ 6,515 $ 290 $ (9) $ 6,796
State and political subdivision bonds 9,485 126 (21) 9,590
Corporate securities 13,605 187 (81) 13,711
Mortgage-backed or
asset-backed securities 6,308 80 (5) 6,383
-------- ------- -------- --------
Total $ 35,913 $ 683 $ (116) $ 36,480
======== ======= ======== ========
</TABLE>
B-16
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of debt securities, by contractual
maturity, as of December 31, 1999 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
PHL Variable may have the right to put or sell the obligations back to the
issuers.
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 1,732 $ 1,726 $ 500 $ 500
Due after one year through five years 6,676 6,654 14,282 13,737
Due after five years through ten years 1,890 1,884 9,903 9,664
Due after ten years 8,793 8,098
Mortgage-backed or
asset-backed securities 24,194 23,841
--------- --------- --------- ---------
Total $ 10,298 $ 10,264 $ 57,672 $ 55,840
========= ========= ========= =========
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the year ended December 31,
were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ 3,362 $ 2,142 $ 1,301
Policy loans 7 1
Other invested assets 20 9
Short-term investments 561 344 269
-------- -------- --------
3,950 2,496 1,570
Less investment expenses 59 38 27
-------- -------- --------
Net investment income $ 3,891 $ 2,458 $ 1,543
======== ======== ========
</TABLE>
B-17
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT GAINS AND LOSSES
Net unrealized (losses) gains and on securities available-for-sale and
carried at fair value for the year ended December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ (2,399) $ 333 $ 87
Deferred policy acquisition costs 983 (139) (30)
Deferred income taxes (benefits) (496) 68 20
--------- ------- -------
Net unrealized investment (losses) gains
on securities available-for-sale $ (920) $ 126 $ 37
========= ======= =======
</TABLE>
The proceeds from sales of available-for-sale debt securities for the years
ended December 31, 1999, 1998 and 1997 were $6.0 million, $10.0 million and
$0.2 million, respectively. The gross realized gains or losses associated
with these sales were $7.4 thousand, $37.7 thousand and ($0.3) thousand in
1999, 1998 and 1997, respectively.
4. GOODWILL
PHL Variable was acquired by way of a stock purchase agreement on May 31,
1994 and was accounted for under the purchase method of accounting. The
assets and liabilities were recorded at fair value as of the date of
acquisition and the goodwill of $1.02 million was pushed down to PHL
Variable from PM Holdings.
Goodwill was as follows:
DECEMBER 31,
1999 1998
(IN THOUSANDS)
Goodwill $ 1,020 $ 1,020
Accumulated amortization (569) (467)
-------- --------
Total $ 451 $ 553
======== ========
B-18
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. INCOME TAXES
A summary of income taxes (benefits) in the Statement of Income,
Comprehensive Income and Equity for the year ended December 31, is as
follows:
1999 1998 1997
Income taxes:
Current $ 347 $ 3,244 $ 1,469
Deferred 2,883 (987) (916)
-------- --------- --------
Total $ 3,230 $ 2,257 $ 553
======== ========= ========
The income taxes attributable to the results of operations are different
than the amounts determined by multiplying income before taxes by the
statutory income tax rate. The sources of the difference and the tax
effects of each for the year ended December 31, were as follows (in
thousands, aside from the percentages):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory rate $3,230 35% $2,256 35% $ 527 35%
Dividend received deduction and (1) 0% 0% 1 0%
tax-exempt interest
State income tax expense
Other, net 1 0% 1 0% 25 2%
------ ------ -----
Income taxes $3,230 35% $2,257 35% $ 553 37%
====== ====== =====
</TABLE>
The deferred income tax liability (asset) represents the tax effects of
temporary differences. The components as of December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ 17,775 $ 10,953
Surrender charges (17,597) (11,886)
Investments 104 72
Future policyholder benefits 376 (1,374)
Other (65) (54)
--------- ---------
593 (2,289)
Net unrealized investment (losses) gains (384) 111
--------- ---------
Deferred tax liability (asset), net $ 209 $ (2,178)
========= =========
</TABLE>
B-19
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Gross deferred income tax assets totaled $18.1 million and $13.3 million at
December 31, 1999 and 1998, respectively. Gross deferred income tax
liabilities totaled $18.3 million and $11.1 million at December 31, 1999
and 1998, respectively. It is management's assessment, based on PHL
Variable's earnings and projected future taxable income, that it is more
likely than not that the deferred income tax assets at December 31, 1999
and 1998, will be realized.
PHL Variable's income tax return is not currently being examined; however,
income tax years 1996 through 1998 remain open for examination. Management
does not believe that there will be a material adverse effect on the
financial statements as a result of pending income tax matters.
6. COMPREHENSIVE INCOME
The components of, and related income tax effects for, other comprehensive
(loss) income for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE ARISING DURING PERIOD:
Before-tax amount $ (1,405) $ 256 $ 57
Income tax (benefit) expense (492) 90 20
--------- ------- -------
Totals (913) 166 37
--------- ------- -------
RECLASSIFICATION ADJUSTMENT FOR (LOSSES)
REALIZED IN NET INCOME:
Before-tax amount (11) (62)
Income tax (benefit) (4) (22)
--------- ------- -------
Totals (7) (40)
--------- ------- -------
NET UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount (1,416) 194 57
Income tax (benefit) expense (496) 68 20
--------- ------- -------
Totals $ (920) $ 126 $ 37
========= ======= =======
</TABLE>
The following table summarizes accumulated other comprehensive (loss)
income balances:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance, beginning of year $ 207 $ 81
Change during period (920) 126
-------- -------
Balance, end of year $ (713) $ 207
======== =======
</TABLE>
B-20
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. REINSURANCE
PHL Variable entered into a reinsurance treaty in 1996 that cedes death
benefits to a reinsurer in excess of account balances on variable
contracts. Premiums paid by PHL Variable during 1999, 1998 and 1997 were
$1,114 thousand, $668 thousand and $259 thousand, respectively, less claims
of $22 thousand, $13 thousand and $1 thousand in 1999, 1998 and 1997,
respectively.
In connection with PHL Variable's life insurance products, automatic
treaties have been established with four reinsurers and their subsidiaries,
covering 90% of the net amount at risk, on a first dollar basis. As of
December 31, 1999, PHL Variable had approximately $661.5 million of net
insurance in force, including $6.5 billion of direct in force less $5.8
billion of reinsurance ceded. As of December 31, 1998, PHL Variable had
approximately $271.6 million of net insurance in force, including $2.7
billion of direct in force less $2.4 billion of reinsurance ceded. As of
December 31, 1997, PHL Variable had approximately $9.1 million of net
insurance in force, including $80.7 million of direct in force less $71.6
million of reinsurance ceded. No claims were recovered in 1999, 1998 or
1997.
For PHL Variable's life insurance products, a stop loss treaty between
Phoenix and PHL Variable was introduced in 1998. The reinsurance
recoverables were $0 thousand as of December 31, 1999 and $455 thousand and
as of December 31, 1998. The claims recovered were $455 thousand for 1999
and $0 for 1998 and 1997, respectively.
8. RELATED PARTY TRANSACTIONS
Phoenix provides services and facilities to the Company and is reimbursed
through a cost allocation process. Investment services are provided for a
fee by a Phoenix registered investment advisor.
9. DEFERRED POLICY ACQUISITION COSTS
The following reflects the amount of policy acquisition costs deferred and
amortized for the years ended December 31:
1999 1998
(IN THOUSANDS)
Balance at beginning of year $ 36,686 $ 21,010
Acquisition expense deferred 28,884 19,791
Amortized to expense during the year (4,747) (3,976)
Adjustment to equity during the year 983 (139)
--------- ---------
Balance at end of year $ 61,806 $ 36,686
========= =========
B-21
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
10. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure
requirements (insurance contracts are excluded) are carried in the
financial statements at amounts that approximate fair value. The fair
values presented for certain financial instruments are estimates which, in
many cases, may differ significantly from the amounts which could be
realized upon immediate liquidation. In cases where market prices are not
available, estimates of fair value are based on discounted cash flow
analyses that utilize current interest rates for similar financial
instruments which have comparable terms and credit quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
POLICY LOANS
Fair values are estimated as the present value of loan interest and policy
loan repayments discounted at the ten year Treasury rate. Loan repayments
were assumed only to occur as a result of anticipated policy lapses, and it
was assumed that annual policy loan interest payments were made at the
guaranteed loan rate less 17.5 basis points. Discounting was at the ten
year Treasury rate, except for policy loans with a variable policy loan
rate. Variable policy loans have an interest rate that is reset annually
based upon market rates and therefore, book value is a reasonable
approximation of fair value.
INVESTMENT CONTRACTS
Variable annuity contracts have guarantees of less than one year for which
interest credited is closely tied to rates earned on owned assets. For such
liabilities, fair value is assumed to be equal to the stated liability
balances. The contract liability balances for December 31, 1999 and 1998
were $64.2 million and $39.7 million, respectively.
OTHER INVESTED ASSETS
Other invested assets consist of the Company's interest in the separate
accounts which are carried at fair value.
B-22
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
11. STATUTORY FINANCIAL INFORMATION
The life insurance subsidiaries of Phoenix are required to file annual
statements with state regulatory authorities prepared on an accounting
basis prescribed or permitted by such authorities. As of December 31, 1999,
there were no material practices not prescribed by the State of Connecticut
Insurance Department. Statutory equity differs from equity reported in
accordance with GAAP for life insurance companies primarily because policy
acquisition costs are expensed when incurred, investment reserves are based
on different assumptions, postretirement benefit costs are based on
different assumptions and reflect a different method of adoption, life
insurance reserves are based on different assumptions and income tax
expense reflects only taxes paid or currently payable.
The following reconciles the statutory net income of PHL Variable as
reported to regulatory authorities to the net income as reported in these
financial statements for the year ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $ (1,655) $ 1,542 $ 937
Deferred policy aquisition costs 24,136 15,815 11,483
Future policy benefits (13,496) (14,056) (12,271)
Deferred income taxes (2,882) 987 899
Other, net (104) (98) (95)
--------- -------- -------
Net income, as reported $ 5,999 $ 4,190 $ 953
========= ======== =======
</TABLE>
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of PHL Variable as reported to regulatory authorities to equity as
reported in these financial statements:
DECEMBER 31,
1999 1998
(IN THOUSANDS)
Statutory surplus and AVR $ 66,354 $ 41,268
Deferred policy acquisition costs, net 61,072 36,686
Future policy benefits (48,391) (37,155)
Investment valuation allowances (1,089) 568
Deferred income taxes (208) 2,178
Other, net 451 565
--------- ---------
Equity, as reported $ 78,189 $ 44,110
========= =========
The Connecticut Insurance Holding Act limits the maximum amount of annual
dividends or other distributions available to stockholders of Connecticut
domiciled insurance companies without prior approval of the Insurance
Commissioner. Under current law, the maximum dividend distribution that may
be made by PHL Variable during 1999 without prior approval is subject to
restrictions relating to statutory surplus.
B-23
<PAGE>
PART C
OTHER INFORMATION
<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 condensed
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 is incorporated by reference to Registrant's
Registration Statement (No. 33-87376) on Form N-4 dated
December 14, 1994.
(2) Not Applicable.
(3) Distribution of Policies
(a) Master Service and Distribution Compliance Agreement
between Registrant and Phoenix Equity Planning
Corporation dated December 31, 1996 is incorporated by
reference to Registrant's Form N-4 (File No. 33-87376)
Post-Effective Amendment No. 3, filed via Edgar on
April 30, 1997.
