As filed with the Securities and Exchange Commission on
February 25, 2000
Registration No. 33-90208
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 7
to
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
Acacia National Life Insurance Company
SEPARATE ACCOUNT I
(EXACT NAME OF REGISTRANT)
----------------
Acacia National Life Insurance Company
(Depositor)
7315 Wisconsin Avenue Bethesda, MD 20814
----------------
Robert-John H. Sands Senior Vice President, Corporate Secretary
and General Counsel
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20855
-----------------
Title of Securities Being Registered: SECURITIES OF UNIT INVESTMENT TRUST
Approximate Date Of Proposed Public offering: As soon as practicable
after effective date.
It is proposed that this filing will become effective:
___ Immediately upon filing pursuant to paragraph (b).
___ On ______________ pursuant to paragraph (b).
___ 60 days after filing pursuant to paragraph (a)(1).
_X_ On MAY 1, 2000 pursuant to paragraph (a)(1) of Rule 485.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
------------- -----------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 Acacia National Life Insurance Company - Separate Account I
6 Acacia National Life Insurance Company - Separate Account I
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion of Substitution of Investments;
Policy Benefits; Policy Rights; Payment and Allocation of
Premiums; General Provisions; Voting Rights
11 Summary; The Funds
12 Summary; The Funds
13 Summary; The Funds - Charges and Deductions
14 Summary; Payment and Allocation of Premiums
15 Summary; Payment and Allocation of Premiums
16 Summary; The Alger American Fund, Calvert Variable
Series, Inc, BT Insurance Funds Trust, Variable
Insurance Products Fund, Variable Insurance Products
Fund II, Franklin Templeton Variable Insurance
Products Trust, Neuberger Berman Advisers Management
Trust, Oppenheimer Variable Account Funds., and Van
Eck Worldwide Insurance Trust
17 Summary, Policy Rights
18 The Alger American Fund, Calvert Variable Series,
Inc, BT Insurance Funds Trust, Variable Insurance
Products Fund, Variable Insurance Products Fund II,
Franklin Templeton Variable Insurance Products Trust,
Neuberger Berman Advisers Management Trust,
Oppenheimer Variable Account Funds, and Van Eck
Worldwide Insurance Trust
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights, Loan Benefits; General Provisions
22 Not Applicable
23 Safekeeping of the Separate Account's Assets
24 General Provisions
25 Acacia National Life Insurance Company
26 Not Applicable
27 Acacia National Life Insurance Company
28 Executive Officers and Directors of ANLIC; Acacia National
Life Insurance Company
29 Acacia National Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Required
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of Policies
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
-------------- -----------------------
42 Not Applicable
43 Not Applicable
44 Cash Value, Payment and Allocation of Premium
45 Not Applicable
46 The Funds; Cash Value
47 The Funds
48 State Regulation of ANLIC
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment and Allocation
of Premiums, Charges and Deductions
52 Addition, Deletion or Substitution of Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
<PAGE>
THE ACACIA GROUP LOGO
PROSPECTUS
The Date of This Prospectus is May 1, 2000.
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Allocator 2000 --
A Flexible Premium Variable Universal Life
Insurance Policy issued by Acacia National Life Insurance Company
Allocator 2000 is a flexible premium variable universal life insurance Policy
("Policy"), issued by Acacia National Life Insurance Company ("ANLIC"). Like
traditional life insurance policies, an Allocator 2000 Policy provides Death
Benefits to Beneficiaries and gives you, the Policyowner, the opportunity to
increase the Policy's cash value. Unlike traditional policies, Allocator 2000
lets you vary the frequency and amount of premium payments, rather than follow a
fixed premium payment schedule. It also lets you choose one of two Death Benefit
options: (1) a level amount, which generally equals the Face Amount of the
Policy; or (2) a variable amount which generally equals the Face Amount plus the
Policy Account Value. While the Policy remains in force, the Death Benefit will
not be less than the maximum of the current Face Amount of the Policy or the
Policy Account Value mutliplied by the applicable corridor percentage specified
in the Policy. The minimum face amount is $ 25,000.