(b) Form of Agreement between Phoenix Equity Planning
Corporation and Registered Broker-Dealers with respect
to the sale of Contracts is incorporated by reference
to Registrant's Pre-Effective Amendment No. 1 to its
Form N-4 Registration Statement (File No. 33-87376)
dated July 20, 1995.
(4) (a) Form of Variable Annuity Contract (Premium Edge).
(5) (a) Form of Application (Premium Edge).
(6) (a) Charter of PHL Variable Insurance Company is
incorporated by reference to Registrant's Registration
Statement (File No. 33-87376) on Form N-4 dated
December 14, 1994.
(b) By-laws of PHL Variable Insurance Company is
incorporated by reference to Registrant's Registration
Statement (File No. 33-87376) on Form N-4 dated
December 14, 1994.
(7) Not Applicable.
(8) Not Applicable.
(9) Written Opinion of Edwin L. Kerr, Esq.
(10) (a) Written Consent of Edwin L. Kerr, Esq.
(b) Written Consent of PricewaterhouseCoopers LLP.
(11) Not Applicable.
(12) Not Applicable.
(13) (a) Explanation of Yield and Effective Yield Calculation is
incorporated by reference to Registrant's Post-Effective
Amendment No. 1 to its Form N-4 Registration Statement
(File No. 33-87376) filed via Edgar on April 19, 1996.
(b) Explanation of Total Return Calculation is incorporated
by reference to Registrant's initial N-4 filing on
January 28, 2000 (Accession Number
0000949377-00-000035).
C-1
<PAGE>
ITEM 25. DIRECTORS AND EXECUTIVE OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR
---- -------------------------- -----------------------
<S> <C> <C>
Carl T. Chadburn* Director
Robert W. Fiondella* Director and Chairman
Joseph E. Kelleher** Director and Senior
Vice President
Philip R. McLoughlin* Director, Executive Vice President
and Chief Investment Officer
David W. Searfoss* Director, Executive Vice President
and Chief Financial Officer
Simon Y. Tan* Director and President
Dona D. Young* Director and Executive
Vice President
Michael J. Gilotti* Executive Vice President
Robert G. Lautensack, Jr.* Senior Vice President
</TABLE>
* The principal business address of each of these individuals is PHL Variable
Insurance Company, One American Row, Hartford, Connecticut 06102-5056.
** 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 CONTRACT OWNERS
As of April 30, 2000, 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
C-2
<PAGE>
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."
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 Duff &
Phelps Funds, Phoenix Funds, and Phoenix Home Life Variable
Universal Life Account, Phoenix Home Life Variable Accumulation
Account and Phoenix Life and Annuity Variable Universal Life
Account in addition to those of the Registrant.
(b) Directors and Executive Officers of PEPCO
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
---------------- ----------------
Michael E. Haylon** Director
Philip R. McLoughlin** Director, President and Chairman
William R. Moyer* Director, Executive Vice President,
Chief Financial Officer and
Treasurer
Barry Maridinach Executive Vice President, Chief
Marketing Officer, Retail Division
John F. Sharry* Executive Vice President, Retail
Distribution
Robert R. Tousignant* Senior Vice President and National
Sales Manager
* 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 06115-0480.
(c) Compensation received by PEPCO during Registrant's last fiscal
year:
<TABLE>
<CAPTION>
NAME OF
PRINCIPAL NET UNDERWRITING COMPENSATION BROKERAGE
UNDERWRITER DISCOUNTS AND COMMISSIONS ON REDEMPTION COMMISSIONS COMPENSATION
- ----------- ------------------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
PEPCO 0 0 0
</TABLE>
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 06083-2200 and 101 Munson Street, Greenfield,
Massachusetts 01302-0810.
C-3
<PAGE>
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.
Pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as
amended, PHL Variable Insurance Company represents that the fees and charges
deducted under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred and the risks to be
assumed thereunder by PHL Variable Insurance Company.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, PHL Variable Accumulation Account has duly caused this
Registration Statement to be signed on its behalf, in the City of Hartford,
State of Connecticut on this 11th day of May, 2000.
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
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities indicated with PHL Variable Insurance
Company on this 11th day of May, 2000.
SIGNATURE TITLE
--------- -----
--------------------------- Director
Carl T. Chadburn
Director and Chairman
- --------------------------- (Principal Executive Officer)
*Robert W. Fiondella
- --------------------------- Director
*Joseph E. Kelleher
--------------------------- Director
*Philip R. McLoughlin
--------------------------- Director
*David W. Searfoss
- --------------------------- Director
*Simon Y. Tan
/s/ Dona D. Young Director
- ---------------------------
*Dona D. Young
By:/s/ Dona D. Young
-----------------------------------
*Dona D. Young, as Attorney in Fact pursuant to Powers of Attorney, copies of
which were previously filed.
S-1
Exhibit 4(a)
Form of Variable Annuity Contract
<PAGE>
[LOGO] PHOENIX
- --------------------------------------------------------------------------------
Primary Annuitant: John Doe 35 Male :Age and Sex
Contract Number: 13000000 December 12, 1994 :Contract Date
Initial Premium: $10,000.00 July 1, 2029 :Maturity Date
Dear Contract Owner:
Thank You for purchasing this annuity contract from PHL Variable Insurance
Company. We agree to pay the benefits of this contract in accordance with
its provisions.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH YOUR CONTRACT AND THAT IT
MEETS YOUR FINANCIAL GOALS. IF FOR ANY REASON YOU ARE NOT SATISFIED WITH
THIS CONTRACT, YOU MAY RETURN IT WITHIN 10 DAYS AFTER WE DELIVER IT TO YOU
FOR A REFUND OF THE CONTRACT VALUE, LESS THE VALUE OF ANY BONUS PAYMENTS
MADE UNDER THIS CONTRACT. YOU MAY RETURN IT TO EITHER THE AGENT THROUGH
WHOM IT WAS PURCHASED OR TO US AT THE FOLLOWING ADDRESS:
PHL Variable Insurance Company
Variable Annuity Operations
P.O. Box 8027
Boston, MA 02266-8027
Telephone (800) 447-4312
WE WILL DETERMINE THE CONTRACT VALUE AS OF THE NEAREST VALUATION DATE
FOLLOWING RECEIPT OF THE RETURNED CONTRACT AT OUR VARIABLE ANNUITY
OPERATIONS.
This contract provides for a series of annuity payments. The annuity
payments will be based on the Contract Value on the Maturity Date, the
annuity purchase rates stated herein, and the investment experience of the
Subaccounts during the annuity payout period. The Contract Value will
depend on the rate of interest credited to the Guaranteed Interest Account
and the investment experience of the Subaccounts.
Signed for PHL Variable Insurance Company at its Home Office, One American
Row, Hartford, Connecticut 06102-5056.
Sincerely yours,
PHL VARIABLE INSURANCE COMPANY
/S/ /S/ Robert W. Fiondella
Secretary Chief Executive Officer
Registrar
FLEXIBLE PREMIUM VARIABLE ACCUMULATION DEFERRED ANNUITY
ALL VALUES AND BENEFITS BASED ON THE INVESTMENT EXPERIENCE OF THE
SUBACCOUNTS OF THE SEPARATE ACCOUNT MAY INCREASE OR DECREASE AND ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE PART 7 FOR A
DESCRIPTION OF HOW THE CONTRACT VALUES ARE DETERMINED, AND PART 9 FOR A
DESCRIPTION OF HOW THE DEATH BENEFITS ARE DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
D604
<PAGE>
SCHEDULE PAGE
Primary Annuitant: [John Doe] [35 Male] :Age and Sex
Contract Number: [13000000] [December 12, 1994] :Contract Date
Initial Premium: [$10,000.00] [July 1, 2029] :Maturity Date
Contingent Annuitant: [None]
Owner: [John Doe]
Beneficiaries: [Jane Doe]
Subsequent Premiums: [Flexible]
Payment Intervals: [Flexible]
Death Benefit Option: [1]
Bonus Payment: [5% of each Premium Payment]
SUBACCOUNT FEES
Mortality and Expense Risk Fee: [.00404%(Based on an annual rate of 1.475%)]
Daily Administrative Fee: [.00034%(Based on an annual rate of .125%)]
Daily Tax Fee: [.0000%]
CONTRACT FEES AND CHARGES
Premium Tax: [.000% of each premium paid]
Annual Administrative Charge: [$35]
Transfer Charge: [Currently, there is no charge for transfers. However, we
reserve the right to impose a Transfer Charge after the first two transfers made
in each Contract Year, upon prior Written Notice to the Owner. In no event,
however, will such Transfer Charge exceed $20 per transaction.]
Contingent Deferred Sales Charge: See Part 5 for a Description of How this
Charge Is Determined.
PREMIUM ALLOCATION SCHEDULE
[Money Market #122 100.00%]
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SCHEDULE PAGE (CONTINUED)
Annuitant: John Doe 13000000 :Contract Number
GUARANTEED The Guaranteed Interest Account is not part of
INTEREST ACCOUNT the Separate Account. It is accounted for as
part of Our General Account. We reserve the
right to limit cumulative premium payments to
the Guaranteed Interest Account during any
one-week period to not more than $250,000. We
will credit interest daily on any amounts held
under the Guaranteed Interest Account at such
rates as We shall determine but in no event will
the effective annual rate of interest be less
than 3%. On the last working day of each
calendar week, We will set the interest rate
that will apply to any premium and Bonus Payment
made to the Guaranteed Interest Account during
the following calendar week. That rate will
remain in effect for such premiums and Bonus
Payments, or their resulting Adjusted Premiums,
for an initial guaranteed period of one full
year. Upon expiry of the initial one-year
guarantee period, and for any premiums, Bonus
Payments or Adjusted Premiums whose guarantee
has just ended, the new rate shall be the same
rate that applies to new premiums made during
the calendar week in which the guarantee period
expired. Such rate shall likewise remain in
effect for such Adjusted Premiums for a
subsequent guarantee period of one full year.
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SCHEDULE PAGE (CONTINUED)
Annuitant: John Doe 13000000 :Contract Number
GUARANTEED INTEREST ACCOUNTS
GUARANTEED The GIA account with 1-year guarantee is not
INTEREST ACCOUNT part of the Separate Account. It is accounted
WITH 1-YEAR for as part of Our General Account. We reserve
GUARANTEE the right to limit cumulative premium payments
(GIA) to the GIA account during any one-week period to
not more than $250,000. We will credit interest
daily on any amounts held under the GIA account
at such rates as We shall determine but in no
event will the effective annual rate of interest
be less than 3%. On the last working day of each
calendar week, We will set the interest rate
that will apply to any premium and Bonus Payment
made to the GIA account during the following
calendar week. That rate will remain in effect
for such premiums, Bonus Payments or their
resulting Adjusted Premiums, for an initial
guaranteed period of one full year. Upon expiry
of the initial one-year guarantee period, and
for any premiums, Bonus Payments or Adjusted
Premiums whose guarantee has just ended shall be
the same rate that applies to new premiums made
during the calendar week in which the guarantee
period expired. Such rate shall likewise remain
in effect for such Adjusted Premiums for a
subsequent guarantee period of one full year. No
market value adjustment is applied to
withdrawals from the GIA account.
MARKET VALUE The MVA account provides four choices of
ADJUSTED interest rate guarantee periods: 3-year, 5-year,
GUARANTEED 7-year, and 10-year. The MVA account is
INTEREST ACCOUNT accounted for as a non-unitized separate
(MVA) account. We will credit interest daily on any
amounts held under the MVA account at such rates
as We shall determine but in no event will the
effective annual rate of interest be less than
3%. On the last working day of each calendar
week, We will set the interest rate that will
apply to any new premiums and Bonus Payments
made during the following calendar week to each
of these accounts. The applicable rate will
remain in effect until the end of the Guarantee
Period selected by you, the Contract Owner. Upon
expiry of the selected Guarantee Period, unless
you elect to transfer funds to another Guarantee
Period or Subaccount, or elect to withdraw
funds, We will begin another Guarantee Period of
the same duration as the one that just ended,
and will credit interest at the then current
rate for that new Guarantee Period. If your
original Guarantee Period is no longer available
or if you choose a Guarantee Period that is no
longer available We will use the Guarantee
Period with the next longest duration. To the
extent permitted by law, We reserve the right to
discontinue Guarantee Periods and to offer other
Guarantee Periods that differ from those
available at the time your contract was issued.