An Allocator 2000 Policy is different from traditional life insurance policies
in another important way: you select how Policy premiums will be invested.
Although each Policyowner is guaranteed a minimum death benefit, the cash value
of the Policy, as well as the actual Death Benefit, will vary with the
performance of investments you select.
The Investment Options available through Allocator 2000 include investment
portfolios from The Alger American Fund, Calvert Variable Series, Inc., BT
Insurance Funds Trust, Variable Insurance Products Fund, Variable Insurance
Products Fund II, Franklin Templeton Variable Insurance Products Trust,
Neuberger Berman Advisers Management Trust, Oppenheimer Variable Account Funds,
and Van Eck Worldwide Insurance Trust. Each of these portfolios has its own
investment objective and policies. These are described in the prospectuses for
each investment portfolio which must accompany this Allocator 2000 prospectus.
You may also choose to allocate premium payments to the Fixed Account managed by
ANLIC.
An Allocator 2000 Policy will be issued after ANLIC accepts a prospective
Policyowner's application. Allocator 2000 Policies are available to cover
individuals between the ages of 20 and 80 at the time of purchase. An Allocator
2000 Policy, once purchased, may generally be canceled until 20 days after the
Owner receives the Policy or 45 days after completion of Part I of the
application, if later.
This Allocator 2000 prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of an Allocator 2000 Policy.
Prospective Policyowners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the
Allocator 2000 Policy, information about ANLIC, a list of the investment
portfolios to which you may allocate premium payments, and a detailed
description of the Allocator 2000 Policy. The appendix to the prospectus
includes tables designed to illustrate how cash values and death benefits may
change with the investment experience of the Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through Allocator 2000. Although the Allocator 2000 Policy
is designed to provide life insurance, an Allocator 2000 Policy is considered to
be a security. The purchase of an Allocator 2000 Policy involves investment
risk, including the possible loss of principal. For this reason, Allocator 2000
may not be suitable for all individuals. It may not be advantageous to purchase
an Allocator 2000 Policy as a replacement for another type of life insurance or
as a way to obtain additional insurance protection if the purchaser already owns
another flexible premium variable universal life insurance policy. This Policy
may not be available in all states.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains other information regarding registrants that file electronically
with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Glossary of Defined Terms.....................................................3
Questions and Answers About Your Policy.......................................6
ANLIC and the Variable Account............................................... 9
Acacia National Life Insurance Company...................................9
The Variable Account....................................................10
The Portfolios...............................................................10
The Alger American Fund.................................................10
Calvert Variable Series, Inc............................................11
BT Insurance Funds Trust................................................12
Variable Insurance Products Fund, Variable Insurance Products Fund II...13
Franklin Templeton Variable Insurance Products Trust....................13
Neuberger Berman Advisers Management Trust..............................13
Oppenheimer Variable Account Funds......................................14
Van Eck Worldwide Hard Assets Fund......................................15
Resolving Material Conflicts............................................16
Addition, Deletion, or Substitution of Investments......................17
Policy Benefits..............................................................17
Death Benefits..........................................................17
Applicable Percentage Table.............................................18
Payment of Policy Benefits..............................................20
Payment and Allocation of Premiums...........................................21
Policy Issue.........................................................21
Premiums.............................................................21
Allocation of Premiums and Policy Account Value......................22
Transfers............................................................23
Policy Lapse and Reinstatement.......................................23
Charges and Deductions.......................................................24
Surrender Charge.....................................................24
Partial Surrender Charge.............................................25
Premium Expense Charges..............................................25
Policy Account Value Charges.........................................25
Daily Charges Against the Variable Account...........................25
Investment Advisory Fee..............................................26
Portfolio Annual Expenses............................................26
Reduction of Charges.................................................27