Any withdrawals or transfers from the MVA will
be subject to a market value adjustment, except
that funds may be withdrawn or transferred from
this account without a market value adjustment
in the 30-day Window Period from 15 days before
to 15 days after the Guarantee Period expiry
date. We reserve the right to limit cumulative
premiums made to any one of these accounts
during any one-week period to not more than
$250,000.
D604
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CONTRACT SUMMARY
ABOUT THIS SUMMARY This summary briefly highlights some of the
major contract provisions. Since this is only a
summary, the detailed provisions of the contract
will control. See those provisions for full
information and any limits or restrictions that
apply. A Table of Contents is provided to help
You find specific provisions. Your contract is a
legal contract between You and Us. You should,
therefore, READ YOUR CONTRACT CAREFULLY.
Check the Schedule Page of this contract to make
sure it reflects the premium payment allocation
requested. Please call Your agent or Us any time
You have questions about Your contract.
THE TYPE OF CONTRACT This contract provides for payment of a variable
life annuity. The amount of each annuity payment
will be based on the Contract Value, the annuity
purchase rates stated herein, and the investment
experience of the Subaccounts during the annuity
payout period. Other Annuity Payment Options are
available.
ALLOCATION OF The values that accumulate under this contract
PREMIUM PAYMENTS prior to the Maturity Date are based on the
premium payments and Bonus Payments made, the
rates of interest credited on any premium
payments and Bonus Payments allocated to the
Guaranteed Interest Account, any expense
charges, and the investment experience of the
Subaccounts within the Separate Account on any
premium payments and Bonus Payments allocated to
the Subaccounts. Except for the Guaranteed
Interest Account which is part of Our General
Account, the Subaccounts are part of PHL
Variable Insurance Company's Variable
Accumulation Separate Account (VA Account) and
have differing investment objectives. Subject to
the terms of this contract, You may transfer the
Contract's Value between and among the various
Subaccounts and Guaranteed Interest Account.
The VA Account is a Separate Account established
by Our company under Connecticut Law and is
registered as a unit investment trust under the
Investment Company Act of 1940. All income,
gains and losses, realized and unrealized, of
the VA Account are credited to or charged
against the amounts placed in the VA Account
without reference to other income, gains and
losses of Our General Account. The assets of the
VA Account are owned solely by Us and We are not
a trustee with respect to such assets. These
assets are not chargeable with liabilities
arising out of any other business that We may
conduct.
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We use the assets of the VA Account to buy
shares of the Fund(s) of this contract according
to Your most recent allocation instruction on
file with Us at Our Variable Products
Operations. The Fund(s) are registered under the
1940 Act as an open-end, diversified management
investment company. The Fund(s) have separate
Series that correspond to the Subaccounts of the
VA Account. Assets of each Subaccount are
invested in shares of the corresponding Fund
Series.
This contract also contains a Guaranteed
Interest Account to which premium payments and
Bonus Payments may be allocated. The Guaranteed
Interest Account is not part of the Separate
Account. It is accounted for as part of Our
General Account. We will credit interest on the
amount in the Guaranteed Interest Account at
such rate(s) as provided under the terms of this
contract. We reserve the right to add other
Guaranteed Interest Accounts subject to approval
(as required by some states) by the insurance
supervisory official of states where this
contract is delivered.
WITHDRAWAL PRIVILEGE Before the Maturity Date, You may withdraw all
or part of the Contract Value less any
applicable contingent deferred sales charge.
After the Maturity Date, You may only withdraw
from the remaining value under Variable Payment
Options K or L, less any applicable contingent
deferred sales charge.
OTHER BENEFITS This contract provides for the payment of death
proceeds in the event of the death of either the
Owner or the Annuitant prior to the Maturity
Date. The amount of the death proceeds will
depend upon whether it is the Owner or the
Annuitant whose death has occurred. The amount
of the death proceeds is determined as described
in Part 9 of this Contract.
D604
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TABLE OF CONTENTS
PART PAGE
- ---------------------------------------------------------------
SCHEDULE PAGES
CONTRACT SUMMARY
TABLE OF CONTENTS
1. DEFINITIONS.............................................1
2. ABOUT THIS CONTRACT.....................................5
The Effective Date......................................5
The Contract and Application............................5
Required Proof of Age and Survival......................5
Adjustment for Misstatement of
Age or Sex............................................5
Assignments.............................................5
Statement of Account....................................5
3. RIGHTS OF OWNER...........................................6
Who Is the Owner........................................6
What Are the Rights of the Owner........................6
How to Change the Owner ................................7
Designation of Contingent Annuitant.....................7
4. PREMIUM PAYMENTS AND ALLOCATIONS..........................7
Premium Payments........................................7
Premium Payment Allocation..............................8
Accumulation Units......................................8
Additional Subaccounts..................................8
Substitution of Subaccounts.............................9
5. TRANSFERS, WITHDRAWALS AND LAPSE..........................9
Transfers among Subaccounts and the
Guaranteed Interest Account...........................9
Withdrawals and Full Surrender.........................10
Lapse..................................................11
Rules and Limitations..................................11
Deferral of Payment....................................11
6. EXPENSE CHARGES..........................................12
Premium Tax............................................12
Surrender Charge.......................................13
Transfer Charge........................................13
Annual Administrative Charge...........................13
Mortality and Expense Risk Fee.........................13
Daily Tax Fee..........................................13
Daily Administrative Fee...............................13
7. DETERMINING THE CONTRACT AND
ACCUMULATION UNIT VALUES................................13
Crediting of Subaccount Units and Premiums.............13
Determination of the Contract Value....................14
The Valuation of Subaccounts and
Guaranteed Interest Account..........................14
8. ANNUITY BENEFITS.........................................14
9. DEATH BENEFITS...........................................15
Death Before Maturity Date.............................15
Election of Death Benefit Options......................16
Death Benefit - Option 1...............................16
Death Benefit - Option 2...............................16
Adjusted Partial Withdrawals...........................17
Annual Step-up Amount..................................17
Annual Roll-up Amount..................................16
Distribution at Death Requirements.....................17
Death on or after the Maturity Date....................18
The Beneficiary........................................19
What Are the Rights of the Beneficiary.................19
How to Change the Beneficiary..........................19
10. PAYMENT OPTIONS.........................................20
Calculation of Fixed Annuity Payments..................20
Calculation of Variable Annuity Payments...............20
Option A - Life Annuity with Specified
Period Certain.......................................21
Option B - Non-Refund Life Annuity.....................21
Option D - Joint and Survivorship
Life Annuity.........................................21
Option E - Installment Refund Life Annuity.............21
Option F - Joint and Survivorship Life
Annuity with 10-Year Period Certain..................21
Option G - Payments for a Specified Period.............22
Option H - Payments of a Specified Amount..............22
Option I - Variable Life Annuity with
10-Year Period Certain...............................22
Option J - Joint Survivorship Variable
Life Annuity with 10-Year Period Certain.............22
Option K - Variable Annuity for
Specified Period.....................................22
Option L - Variable Life
Expectancy Annuity...................................22
Option M - Unit Refund Variable
Life Annuity.........................................23
Option N - Variable Non-Refund
Life Annuity.........................................23
Other Options..........................................23
11. TABLES OF PAYMENT OPTION AMOUNTS.....................24-26
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PART 1: DEFINITIONS
YOU (YOUR) The Owner of this contract.
WE (OUR, US) PHL Variable Insurance Company
ACCUMULATION UNIT A standard of measurement as described in Part
4, used to determine the value of a Contract and
its interest in the Subaccounts prior to the
Maturity Date and for amounts held under Payment
Option L.
ACCUMULATION UNIT VALUE On the first Valuation Date selected by Us, We
set all Accumulation Unit Values of each
Subaccount of the Separate Account at 1.000000.
The Accumulation Unit Value on any subsequent
Valuation Date is determined by multiplying the
Accumulation Unit Value of the Subaccount on the
immediately preceding Valuation Date by the Net
Investment Factor for that Subaccount for the
Valuation Period just ended.
ADJUSTED PREMIUM Any premium or Bonus Payment to the Guaranteed
Interest Account, as adjusted to include any
interest credited on and any contract charges or
withdrawals deducted from such payments.
ANNUITANT On or prior to the Maturity Date, the term
"Annuitant" as used in this contract refers to
the Primary Annuitant as shown on the Schedule
Page, while such Primary Annuitant is living,
and then the Contingent Annuitant, if any, or as
later changed by You in writing, provided such
Contingent Annuitant is living at the death of
the Primary Annuitant. After the Maturity Date,
the term "Annuitant" shall mean the Annuitant
under this contract determined as of the
Maturity Date.
ANNUITANT'S BENEFICIARY The beneficiary entitled to receive payment of
any amounts payable under this contract upon
death of the Annuitant.
ANNUITY A contract promising a periodic series of
payments.
ANNUITY UNIT A standard of measurement used to determine the
amount of each periodic payment made under the
Variable Payment Options I, J, K, M and N. The
number of Annuity Units in each Subaccount with
assets under the chosen option is equal to the
portion of the first payment provided by that
Subaccount divided by the Annuity Unit Value for
that Subaccount on the first Payment Calculation
Date.
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ANNUITY UNIT VALUE On the first Valuation Date selected by Us, We
set all Annuity Unit Values in each Subaccount
of the Separate Account at $1.000000. The
Annuity Unit Value on any subsequent Valuation
Date is equal to the Annuity Unit Value of the
Subaccount on the immediately preceding
Valuation Date multiplied by the Net Investment
Factor for that Subaccount for the Valuation
Period divided by 1.000000 plus the rate of
interest for the number of days in the Valuation
Period based on the Assumed Investment Rate.
ASSIGNS Any person to whom You assign an interest in
this contract if We have Written Notice of the
assignment in accordance with the provisions
stated in Part 2.
ASSUMED INVESTMENT RATE The Assumed Investment Rate is 4.5% per year. We
use this rate to determine the first payment
under Variable Payment Annuity Options I, J, K,
M and N. Future payment amounts under these
options will depend on the relationship between
the Assumed Investment Rate and the actual
investment performance of each Subaccount as
reflected in the Subaccount's Annuity Unit
Value. The Assumed Investment Rate is the annual
investment return that will need to be earned by
each Subaccount of the Separate Account for
there to be no reduction in the amount of the
monthly payments under these options.
BONUS PAYMENT An amount that We will credit to the Contract
Value at the time of each premium payment. The
amount of Bonus Payment is calculated as a
percentage of each premium payment as shown on
the Schedule Page.
CONTRACT ANNIVERSARY The same date each year as the Contract Date.
CONTRACT DATE The Contract Date shown on the Schedule Page. It
is the date from which Contract Years and
anniversaries are measured.
CONTRACT VALUE The sum of the values under a Contract of all
Accumulation Units held in the Subaccounts and
the Adjusted Premium Payments held in the
Guaranteed Interest Account.
CONTRACT YEAR The first Contract Year is the one-year period
from the Contract Date. Following Contract Years
run from one Contract Anniversary to the next.
FIXED PAYMENT ANNUITY An annuity providing payments which do not vary
in amount after the first payment is made.