Policy Rights................................................................27
Loan Privileges......................................................27
Surrender Privileges.................................................29
Partial Surrender....................................................29
Coverage Beyond the Maturity Date....................................29
Examination of the Policy Privilege (Free Look)..............................29
General Account..............................................................30
General Description..................................................30
The Policy...........................................................30
General Account Value................................................30
General Policy Provisions....................................................30
Postponement of Payments.............................................30
The Contract.........................................................31
Suicide..............................................................31
Incontestability.....................................................31
Change of Owner or Beneficiary.......................................31
Collateral Assignment................................................31
Misstatement of Age or Sex...........................................31
Reports and Records..................................................31
Optional Insurance Benefits..........................................31
Federal Tax Considerations...................................................32
Introduction.........................................................32
Policies Issued in Conjunction with Employee Benefit Plans...................36
Legal Developments Regarding Unisex Actuarial Tables.........................36
Voting Rights................................................................36
Officers and Directors of ANLIC..............................................37
Distribution of the Policies.................................................38
Administration...............................................................39
Preparations for the Year 2000...............................................39
Policy Reports...............................................................39
State Regulation.............................................................40
Experts......................................................................40
Legal Matters................................................................40
Additional Information.......................................................40
Appendix A - Illustrations
Appendix B - Automatic Rebalancing and Dollar Cost Averaging Programs
Financial Statements
<PAGE>
GLOSSARY OF DEFINED TERMS
ATTAINED AGE The age of the Insured on the last Policy Anniversary.
BENCHMARK PREMIUM A monthly premium based on the original face amount and
any increase made during the first sixty months that the
Policy is in force. During the first sixty months that
the Policy is in force, the Policy is guaranteed not to
lapse provided the sum of the premiums paid equals or
exceeds the sum of the scheduled Benchmark Premiums
since the Policy date and any Increase date.
BENEFICIARY The Beneficiary is designated by the Owner to receive
the Death Benefit proceeds. If changed, the Beneficiary
is as shown in the latest change filed with ANLIC. If no
Beneficiary survives the Insured, the Owner or the
Owner's estate will be the Beneficiary. The interest of
any Beneficiary is subject to that of any assignee.
CASH SURRENDER The Policy Account Value minus any applicable surrender
VALUE charges, minus any outstanding indebtedness and due
charges.
DEATH BENEFIT The amount of insurance coverage provided under the
selected Death Benefit option of the Policy.
DEATH BENEFIT The proceeds payable to the Beneficiary upon receipt by
PROCEEDS ANLIC of Satisfactory Proof of Death of the Insured
while the Policy is in force. It is equal to: (l) the
Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any
Outstanding Policy Debt; (4) minus any Accrued Expense
Charges, including the Monthly Deduction for the month
of the Death of the Insured.
DUE PROOF OF DEATH One of the following:
(a) A copy of a certified death certificate.
(b) A copy of a certified decree of a court of
competent jurisdiction as to the finding of
death.
(c) A written statement by a medical doctor who
attended the insured.
(d) Any other proof satisfactory to ANLIC.
FACE AMOUNT The minimum death benefit payable under the Policy so
long as the Policy remains in force. The death benefit
proceeds will be reduced by any outstanding indebtedness
and any due and unpaid charges.
FIXED ACCOUNT The portion of the Policy Account Value allocated to our
General Account.
FREE LOOK PERIOD The period of time in which the Owner may cancel the
Policy and receive a refund of the total premiums paid.
The Owner may cancel the Policy within 20 days of
receipt of the Policy and free look notice, or 45 days
after completion of Part 1 of the application, whichever
is later. This provision also applies in the event of an
increase in coverage.
GENERAL ACCOUNT The assets of ANLIC other than those allocated to the
Variable Account or any other separate account.
GRACE PERIOD The 62 days allowed from the mailing of the notice of
the start of the Grace Period until the date the Policy
will Lapse for non payment of premium.