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MATURITY DATE The Maturity Date shown on the Schedule Page or
such changed Maturity Date as may result from
death of the Primary Annuitant while a
Contingent Annuitant is living or as We may
later agree. The Maturity Date may not be
earlier than the fifth Contract Anniversary, or
later than the Contract Anniversary nearest the
Annuitant's 95th birthday unless We agree
otherwise. If a Contingent Annuitant becomes the
Annuitant as the result of death of the Primary
Annuitant prior to the Maturity Date, the
Maturity Date will change to the Contract
Anniversary nearest the Contingent Annuitant's
95th birthday unless You and We agree otherwise.
NET INVESTMENT FACTOR The Net Investment Factor for each Subaccount of
the Separate Account is determined by the
investment performance of the assets underlying
the Subaccount for the Valuation Period just
ended. The Net Investment Factor is equal to
1.000000 plus the applicable net investment rate
for the Valuation Period. The net investment
rate is determined by:
a. taking the sum of the accrued net investment
income and capital gains and losses,
realized or unrealized, of the Subaccount
for the Valuation Period. The net investment
income is affected by an investment advisory
expense fee which is deducted from the Funds
in which the assets of the Subaccounts of
the Separate Account are invested; and
b. dividing the result of (a) by the
Subaccount's share of the Separate Account
at the beginning of the Valuation Period;
and
c. for each calendar day in the Valuation
Period subtracting from the result of (a)
divided by (b), an amount equal to the
Mortality and Expense Risk Fee plus the
Daily Administrative Fee and any daily tax
fee.
OWNER/ANNUITANT An individual who is both the Owner and
Annuitant under the contract.
OWNER'S BENEFICIARY The beneficiary entitled to receive payment of
any amounts payable under this contract upon
death of the Owner.
PAYMENT CALCULATION DATE The date We calculate annuity payments under a
Variable Payment Annuity Option. The first
Payment Calculation Date is the Valuation Date
on or next following the Settlement Date unless
We agree otherwise.
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After the first Payment Calculation Date, We
will calculate payments on the same date each
month. We use the next following Valuation Date
if such date is not a Valuation Date.
PREMIUM PAYMENT DATE The Valuation Date on which a premium payment is
received at Our Variable Products Operations
unless it is received after the close of the New
York Stock Exchange, in which case it will be
the next Valuation Date.
SETTLEMENT DATE The date contract proceeds are applied to an
annuity payment option. Unless We agree
otherwise, for death benefits, the Settlement
Date is the date that We receive a certified
copy of the Annuitant's certificate of death;
for proceeds payable on the Maturity Date, it is
the Maturity Date; and for proceeds payable upon
a surrender, it is the effective date of the
surrender.
SUBACCOUNT(S) The account(s) within Our Separate Account to
which assets under the contract may be
allocated.
SURRENDER VALUE Contract Value less any applicable contingent
deferred sales charge and premium tax.
VALUATION DATE Every day the New York Stock Exchange is open
for trading.
VALUATION PERIOD The period in days beginning with the day
following the last Valuation Date and ending on
the next succeeding Valuation Date.
VARIABLE PAYMENT ANNUITY An annuity where each payment will vary with the
investment experience of the Subaccounts.
VAO Our Variable Annuity Operations division. The
address is shown on the cover page of this
contract.
WRITTEN REQUEST A request We receive in writing at VAO in a form
(AND WRITTEN NOTICE) satisfactory to Us.
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PART 2: ABOUT THIS CONTRACT
THE EFFECTIVE DATE This contract will begin in effect on the
Contract Date provided the initial premium due
is paid while the Annuitant is alive.
THE CONTRACT This contract and application, if any, which is
AND APPLICATION attached to this contract, is the entire
contract between You and Us. Any change in terms
of this contract, as required to conform to law,
to be in effect, must be signed by one of Our
executive officers and countersigned by Our
registrar or one of Our executive officers. This
contract is issued at Our Home Office in
Hartford, Connecticut. Any benefits payable
under this contract are payable at VAO.
REQUIRED PROOF We may require proof of the Annuitant's age
OF AGE AND SURVIVAL before any annuity payments will begin. We also
have the right to require proof of the identity,
age and survival of any person entitled to any
payment under this contract or upon whose life
any payments depend.
ADJUSTMENT FOR If the age or sex of the Annuitant has been
MISSTATEMENT OF misstated, any benefits payable will be adjusted
AGE OR SEX to the amount that the Contract Value would have
purchased based on the Annuitant's correct age
and sex. Any over payment(s) and under
payment(s) made by Us will be charged or
credited against future payments to be made
under the contract.
ASSIGNMENTS We will not be considered to have notice of any
assignment of an interest in this contract until
We receive the original or copy of the written
assignment at VAO. In no event will We be
responsible for its validity.
STATEMENT OF ACCOUNT We will send You a statement of the Contract
Value of this contract at least annually. We
will also provide You with a statement of the
investments held by each Subaccount. After the
Maturity Date, We will provide You with an
annual Statement of Account if You elect any of
the variable payment options.
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PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The Owner may be the Annuitant, an employer, a
trust or any other individual or entity. If no
Owner is named, the Annuitant will be the Owner.
Under contracts used with certain tax qualified
plans, the Owner must be the Annuitant. A
husband and wife may be designated as Joint
Owners. If one of such Joint Owners dies, the
other Joint Owner becomes the sole Owner of the
Contract.
WHAT ARE THE RIGHTS You control this contract during the Annuitant's
OF THE OWNER lifetime but not until the Contract Date. Unless
You and We agree otherwise, You may exercise all
rights provided under this contract without the
consent of anyone else. Your rights include the
right to:
a. Receive any amounts payable under this
contract during the Annuitant's lifetime.
b. Change the Owner.
c. Change the premium payment amounts and
intervals. See Part 4.
d. Change the allocation schedule for
premium payments. See Part 4.
e. Transfer Contract Values between and among
the various Subaccounts and the Guaranteed
Interest Account. See Part 5.
f. Make withdrawals from the various
Subaccounts and the Guaranteed Interest
Account or fully surrender the contract for
its Surrender Value. See Part 5.
g. Select a Payment Option for amounts payable
upon a withdrawal or full surrender.
h. Select an alternative Payment Option to
commence on the Maturity Date. See Part 8.
i. Change the Owner's or Annuitant's
Beneficiary.
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j. Assign, subject to the restrictions stated
in Part 2, release, or surrender any
interest in this contract. See Parts 2 and
5.
k. Change the Contingent Annuitant any
time prior to the death of the Primary
Annuitant.
You may exercise these rights only while the
Annuitant is alive. Your exercise of any rights
will, to the extent thereof, assign, release, or
surrender the interest of the Annuitant and all
beneficiaries and Owners under this contract.
HOW TO CHANGE THE OWNER To change the Owner, you must submit a Written
Request.
DESIGNATION OF Prior to the death of the Annuitant, You may
CONTINGENT ANNUITANT designate or change the Contingent Annuitant by
sending a Written Request with the name, date of
birth, sex, Social Security Number and address
of the new Contingent Annuitant.
If You are an Owner/Annuitant and Your spouse is
Your beneficiary under this Contract, Your
surviving spouse will automatically be the
Contingent Annuitant.
PART 4: PREMIUM PAYMENTS AND ALLOCATION
PREMIUM PAYMENTS The initial premium payment is due on the
Contract Date and must at least equal $10,000
for non-tax qualified plans or $2,000 for
qualified individual retirement annuity plans
unless We agree otherwise. The Annuitant must be
alive when the initial premium payment is made.
Thereafter, the premium payment amount and
intervals are as shown on the Schedule Page
unless later changed as described below. All
premium payments are payable at VAO, except that
the initial premium payment may be given to an
authorized agent for forwarding to VAO. No
benefit associated with any such premium payment
will be provided until it is actually received
by Us at VAO.
You may vary the amount and interval for
subsequent premium payments, and additional
premium payments may be made within the
following limits:
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a. Each premium payment must at least equal
$500 for non-tax qualified plans or $100 for
qualified individual retirement annuity
plans.
b. No more than $1,000,000 in total premium
payments may be paid on this contract,
unless We agree otherwise.
c. The premium payment intervals may be
unscheduled or changed to monthly,
quarterly, semi-annual, annual, or any other
arrangement agreed to by Us.
d. Additional premium payments may only be made
while an Annuitant is living, prior to the
Maturity Date.
We reserve the right to waive the limits in a &
b above.
PREMIUM The premium payment and Bonus Payment will be
PAYMENT ALLOCATION applied on its Premium Payment Date to the
various Subaccounts and the Guaranteed Interest
Account in accordance with Your instructions for
the allocation of premium payments.
You may change the allocation schedule with
respect to subsequent premium payments by
telephone or written request. We reserve the
right to waive the requirement of written
notice.
ACCUMULATION UNITS The number of Accumulation Units credited to
each Subaccount of the Separate Account will be
determined by dividing the premium payment and
Bonus Payment applied to that Subaccount by the
Accumulation Unit Value of that Subaccount on
the Premium Payment Date. The amount deposited
to the Guaranteed Interest Account will equal
the amount of any premium payment and Bonus
Payment applied on the Premium Payment Date.
ADDITIONAL SUBACCOUNTS We have the right to add Subaccounts of the
Separate Account subject to approval by the
Securities and Exchange Commission and, where
required, other regulatory authority. We further
reserve the right to add other Guaranteed
Interest Accounts.
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SUBSTITUTION OF If the shares of the Funds of this contract
SUBACCOUNTS should no longer be available for investment by
the Separate Account or if in Our judgment
further investment in such Funds becomes
inappropriate for use with this contract, We
reserve the right to substitute Accumulation
Units of another Subaccount for Accumulation
Units already purchased or to be purchased in
the future by premium payments under this
contract. Any such change will be subject to
approval by the Securities and Exchange
Commission and, where required, by the insurance
supervisory official of the state where this
contract is issued.
PART 5: TRANSFERS, WITHDRAWALS AND LAPSE
TRANSFERS AMONG You may transfer all or a portion of the
SUBACCOUNTS AND THE Contract Value of this contract among one or
GUARANTEED INTEREST ACCOUNT more of the Subaccounts and the Guaranteed
Interest Account. Transfers may be made by
telephone or Written Request. You may make up to
six transfers per Contract Year from the
Subaccounts and only one transfer per Contract
Year from the Guaranteed Interest Account unless
the Systematic Transfer Program is elected.
Under the Systematic Transfer Program, funds may
be transferred automatically among the
Subaccounts on a monthly, quarterly, semiannual
or annual basis. Unless We agree otherwise, the
minimum initial and subsequent transfer amounts
are $25 monthly, $75 quarterly, $150
semi-annually or $300 annually. Except as
otherwise provided under the Systematic Transfer
Program, the amount that may be transferred from
the Guaranteed Interest Account at any one time
cannot exceed the higher of $1000 or 25% of the
value of the Guaranteed Interest Account.
The transfer charge is as shown on the Schedule
Page. Any such charge will be deducted from the
Subaccounts or Guaranteed Interest Account from
which the amounts are to be transferred with
each such Subaccount or Guaranteed Interest
Account bearing a pro rata share of the transfer
charge. The value of each Subaccount will be
determined on the Valuation Date that coincides
with the date of transfer. Any Accumulation
Units held under a Subaccount of the Separate
Account or Adjusted Premiums held under the
Guaranteed Interest Account as the result of any
transfer shall retain its original Premium
Payment Date.
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WITHDRAWALS AND
FULL SURRENDER
You may withdraw in cash the Contract Value of
this contract, less any applicable deferred
premium tax and contingent deferred sales
charge, in whole or in part any time prior to
the Maturity Date or at any time for amounts
held under Variable Payment Annuity Options K or
L. Such withdrawals must be by Written Request
and must include such tax withholding
information as We may reasonably require. The
portion withdrawn from any Subaccount will be
taken by the surrender and release of such
number of Accumulation Units in such Subaccount
required to make the withdrawal, including any
deferred premium tax and contingent deferred
sales charge applicable to such withdrawal. Any
portion withdrawn from the Guaranteed Interest
Account will be taken by the release of Adjusted
Premiums in the amount needed to make the
withdrawal, including any deferred premium tax
and contingent deferred sales charge applicable
to such withdrawal. If no Contract Value remains
under this contract as the result of a
withdrawal, the contract will be deemed fully
surrendered and have no further value or effect.
The Contract Value will be determined on the
Valuation Date that coincides with the date of
the withdrawal.
During the first Contract Year, an amount up to
10% of the Contract Value at the time of the
first partial withdrawal may be withdrawn free
of any contingent deferred sales charge. After
the first Contract Year and each Contract Year
before the Maturity Date, an amount up to 10% of
the Contract Value as of the end of the prior
Contract Year may be withdrawn free of any
contingent deferred sales charge. Any amount
withdrawn in excess of the 10% will be subject
to the following contingent deferred sales
charge, expressed as a percentage of the amount
withdrawn, up to a maximum of the total premium:
<TABLE>
<CAPTION>
Age in Complete Years from Payment
Date of Unit or Adjusted Premium Contingent Deferred
Released to Effectuate Withdrawal Sales Charge
---------------------------------- ------------
<S> <C> <C>
0 8%
1 8%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 years or more 0%
</TABLE>
D604 10
<PAGE>
The contingent deferred sales charge is applied
to amounts withdrawn up to the total of all
premium payments less prior withdrawals
including any free withdrawal amounts. In no
event, however, will the total of all contingent
deferred sales charges applied under this
contract exceed 9% of the total premium payments
paid on this contract.
You may elect to apply the amount withdrawn or
surrendered to the various Payment Options
described in Part 10.
LAPSE If on any Valuation Date the Contract Value
becomes zero, the contract will immediately
terminate and lapse without value unless any
Contract Value has been applied under one of the
variable payment options within 30 days after
any such Valuation Date. We will mail a written
notice of lapse to You at Your most recent post
office address on file with Us at VAO.
RULES AND LIMITATIONS The Accumulation Units and Adjusted Premiums
released for transfer or withdrawal will be
determined on a First-In, First-Out (FIFO) basis
based on Premium Payment Date. No withdrawals,
or full surrender may be made after commencement
of an annuity on the Maturity Date except for
any Contract Value remaining under Options K or
L. Also, You may not transfer any assets under
Option M, unless We agree otherwise
DEFERRAL OF PAYMENT With the exception of transfers from the
Guaranteed Interest Account, as described above
under Transfers Among Subaccounts and
withdrawals from such Subaccount as described
below, transfers, withdrawals, or a request for
a full surrender will usually be processed
within 7 days after We receive the written
request at VAO. However, We may postpone the
processing of any such transactions for any of
the following reasons (as provided under the
Investment Company Act of 1940):
a. when the New York Stock Exchange is closed,
other than customary weekend and holiday
closings;
b. when trading on the exchange is restricted
by the Securities and Exchange Commission;
D604 11
<PAGE>
c. when the Securities and Exchange Commission
declares that an emergency exists as a
result of which disposal of securities in
the Fund is not reasonably practicable or it
is not reasonably practicable to determine
the value of the Units in the Subaccounts of
the Separate Account; or
d. when a governmental body having jurisdiction
over the VA Account by order permits such
suspension.
Rules and regulations of the Securities and
Exchange Commission, if any, are applicable and
will govern as to whether conditions described
in (b) or (c) or (d) exist.
For withdrawals from the Guaranteed Interest
Account, We may defer payment for up to six
months from the date VAO receives the Written
Request. If payment is delayed 30 days or more,
We will add interest at an annual rate of 4%.
PART 6: EXPENSE CHARGES
Charges to cover expenses incurred by Us in the
distribution and administration of this contract
are made in the manner described below.
PREMIUM TAX A premium tax may be required based on the laws
of the state of issue or the state where the
Owner resides when a premium payment is applied.
The premium tax rate, if any, as of the Contract
Date, is shown on the Schedule Page. This rate
may change for subsequent premium payments in
accordance with applicable state law. We will
pay any premium tax due and will only reimburse
ourselves upon the earlier of partial
withdrawal, surrender of the Contract, payment
of death proceeds or the Maturity Date. At the
time of reimbursement, We will deduct the tax
proportionately from the Subaccounts and
Guaranteed Interest Account based on their
proportionate Contract Value. On partial
withdrawals, We will deduct a pro rata amount of
the tax based upon the ratio of the amount
withdrawn to the Contract Value.
D604 12
<PAGE>
SURRENDER CHARGE A charge to cover expenses incurred in the sale
and distribution of this contract is taken in
the form of a contingent deferred sales charge
as described in Part 5 which is applied to any
withdrawals or full surrender made within the
seven-year period following the Premium Payment
Date of the Accumulation Units or Adjusted
Premiums released to make such withdrawal or
surrender.
TRANSFER CHARGE A transfer charge is as shown on the Schedule.
ANNUAL ADMINISTRATIVE A portion of the administrative expense incurred
CHARGE by Us is assessed in the form of an annual
charge as shown on the Schedule Page. We reserve
the right to lower such charge. Such charge will
be deducted at the end of each Contract Year
from the total Contract Value with each
Subaccount and Guaranteed Interest Account
bearing a pro rata share of such expense based
on the proportionate Contract Value of each of
the Subaccounts and Guaranteed Interest Account.
By agreement with Us, You may, instead, elect to
pay this charge in cash.
If You elect Payment Options I, J, K, M or N,
the Annual Administrative Charge after the
Maturity Date will be deducted from each annuity
payment in proportionately equal amounts.
MORTALITY AND The mortality and expense risk fee is taken in
EXPENSE RISK FEE the form of a daily fee against each
Subaccount as shown on the Schedule
Page. We reserve the right to lower such fee.
DAILY TAX FEE A daily tax fee is taken by Us in the form of a
daily fee against each Subaccount as shown on
the Schedule Page.
DAILY ADMINISTRATIVE FEE A portion of the administrative expense incurred
by Us is assessed in the form of a daily fee
against each Subaccount as shown on the Schedule
Page.
PART 7: DETERMINING THE CONTRACT AND
ACCUMULATION UNIT VALUES
CREDITING OF SUBACCOUNT We will apply any premium payments We receive on
UNITS AND PREMIUMS the Premium Payment Date and Bonus Payments to
credit Accumulation Units to one or more
Subaccounts or to credit purchases to the
Guaranteed Interest Account in accordance with
the most recent allocation schedule on file with
Us. The number of Accumulation Units
D604 13
<PAGE>
credited to each Subaccount will be determined
by dividing the premium payment and Bonus
Payment applied to that Subaccount by the then
current Accumulation Unit Value of that
Subaccount. The Accumulation Unit Value of each
Subaccount on a Valuation Date is determined at
the end of that day.
DETERMINATION OF THE Prior to the Maturity Date, the value of a
CONTRACT VALUE Subaccount of the Separate Account is determined
by multiplying the total number of Accumulation
Units under this contract for that Subaccount by
the current Accumulation Unit Value of that
Subaccount. The Contract Value for amounts held
under Variable Payment Annuity Option L is
determined in the same manner. The value of the
Guaranteed Interest Account equals the total
value of the Adjusted Premiums. The total
Contract Value under this contract equals the
sum of the values of each of the Subaccounts and
the Adjusted Premiums.
THE VALUATION OF SUB- The values and benefits of the Guaranteed
ACCOUNTS AND GUARANTEED Interest Account are not less than those
INTEREST ACCOUNT required by the laws of the state in which it is
delivered.
The values of the assets in each Subaccount will
be calculated in accordance with applicable law
and accepted procedures.
We guarantee that expense and mortality results
shall not adversely affect the dollar amount of
variable benefits and other contractual payments
and values.
PART 8: ANNUITY BENEFITS
On or before the Maturity Date, You may elect
any one of the Payment Options as described in
Part 10. If you do not select a Payment Option
on or before the Maturity Date, We will apply
the Contract Value less any premium tax due to
provide You a variable life annuity under
Payment Option L as described in Part 10. Any
annuity payments falling due after the
Annuitant's death during the period certain will
be paid to the Annuitant's 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, We shall have the
right to pay such amount to You in one lump sum
in lieu of providing such annuity. We also have
the right to change the annuity payment
frequency to annual if the monthly annuity
payment would otherwise be less than $20.
D604 14
<PAGE>
PART 9: DEATH BENEFITS
The death benefits provided under this contract
are not less than the minimum benefits required
under the laws of the state where this contract
is delivered.
DEATH BEFORE For deaths occurring prior to the Maturity Date,
MATURITY DATE We will pay the death proceed upon receipt of
due proof of death as follows:
1. Death of an Owner/Annuitant:
If an Owner/Annuitant dies before the
Maturity Date, We will pay the Annuitant's
Beneficiary the death proceeds provided by
the Death Benefit Option selected by the
Owner at the time of the initial premium
payment.
2. Death of an Owner who is not the Annuitant:
If an Owner who is not the Annuitant dies
before the Maturity Date, we will pay the
Owner's Beneficiary the death proceeds (less
any deferred premium tax) equal to the
greater of:
a. 100% of premium payments (not including
any Bonus Payments) less "Adjusted
Partial Withdrawals" (as defined below);
or
b. the Contract Value next determined
following receipt of a certified copy of
the death certificate at VAO.
3. Death of an Annuitant who is not the Owner:
If an Annuitant who is not the Owner dies
before the Maturity Date, We will pay the
Annuitant's Beneficiary the death proceeds
provided by the Death Benefit Option
selected by the Owner at the time of the
initial premium payment.
In lieu of receiving the death proceeds in
one lump sum, the beneficiary may elect to
apply the death proceeds under any of the
Payment Options described in Part 10 subject
to the following limitations:
D604 15
<PAGE>
a. Options D, F and J are not available for
death benefits;
b. Under Options A, E, G, H and K the period
specified must be at least 5 years, but
not beyond the life expectancy of such
beneficiary.
ELECTION OF DEATH The Owner shall elect either Death Benefit
BENEFIT OPTIONS Option 1 or Death Benefit Option 2 at the time
of the Owner's initial premium payment. The
Owner's chosen option is as shown on the
Schedule Page. If no option is elected, Death
Benefit Option 1 shall apply.
DEATH BENEFIT - OPTION 1 Upon the death of the Annuitant or an
Owner/Annuitant, the death proceeds (less any
deferred premium tax) is equal to the greater
of:
a. 100% of premium payments (not including
any Bonus Payments) less "Adjusted
Partial Withdrawals" (as defined below);
or
b. the Contract Value next determined
following receipt of a certified copy of
the death certificate at VAO.
DEATH BENEFIT - OPTION 2 Upon the death of the Annuitant or an
Owner/Annuitant who has not yet attained age 80,
the death proceeds (less any deferred premium
tax) is equal to the greater of:
a. 100% of premium payments (not including
any Bonus Payments) less "Adjusted
Partial Withdrawals" (as defined below);
or
b. the "Annual Step-up Amount" (as
defined below); or
c. the Contract Value next determined
following receipt of a certified copy of
the death certificate at VAO.
On and after the Annuitant's attained age 80,
the death proceeds (less any deferred premium
tax) equals the greater of:
a. the death benefit calculated at the end
of the Contract Year prior to the
Annuitant's attained age 80, plus 100% of
the premium payments less "Adjusted
Partial Withdrawals" made since the end
of the Contract Year prior to the
Annuitant's attained age 80; or
b. the Contract Value next determined
following receipt of a certified copy of
the death certificate at VAO.