ALLOCATOR 2000
3
<PAGE>
GUARANTEED DEATH An annual premium listed in the Policy, based on the
Insured's age, sex, rate class BENEFIT PREMIUM and
amount of insurance coverage at the time of issue.
Provided GDBP is paid and the ("GDBP") Owner does not
elect to take any loans or partial surrenders, the
Policy is guaranteed not to lapse before the Insured's
age 65 or for ten years from the effective date of
coverage, whichever is later.
INDEBTEDNESS The sum of all unpaid Policy loans and accrued interest
on loans.
ISSUE AGE The Insured's age on the Policy Date.
INSURED The person upon whose life the Policy is issued.
INVESTMENT The Fixed Account and the Sub-accounts which invest in
OPTIONS portfolios described in the Fund prospectuses.
LOAN VALUE The maximum amount that may be borrowed under the
Policy. The loan value equals 90% of the Policy's Cash
Surrender Value.
MATURITY DATE The Policy Anniversary following the Insured's 95th
birthday.
MONTHLY The same date in each succeeding month as the Policy
ANNIVERSARY Date. For purposes of the Variable Account, whenever the
Monthly Anniversary falls on a date other than a
Valuation Date, the Monthly Anniversary will be deemed
the next Valuation Date.
NET PREMIUM Premium paid less the Premium Expense Charge.
OWNER The Policy Owner as defined below.
PLANNED PERIODIC A scheduled premium of a level amount at a fixed
PREMIUM interval over a specified period of time.
POLICY The Flexible Premium Variable Life Insurance Policy
offered by ANLIC and described in this Prospectus.
POLICY ACCOUNT The sum of the Policy's values in the Sub-accounts and
VALUE the General Account.
POLICY DATE The date set forth in the Policy that is used to
determine Policy years and Policy months. Policy
anniversaries are measured from the Policy Date.
POLICY MONTH A month beginning on the Monthly Anniversary.
POLICY OWNER The person so designated in the Application or as
("OWNER") subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Owner. A collateral
assignee is not the Owner.
PORTFOLIO A separate investment portfolio of a mutual fund in
which the Variable Account assets are invested.
PREMIUM EXPENSE A charge to cover all premium taxes imposed by the
CHARGE states and any subdivision thereof, which does
not necessarily relate to the premium taxes paid for a
ALLOCATOR 2000
4
<PAGE>
particular Policy.
SUB-ACCOUNT A sub-division of the Variable Account. Each Sub-account
invests exclusively in the shares of a specified
Portfolio of a Fund.
SURRENDER The amount deducted from the Policy Account Value upon
CHARGE lapse or surrender of the Policy during the first 9
years that the original Policy coverage is effective and
during the first 9 years from the effective date of an
increase.
TARGET PREMIUM An annual premium amount based upon the Face Amount and
the Insured's age, sex and risk class that is used to
calculate surrender charges and agent compensation.
VALUATION DATE Each regular business day that ANLIC and the New York
Stock Exchange are open for business, excluding
holidays, and any other day in which there is sufficient
trading in the Fund's portfolio securities to materially
affect the value of the assets in the Variable Account.
VALUATION PERIOD The period between two successive Valuation Dates,
commencing at the close of business of a Valuation Date
and ending at the close of business on the next
succeeding Valuation Date.
VARIABLE ACCOUNT Acacia National Variable Life Insurance Separate Account
I, a separate investment account established by ANLIC to
receive and invest the net premiums paid under the
Policy.
ALLOCATOR 2000
5
<PAGE>
QUESTIONS AND ANSWERS ABOUT YOUR POLICY
The following summary is intended to highlight the most important features of an
Allocator 2000 Policy that you should consider. You will find more detailed
information in the main portion of the prospectus; cross-references are provided
for your convenience. As you review this Summary, take note of the capitalized
terms which are defined in the Definitions Section of this prospectus. This
summary and all other parts of this prospectus are qualified in their entirety
by the terms of the Allocator 2000 Policy, which is available upon request from
ANLIC.