D604 16
<PAGE>
ADJUSTED PARTIAL The sum of all Adjusted Partial Withdrawals when
WITHDRAWALS each is calculated for each partial withdrawal
as the product of (a) times (b) where:
a. is the ratio of the amount of the partial
withdrawal to the Contract Value on the
date of (but prior to) the partial
withdrawal; and
b. is the death benefit on the date of
(but prior to) the partial withdrawal.
ANNUAL STEP-UP AMOUNT In the first Contract Year the Annual Step-up
Amount is equal to the greater of:
a. 100% of premium payments less "Adjusted
Partial Withdrawals"; or
b. the Contract Value.
In the second Contract Year or any subsequent
Contract Year the Annual Step-up Amount is equal
to the greater of:
a. the Annual Step-up Amount at the end of
the previous Contract Year, plus 100% of
premium payments made since the end of
the previous Contract Year, less
"Adjusted Partial Withdrawals" made since
the end of the previous Contract Year; or
b. the Contract Value next determined
following receipt of a certified copy of
the death at VAO.
DISTRIBUTION AT DEATH Death of an Owner/Annuitant
REQUIREMENTS ---------------------------
If the Owner/Annuitant dies before the Maturity
Date, then the Annuitant's Beneficiary must
elect within 60 days of Our receipt of due proof
of death to receive the death proceeds in a lump
sum or elect to apply the death proceeds due
under a Payment Option, provided that the
payments begin within one year of the date of
death of the Annuitant. If the Annuitant's
Beneficiary is the surviving spouse, the
surviving spouse may elect to continue the
Contract as new Owner/Annuitant as if no death
had occurred.
D604 17
<PAGE>
Death of an Owner Who Is not the Annuitant
------------------------------------------
If the Owner who is not the Annuitant dies
before the Maturity Date and the Owner's
surviving spouse is not the Joint Owner or the
Owner's Beneficiary, the Owner's entire interest
in this Contract must be distributed within five
years of the date of the Owner's death, provided
that the Owner's Beneficiary may elect to apply
the death proceeds to a Payment Option not
extending beyond the life (or life expectancy)
of the Owner's Beneficiary and the payments
begin within one year after the Owner's death.
If the Owner's surviving spouse is a Joint
Owner, the Contract will continue with the
surviving Joint Owner becoming the sole Owner.
If the Owner's Beneficiary is the surviving
spouse, the surviving spouse may elect to
continue the Contract as the new Owner as if no
death had occurred.
Death of an Annuitant Who Is not the Owner
------------------------------------------
If the Annuitant who is not the Owner dies
before the Maturity Date and there is no
Contingent Annuitant, then the Annuitant's
Beneficiary must elect within 60 days of Our
receipt of due proof of death to receive the
death proceeds in a lump sum or elect to apply
the death proceeds due under a Payment Option,
provided that the payments begin within one year
of the date of death of the Annuitant. If there
is a Contingent Annuitant, the Contract will
continue with the Contingent Annuitant becoming
the new Annuitant.
If the Annuitant dies before the Maturity Date
and the Owner is not an individual, the entire
interest in this contract must be distributed
within five years of the date of the Annuitant's
death. However, the Annuitant's Beneficiary may
elect to apply the death proceeds to a Payment
Option not extending beyond the life (or life
expectancy) of such Annuitant's Beneficiary and
the payments begin within one year after the
Annuitant's death. If the Annuitant's
Beneficiary is the surviving spouse, the
surviving spouse may elect to continue the
Contract as new Annuitant as if no death had
occurred.
We shall have the right to first require return
of the contract to us so that we may amend it to
reflect these changes.
DEATH ON OR AFTER THE If either the Owner/Annuitant, Annuitant, or
MATURITY DATE Owner dies on or after the Maturity Date, any
remaining income payments will be continued to
the Annuitant's or Owner's Beneficiary
respectively. Under Payment Option M, the sum of
the number of remaining Annuity Units for each
Subaccount multiplied by the current Annuity
Unit Value for that Subaccount will be paid to
the Annuitant's or Owner's Beneficiary in a lump
sum (see "Option M - Unit Refund Variable Life
Annuity" in Part 10).
D604 18
<PAGE>
THE BENEFICIARY The Annuitant's Beneficiary:
---------------------------
Any death proceeds payable to the Annuitant's
Beneficiary will be paid to the Owner or the
Owner's estate if the Annuitant's Beneficiary is
not living when such death proceeds become
payable.
The Owner's Beneficiary:
------------------------
Any death proceeds payable to the Owner's
Beneficiary will be paid to the Owner's estate
if the Owner's Beneficiary is not living when
such death proceeds become payable.
In the case of the death of an Owner/Annuitant
where conflicting Owner and Annuitant's
Beneficiaries have been named, any death
proceeds payable will be paid to the Annuitant's
Beneficiary.
The naming of an Owner's or Annuitant's
beneficiary by familial relationship (such as
Mother, Father, etc.) shall be understood to be
their relationship to the Owner or Annuitant
making such designation.
WHAT ARE THE RIGHTS The Annuitant's Beneficiary and Owner's
OF THE BENEFICIARY Beneficiary may exercise the following rights
with respect to the death proceeds they are
entitled to receive:
1. Receive the death proceeds payable under
this contract; or
2. Select a Payment Option for the death
proceeds; or
3. Transfer the amount of any deferred death
proceeds between and among the various
Subaccounts. See Part 5.
HOW TO CHANGE THE At any time prior to the death of the last of
BENEFICIARY the Annuitants under this contract, You may
change the Owner's Beneficiary or the
Annuitant's Beneficiary. The change must be made
by Written Notice signed by You. When We receive
it, the change will be effective as of the date
it was signed by You. However, the change will
be subject to any payment made or actions taken
by Us before We received the Written Notice.
D604 19
<PAGE>
PART 10: PAYMENT OPTIONS
You must elect a payment option by Written
Request. We reserve the right to require that
the election of a payment option be in the form
of a supplementary contract distributed by Us
reflecting the terms of the payment option
elected. We have the right to require proof of
age and sex of any person on whose life payments
depend, as well as proof of the continued
survival of any such person. After the first
Payment Calculation Date, You may not change the
Payment Option You elected. As regards the
election of a Payment Option by the beneficiary
of any death proceeds payable under this
contract, limited as described in Part 9, the
term "Annuitant" as used below shall refer to
such beneficiary.
CALCULATION OF The guaranteed annuity payment rates under the
FIXED ANNUITY following options will be based on the
PAYMENTS Annuitant's age and sex, and will be no less
favorable than the following:
Under Options A, B, D, E and F rates are based
on the a-49 Annuity Table projected to 1985 with
Projection Scale B. We use an interest rate of
3-3/8% for 5- and 10-year certain periods under
Option A, for the 10-year certain 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 Options B and D. Under Options G and H the
guaranteed interest rate is 3%.
If Our rates in effect on the Settlement Date
are more favorable, We will use those rates.
CALCULATION OF Under the following options, all payments after
VARIABLE ANNUITY the first payment will vary with the investment
PAYMENTS experience of the Subaccounts. Payments may be
either higher or lower than the first payment.
Under Options I, J, K, M and N, We determine the
first payment by multiplying the amounts held
under the selected option in each Subaccount by
the applicable Payment Option rate. The first
payment equals the total of such amounts
determined for each Subaccount. We determine
future payments under these options by
multiplying the number of Annuity Units in each
Subaccount by the Annuity Unit Value for each
Subaccount on the Payment Calculation Date. The
payment will equal the sum of the amounts
provided by each Subaccount.
D604 20
<PAGE>
Under Option L, We determine the amount of the
annual distribution by dividing the amount of
Contract Value held under this option on
December 31 of the previous year by the life
expectancy of the Annuitant or the joint life
expectancy of the Annuitant and Joint Annuitant
at that time.
Under Options I, J, M and N, the applicable
option rate used to determine the first payment
amount will not be less than the rate based on
the 1983 Table A (1983 IAM) projected with
Projection Scale G to the year 2040, and with
continued projection thereafter, and on the
Assumed Investment Rate. Under Option K, the
rate will be based on the number of payments to
be made during the specified period and the
Assumed Investment Rate.
OPTION A - A fixed payout annuity payable monthly while the
LIFE ANNUITY Annuitant is living or, if later, the end of the
WITH SPECIFIED specified period certain. The period certain may
PERIOD CERTAIN be specified as 5, 10, or 20 years. The period
certain must be elected at the time this option
is elected.
OPTION B - A fixed payout annuity payable monthly while the
NON-REFUND Annuitant is living and ending with the last
LIFE ANNUITY Life payment due preceding the date of the
Annuitant's death.
OPTION D - A fixed payout annuity payable monthly while the
JOINT AND SURVIVORSHIP Annuitant and the designated Joint Annuitant are
LIFE ANNUITY living, and continuing thereafter during the
lifetime of the survivor. The amount to be
continued to the survivor is 100% of the joint
annuity payment, as specified at the time this
option is elected. The designated Joint
Annuitant must be designated at the time this
option is elected and must have an adjusted age
of at least 40. The adjusted age is the person's
age on his or her birthday nearest the
Settlement Date.
OPTION E - A fixed payout annuity payable monthly while the
INSTALLMENT REFUND Annuitant is living or, if later, the date the
LIFE ANNUITY annuity payments made under this option total an
amount which refunds the entire amount applied
under this option. If the Annuitant is not
living when the final payment falls due, that
payment will be limited to the amount which
needs to be added to the payments already made
to equal the entire amount applied under this
option.
OPTION F - A fixed payout annuity payable monthly while
JOINT AND SURVIVORSHIP either the Annuitant or designated Joint
LIFE ANNUITY WITH Annuitant is living, or if later, the end of 10
10-YEAR PERIOD CERTAIN years. The designated Joint Annuitant must be
designated at the time this option is elected
and must have an adjusted age of at least 40
years. The adjusted age is the person's age on
his or her birthday nearest the settlement date.
D604 21
<PAGE>
OPTION G - Equal income installments for a specified period
PAYMENTS FOR A of years are paid whether the payee lives or
SPECIFIED PERIOD dies. The period certain specified must be in
whole numbers of years from 5 to 30.
OPTION H - Equal income installments of a specified amount
PAYMENTS OF A are paid until the principal sum remaining under
SPECIFIED AMOUNT this option from the amount applied is less than
the amount of the installment. When that
happens, the principal sum remaining will be
paid as a final payment. The amount specified
must provide for payments for a period of at
least 5 years.
OPTION I - This option provides variable monthly payments
VARIABLE LIFE ANNUITY that will continue during the lifetime of the
WITH 10-YEAR Annuitant or for ten years, if longer. If the
PERIOD CERTAIN beneficiary of any death benefits payable under
this contract elects this payment option, the
term "Annuitant" as used in the preceding
paragraph shall refer to such beneficiary and
the period certain will equal 10 years, or the
life expectancy of such beneficiary, if shorter.
OPTION J - This option provides variable monthly payments
JOINT SURVIVORSHIP VARIABLE while the Annuitant and the designated Joint
LIFE ANNUITY WITH Annuitant are living. Payments will continue
10-YEAR PERIOD CERTAIN during the life of the survivor or until the end
of 10 years if later. You must designate the
Joint Annuitant at the time You elect this
option. The designated Joint Annuitant must be
at least age 40 on the birthday nearest the
first Payment Calculation Date. This option is
not available for the payment of any death
benefit under this contract.
OPTION K - This option provides variable monthly payments
VARIABLE ANNUITY through the release of a fixed number of Annuity
FOR SPECIFIED PERIOD Units over a specified period of time. Payment
continues whether the Annuitant lives or dies.
The specified period must be in whole numbers of
years from 5 to 30. However, the period selected
by the beneficiary may not extend beyond the
life expectancy of such beneficiary. This option
also provides for unscheduled withdrawals. An
unscheduled withdrawal will reduce the number of
remaining annuity units. Thus, the specified
period will be reduced to the period that the
remaining annuity units can provide.
OPTION L - This option provides a variable income which is
VARIABLE LIFE payable over the Annuitant's annually
EXPECTANCY ANNUITY recalculated life expectancy or the annually
recalculated life expectancy of the Annuitant
and Joint Annuitant. This option also provides
for unscheduled withdrawals. An unscheduled
withdrawal will reduce the Contract Value. This
will thus affect the amount of future payments.
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.
D604 22
<PAGE>
OPTION M - This option provides variable monthly payments
UNIT REFUND as long as the Annuitant lives. In the event of
VARIABLE LIFE ANNUITY the death of the Annuitant, the income will stop
and the Annuitant's Beneficiary will receive in
a lump sum the value of the remaining Annuity
Units. This value is equal to the sum of the
number of remaining Annuity Units for each
Subaccount multiplied by the current Annuity
Unit Value for that Subaccount. The number of
remaining Annuity Units for each Subaccount will
be calculated as follows:
(1) the net amount in the Subaccount
applied under this option on the first
Payment Calculation Date divided by the
corresponding Annuity Unit Value on
that date minus
(2) the sum of the Annuity Units released
from the Subaccount to make the
payments under this option.
OPTION N - This option provides a variable monthly income
VARIABLE NON- for the lifetime of the Annuitant. No income is
REFUND LIFE ANNUITY payable after the death of the Annuitant.
OTHER OPTIONS We may offer other payment options or
alternative versions of the options listed
above.
PART 11: TABLES OF PAYMENT OPTION AMOUNTS
The tables that follow show the guaranteed
minimum monthly payments for Options A-G, and
the minimum initial payment for the Variable
Payment Options I, J, K, M and N for each $1,000
applied. If Our rates in effect at the
Settlement Date are more favorable, We will use
those rates. Subsequent monthly payments for the
Variable Payment Options will vary and may be
higher or lower than the first payment. Amounts
for payment frequencies, periods or ages not
shown will be furnished upon request.
The term "age" as used in the tables refers to
the adjusted age. The adjusted age is defined as
the age of the Annuitant on the Annuitant's
birthday nearest the effective date of the
payment option elected.
D604 23
<PAGE>
OPTIONS A & E -- LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN; INSTALLMENT
REFUND LIFE ANNUITY
<TABLE>
<CAPTION>
- ------------ --------------------------- -------------------------- -------------------------
INSTALLMENT REFUND 10 YEARS CERTAIN 20 YEARS CERTAIN
AGE OF --------------------------------------------------------------------------------
PAYEE MALE FEMALE MALE FEMALE MALE FEMALE
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
40 $3.80 $3.64 $3.86 $3.60 $3.74 $3.54
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
45 4.05 3.85 4.14 .82 3.99 3.74
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
50 4.36 4.12 4.50 4.10 4.28 3.99
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
55 4.76 4.47 4.95 4.47 4.61 4.31
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
60 5.28 4.93 5.54 4.96 4.97 4.67
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
65 5.97 5.54 6.30 5.63 5.29 5.06
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
70 6.91 6.39 7.24 6.50 5.43 5.31
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
75 8.21 7.57 8.26 7.56 5.44 5.40
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
80 10.04 9.26 10.12 8.60 5.46 5.46
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
85 12.61 11.68 12.60 9.31 5.46 5.46
- ------------ ------------- ------------- ------------ ------------- ------------ ------------
</TABLE>
OPTION B -- NON-REFUND LIFE ANNUITY
- --------------- ------------ ------------
AGE OF
PAYEE MALE FEMALE
- --------------- ------------ ------------
40 $ 3.95 $ 3.75
- --------------- ------------ ------------
45 4.24 3.98
- --------------- ------------ ------------
50 4.62 4.28
- --------------- ------------ ------------
55 5.12 4.68
- --------------- ------------ ------------
60 5.79 5.24
- --------------- ------------ ------------
65 6.75 6.04
- --------------- ------------ ------------
70 8.15 7.22
- --------------- ------------ ------------
75 10.26 9.03
- --------------- ------------ ------------
80 13.54 11.88
- --------------- ------------ ------------
85 18.72 16.54
- --------------- ------------ ------------
OPTION D -- JOINT AND SURVIVORSHIP LIFE ANNUITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FEMALE MALE
AGE ---------------------------------------------------------------------------------------
40 45 50 55 60 65 70 75
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 $3.49 $3.55 $3.59 $3.62 $3.64 $3.65 $3.66 $3.67
------------------------------------------------------------------------------------------------
45 3.58 3.67 3.74 3.80 3.83 3.86 3.88 3.89
------------------------------------------------------------------------------------------------
50 3.65 3.79 3.90 4.00 4.07 4.12 4.16 4.18
------------------------------------------------------------------------------------------------
55 3.72 3.89 4.06 4.22 4.35 4.44 4.51 4.56
------------------------------------------------------------------------------------------------
60 3.77 3.97 4.20 4.43 4.65 4.83 4.96 5.05
------------------------------------------------------------------------------------------------
65 3.80 4.04 4.31 4.62 4.94 5.25 5.51 5.71
------------------------------------------------------------------------------------------------
70 3.83 4.08 4.34 4.77 5.20 5.67 6.13 6.52
------------------------------------------------------------------------------------------------
75 3.85 4.12 4.46 4.88 5.40 6.04 6.75 7.46
------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPTION F -- JOINT AND SURVIVORSHIP LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
- --------------------------------------------------------------------------------------------------
MALE
FEMALE -------------------------------------------------------------------------------------------
AGE 40 45 50 55 60 65 70 75
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 $3.49 $3.55 $3.59 $3.62 $3.64 $3.65 $3.66 $3.67
------------------------------------------------------------------------------------------------
45 3.58 3.67 3.74 3.80 3.83 3.86 3.88 3.89
------------------------------------------------------------------------------------------------
50 3.65 3.78 3.90 4.00 4.07 4.12 4.15 4.17
------------------------------------------------------------------------------------------------
55 3.72 3.89 4.06 4.22 4.34 4.44 4.50 4.54
------------------------------------------------------------------------------------------------
60 3.77 3.97 4.19 4.43 4.64 4.82 4.95 5.03
------------------------------------------------------------------------------------------------
65 3.80 4.03 4.31 4.61 4.93 5.23 5.45 5.65
------------------------------------------------------------------------------------------------
70 3.83 4.08 4.39 4.75 5.18 5.63 6.07 6.41
------------------------------------------------------------------------------------------------
75 3.85 4.11 4.45 4.86 5.36 5.96 6.62 7.21
------------------------------------------------------------------------------------------------
</TABLE>
D604 24
<PAGE>
OPTION G -- PAYMENTS FOR A SPECIFIED PERIOD
- -------------------- ----------------- ------------------
NUMBER OF ANNUAL MONTHLY
YEARS INSTALLMENT INSTALLMENT
- -------------------- ----------------- ------------------
5 $211.99 $17.91
- -------------------- ----------------- ------------------
6 179.22 15.14
- -------------------- ----------------- ------------------
7 155.83 13.16
- -------------------- ----------------- ------------------
8 138.31 11.68
- -------------------- ----------------- ------------------
9 124.69 10.53
- -------------------- ----------------- ------------------
10 113.82 9.61
- -------------------- ----------------- ------------------
11 104.93 8.86
- -------------------- ----------------- ------------------
12 97.54 8.24
- -------------------- ----------------- ------------------
13 91.29 7.71
- -------------------- ----------------- ------------------
14 85.95 7.26
- -------------------- ----------------- ------------------
15 81.33 6.87
- -------------------- ----------------- ------------------
16 77.29 6.53
- -------------------- ----------------- ------------------
17 73.74 6.23
- -------------------- ----------------- ------------------
18 70.59 5.96
- -------------------- ----------------- ------------------
19 67.78 5.73
- -------------------- ----------------- ------------------
20 65.26 5.51
- -------------------- ----------------- ------------------
25 55.76 4.71
- -------------------- ----------------- ------------------
30 49.53 4.18
- -------------------- ----------------- ------------------
OPTION I -- VARIABLE LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
- --------------- ------------ ------------
AGE OF
PAYEE 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
- --------------- ------------ ------------
<TABLE>
<CAPTION>
OPTION J -- JOINT SURVIVORSHIP VARIABLE LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
- -------------------------------------------------------------------------------------------------
MALE
FEMALE -------------------------------------------------------------------------------------
AGE 40 45 50 55 60 65 70 75
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 $3.92 $3.94 $3.96 $3.98 $3.99 $4.00 $4.00 $4.01
-----------------------------------------------------------------------------------------------
45 3.96 4.00 4.03 4.06 4.08 4.09 4.10 4.11
-----------------------------------------------------------------------------------------------
50 4.00 4.05 4.10 4.15 4.18 4.21 4.23 4.24
-----------------------------------------------------------------------------------------------
55 4.03 4.10 4.18 4.24 4.30 4.35 4.39 4.41
-----------------------------------------------------------------------------------------------
60 4.06 4.15 4.25 4.34 4.43 4.52 4.58 4.63
-----------------------------------------------------------------------------------------------
65 4.09 4.19 4.31 4.44 4.57 4.70 4.81 4.90
-----------------------------------------------------------------------------------------------
70 4.11 4.22 4.36 4.53 4.70 4.89 5.07 5.22
-----------------------------------------------------------------------------------------------
75 4.12 4.75 4.41 4.60 4.82 5.07 5.34 5.59
-----------------------------------------------------------------------------------------------
</TABLE>
D604 25
<PAGE>
OPTION K -- VARIABLE ANNUITY FOR SPECIFIED PERIOD
- -------------------- ----------------- ------------------
NUMBER OF ANNUAL MONTHLY
YEARS INSTALLMENT INSTALLMENT
- -------------------- ----------------- ------------------
5 $217.98 $18.53
- -------------------- ----------------- ------------------
6 185.53 15.77
- -------------------- ----------------- ------------------
7 162.39 13.81
- -------------------- ----------------- ------------------
8 145.08 12.34
- -------------------- ----------------- ------------------
9 131.65 11.19
- -------------------- ----------------- ------------------
10 120.94 10.28
- -------------------- ----------------- ------------------
11 112.20 9.54
- -------------------- ----------------- ------------------
12 104.94 8.92
- -------------------- ----------------- ------------------
13 98.83 8.40
- -------------------- ----------------- ------------------
14 93.61 7.96
- -------------------- ----------------- ------------------
15 89.10 7.58
- -------------------- ----------------- ------------------
16 85.18 7.24
- -------------------- ----------------- ------------------
17 81.74 6.95
- -------------------- ----------------- ------------------
18 78.70 6.69
- -------------------- ----------------- ------------------
19 75.99 6.46
- -------------------- ----------------- ------------------
20 73.57 6.25
- -------------------- ----------------- ------------------
25 64.53 5.49
- -------------------- ----------------- ------------------
30 58.75 5.00
- -------------------- ----------------- ------------------
OPTION M - UNIT REFUND VARIABLE LIFE ANNUITY
- --------------- ------------ ------------
AGE OF
PAYEE MALE FEMALE
- --------------- ------------ ------------
40 $4.12 $4.01
- --------------- ------------ ------------
45 4.25 4.11
- --------------- ------------ ------------
50 4.42 4.24
- --------------- ------------ ------------
55 4.64 4.41
- --------------- ------------ ------------
60 4.92 4.64
- --------------- ------------ ------------
65 5.28 4.94
- --------------- ------------ ------------
70 5.74 5.33
- --------------- ------------ ------------
75 6.32 5.86
- --------------- ------------ ------------
80 7.07 6.55
- --------------- ------------ ------------
85 8.01 7.43
- --------------- ------------ ------------
OPTION N -- VARIABLE NON-REFUND LIFE ANNUITY
- --------------- ------------ ------------
AGE OF
PAYEE MALE FEMALE
- --------------- ------------ ------------
40 $4.15 $4.02
- --------------- ------------ ------------
45 4.30 4.13
- --------------- ------------ ------------
50 4.50 4.27
- --------------- ------------ ------------
55 4.76 4.47
- --------------- ------------ ------------
60 5.11 4.73
- --------------- ------------ ------------
65 5.60 5.09
- --------------- ------------ ------------
70 6.29 5.60
- --------------- ------------ ------------
75 7.20 6.34
- --------------- ------------ ------------
80 8.49 7.41
- --------------- ------------ ------------
85 10.30 8.98
- --------------- ------------ ------------
D604 26
<PAGE>
[LOGO] PHOENIX
FLEXIBLE PREMIUM VARIABLE ACCUMULATION DEFERRED ANNUITY
ALL VALUES AND BENEFITS BASED ON THE INVESTMENT EXPERIENCE OF THE
SUBACCOUNTS OF THE SEPARATE ACCOUNT MAY INCREASE OR DECREASE AND ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE PART 7 FOR A
DESCRIPTION OF HOW THE CONTRACT VALUES ARE DETERMINED, AND PART 9 FOR A
DESCRIPTION OF HOW THE DEATH BENEFITS ARE DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
D604
Exhibit 5(a)
Form of Variable Annuity Application
<PAGE>
<TABLE>
<CAPTION>
[LOGO] PHOENIX PHL VARIABLE INSURANCE COMPANY PHOENIX PREMIUM EDGE(SM)
One American Row, PO Box 5056 VARIABLE ANNUNITY APPLICATION
Hartford CT 06102-5056
====================================================================================================================================
<S> <C>
TYPE OF CONTRACT: ANNUITANT, PRIMARY
Name ________________________________________________________________________________
[ ] NONQUALIFIED Address _____________________________________________________________________________
[ ] 1035 Exchange City, State, ZIP Code _______________________________________________________________
Phone ______________________________________________________ Sex: [ ] Male [ ] Female
[ ] QUALIFIED Social Security Number _________________ Date of Birth ______________________________
[ ] Regular Contributory IRA
[ ] Roth IRA CONTINGENT ANNUITANT (If Annuitant and Owner are different)
[ ] IRA Direct Rollover
[ ] Simple IRA Name(s) _____________________________________________________________________________
[ ] SEP IRA Address _____________________________________________________________________________
[ ] Tax year ___________ City, State, ZIP Code _______________________________________________________________
[ ] Owner acknowledges receipt of Phone ______________________________________________________ Sex: [ ] Male [ ] Female
Disclosure Statement Social Security Number _________________ Date of Birth ______________________________
DEATH BENEFIT OPTION: CONTRACT OWNER (Complete only if different from Annuitant)
[ ] Benefit Option 1 [ ] Joint Ownership (between spouses ONLY)
(Return of Premium - 5% Bonus Payment) Name(s) _____________________________________________________________________________
[ ] Benefit Option 2 Address _____________________________________________________________________________
(Annual Step-up - 4% Bonus Payment) City, State, ZIP Code _______________________________________________________________
Phone ______________________________________________________ Sex: [ ] Male [ ] Female
Death Benefit and Bonus Payment amount will Social Security Number _________________ Date of Birth ______________________________
vary depending on the contract and Benefit
Option chosen. Please refer to your prospectus BENEFICIARY DESIGNATIONS:
for further details on Options available under
the contract. LEGAL NAME RELATIONSHIP
-------------------------------------------------------------------------------------
Annuitant's Primary Beneficiary
-------------------------------------------------------------------------------------
Annuitant's Contingent Beneficiary
-------------------------------------------------------------------------------------
Owner's Primary Beneficiary
(Required only if Owner and
Annuitant are different)
-------------------------------------------------------------------------------------
Owner's Contingent Beneficiary
-------------------------------------------------------------------------------------
PURCHASE PAYMENTS:
Initial Purchase Payment: $ _______________ Maturity Date __________
Subsequent purchase payments will be flexible unless otherwise noted as follows:
$_________
[ ] Annual [ ] Semi-Annual [ ] Quarterly [ ] Monthly [ ] Check-O-Matic*
BILLING NOTICES ARE REQUESTED. SEND BILLS TO:
Name ________________________________________________________________________________
Address _____________________________________________________________________________
City, State, ZIP Code _______________________________________________________________
* If Check-O-Matic is elected, please complete the authorization form and include a
void check.
OL2973 2-00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
DOLLAR COST AVERAGING SUBACCOUNT ALLOCATION (Use full percentages - Must equal 100%)
<S> <C> <C>
All transfers will be executed on the first _____ Phoenix-Aberdeen International _____ Bankers Trust EAFE[registered
of the month following receipt of the dollar trademark] Equity Index
cost averaging request. _____ Phoenix-Aberdeen New Asia _____ Federated US Government Securities II
_____ Phoenix-Bankers Trust Dow 30 _____ Federated High Income Bond II
_____ Phoenix-Duff & Phelps Real Estate _____ Guaranteed Interest Account
Transfer amount: $__________ Securities
($2,000 minimum balance in sending subaccount) _____ Phoenix-Engemann Capital Growth _____ MSDW Technology Portfolio
_____ Phoenix-Engemann Nifty-Fifty _____ Mutual Shares Securities Fund - Class 2
Frequency: _____ Phoenix-Federated US Govt Bond _____ Templeton Asset Strategy Fund - Class 2
[ ] Monthly [ ] Quarterly _____ Phoenix-Goodwin Multi-Sector _____ Templeton Developing Markets Securities
[ ] Semi-Annual [ ] Annual Fixed Income Fund - Class 2
_____ Phoenix-Goodwin Money Market _____ Templeton International Securities
Fund - Class 2
Sending Subaccount (choose one): _____ Phoenix-Hollister Value Equity _____ Templeton Growth Securities Fund
- Class 2
[ ] Money Market _____ Phoenix-Janus Equity Income _____ Wanger Foreign Forty
[ ] Guaranteed Interest Account _____ Phoenix-Janus Flexible Income _____ Wanger International Small Cap
[ ] Other ____________________________ _____ Phoenix-Janus Growth _____ Wanger Twenty
_____ Phoenix-J.P. Morgan Research _____ Wanger US Small Cap
Enhanced Index
Receiving Subaccounts: _____ Phoenix-Morgan Stanley Focus _____ MVA - 3 Year
Subaccount Transfer Amount Equity
---------- --------------
_____ Phoenix-Oakhurst Balanced _____ MVA - 5 Year
_________________ ____________________ _____ Phoenix-Oakhurst Growth & _____ MVA - 7 Year
Income
_________________ ____________________ _____ Phoenix-Oakhurst Strategic _____ MVA - 10 Year
Allocation
_________________ ____________________ _____ Phoenix-Schafer Mid-Cap Value _____ Other ___________________________
_____ Phoenix-Seneca Mid-Cap Growth _____ Other ___________________________
_________________ ____________________ _____ Phoenix-Seneca Strategic Theme _____ Other ___________________________
MISCELLANEOUS INSTRUCTIONS/COMMENTS
_____________________________________________________________________________________
STATEMENT OF OWNER/APPLICANT AND ANNUITANT
Will the proposed contract replace any existing annuity or life insurance?
[ ] Yes [ ] No
TELEPHONE TRANSFERS AND CHANGE IN PAYMENT If Yes, list company name, plan and year issued. ____________________________________
ALLOCATION:
WE HEREBY REPRESENT THE ANSWERS TO THE ABOVE QUESTIONS TO BE ACCURATE AND COMPLETE.
[ ] Yes [ ] No WE HEREBY VERIFY OUR UNDERSTANDING THAT ALL PAYMENTS AND VALUES PROVIDED BY THE
CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF THE FUND, ARE VARIABLE AND NOT
GUARANTEED. WE ACKNOWLEDGE RECEIPT OF CURRENT PROSPECTUSES FOR THE VARIABLE ANNUITY
Telephone transfers and changes in payment AND THE FUND.
allocation are subject to the terms of the
Prospectus. If you check the "yes" box, Do you request and agree to receive prospectuses, annual and semi-annual reports,
telephone orders will be accepted from you confirmations statements of account, and proxy statements in an electronic format
and your registered representative and you when available rather than in a paper version? [ ] Yes [ ] No
agree that, because we cannot verify the [ ] Statement of Additional Information Requested
authenticity of telephone instructions, we Signed at ____________________________ On __________________________________________
will not be liable for any loss caused by our (City, State) (Date)
acting on telephone instructions, unless Under penalty of perjury, I (owner) certify that my Social Security/Taxpayer ID
caused by our gross negligence. number is correct as it appears on this application.
Signature of Owner/Applicant ________________________________________________________
SEND COMPLETED FORM WITH A CHECK PAYABLE TO Signature of Witness ________________________________________________________________
"PHOENIX" TO: Signature of Annuitant (if other than Owner) ________________________________________
Phoenix Variable Annuity Operations STATEMENT OF REGISTERED REPRESENTATIVE
PO Box 8027 Will this contract replace any existing insurance or annuity? [ ] Yes [ ] No
Boston MA 02266-8027 This replacement is meant to be a tax-free exchange under Section 1035:[ ] Yes [ ] No
If yes, please give details in the Miscellaneous Section.
FOR OVERNIGHT DELIVERY SEND TO:
PHOENIX VARIABLE ANNUITY OPERATIONS The Agent hereby certifies that the Owner signed the application in his/her presence;
66 BROOKS DRIVE, BRAINTREE, MA 02184 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.
(Use full percentages - must equal 100%)
________________________________________________________ ___________________________
Print Representative's Name Business Telephone Number
___________________________ ____________ _____________________ _________ ________
Representative's Signature Date Broker-Dealer Firm Rep # % Share
___________________________ ____________ _____________________ _________ ________
Representative's Signature Date Broker-Dealer Firm Rep # % Share
</TABLE>
Exhibit 9
Written Opinion of Edwin L. Kerr, Esq.
<PAGE>
May 11, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: PHL Variable Accumulation Account
PHL Variable Insurance Company
Pre-Effective Amendment No. 1 to Form N-4/A
File Nos. 333-95611 and 811-8914
Dear Sirs:
As Counsel to the depositor, I have participated in the development of
and am familiar with the variable annuity, Phoenix Premium Edge
("Contracts"), which is 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 New York insurance
law relevant to the issuance of the Contracts.
Based upon this review, I am of the opinion that the Contracts, when
issued, will be 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/ Edwin L. Kerr
Edwin L. Kerr, Counsel
PHL Variable Insurance Company
Exhibit 10(a)
Consent of Counsel
<PAGE>
To Whom It May Concern:
I hereby consent to the reference to my name under the caption "Legal
Matters" in the Prospectus contained in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4/A (File No. 333-95611) filed by PHL Variable
Accumulation Account with the Securities and Exchange Commission under the
Securities Act of 1933.
Very truly yours,
Dated: May 11, 2000 /s/ Edwin L. Kerr
-----------------
Edwin L. Kerr, Counsel
PHL Variable Insurance Company
Exhibit 10(b)
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Pre-Effective Amendment No. 1 to the
registration statement on Form N-4 ("Registration Statement") of our report
dated February 15, 2000, relating to the financial statements of PHL Variable
Insurance Company, which appears in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
May 9, 2000