WHO IS THE ISSUER OF AN ALLOCATOR 2000 POLICY?
ANLIC is the issuer of each Allocator 2000 Policy. ANLIC enjoys a rating of A
(Excellent) from A.M. Best Company, a firm that analyzes insurance carriers. A
stock life insurance company organized in Virginia, ANLIC is a wholly owned
subsidiary of Acacia Life Insurance Company which is, in turn, a second tier
subsidiary of Ameritas Acacia Mutual Holding Company. (See the section on Acacia
National Life Insurance Company.)
WHY SHOULD I CONSIDER PURCHASING AN ALLOCATOR 2000 POLICY?
The primary purpose of an Allocator 2000 Policy is to provide life insurance
protection on the Insured named in the Policy. This means that, so long as the
Policy is in force, it will provide for:
- payment of a Death Benefit, which will never be less than the current
face amount at the time of the Death of the Insured (See the section on
Death Benefits.);
- Policy loans (See the section on Loan Privileges.);
- Partial Surrender, and Surrender features. (See the sections on
Surrender Privileges and Partial Surrenders.)
An Allocator 2000 Policy also includes an investment component. This means that,
so long as the Policy is in force, you will be responsible for selecting the
manner in which Net Premiums will be invested. Thus, the value of an Allocator
2000 Policy will reflect your investment choices over the life of the Policy.
HOW DOES THE INVESTMENT COMPONENT OF MY ALLOCATOR 2000 POLICY WORK?
ANLIC has established the Variable Account, which is separate from all other
assets of ANLIC, as a vehicle to receive and invest premiums received from
Allocator 2000 Policy Owners. The Variable Account is divided into separate
Sub-accounts. Each Sub-account invests exclusively in shares of one of the
investment portfolios available through Allocator 2000. Each Policy Owner may
allocate Net Premiums to one or more Sub-accounts, or to the Fixed Account
(which invests in ANLIC's General Account) in the initial application. These
allocations may be changed, without charge, by notifying ANLIC's Service Office.
The aggregate value of your interests in the Sub-accounts, the Fixed Account and
any amount held in the General Account to secure Policy debt will represent the
Policy Account Value of your Allocator 2000 Policy. (See the section on General
Account.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE ALLOCATOR 2000 POLICY?
The Investment Options available through Allocator 2000 include 25 investment
Portfolios, each of which is a separate series of a mutual fund from: The Alger
American Fund ("Alger American"); Calvert Variable Series, Inc. ("Calvert
Social"); BT Insurance Funds Trust ("Bankers Trust"); Variable Insurance
Products Fund ("VIP"); Variable Insurance Products Fund II ("VIP II"); Franklin
Templeton Variable Insurance Products Trust ("FTVIP"); Neuberger Berman Advisers
Management Trust ("AMT"); Oppenheimer Variable Account Funds ("Oppenheimer
Funds"); and Van Eck Worldwide Insurance Trust ("Van Eck"). These Portfolios
are:
Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
Calvert Social Money Market Portfolio
Calvert Social Small Cap Growth Portfolio
Calvert Social Mid Cap Growth Portfolio
Calvert Social International Equity Portfolio
ALLOCATOR 2000
6
<PAGE>
Calvert Social Balanced Portfolio
Bankers Trust Equity 500 Index Fund
Bankers Trust Small Cap Index Fund
Bankers Trust EAFE(R) Equity Index Fund
Fidelity VIP Equity-Income: Service Class 2
Fidelity VIP High Income: Service Class 2
Fidelity VIP II Contrafund(R): Service Class 2
Templeton Asset Strategy Fund - Class 2
Templeton International Securities Fund - Class 2
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio
Neuberger Berman Advisers Management Trust Growth Portfolio
Neuberger Berman Advisers Management Trust Partners Portfolio
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Strategic Bond Fund Strong/VA
Van Eck Worldwide Hard Assets Fund
Details about the investment objectives and policies of each of the available
investment Portfolios, including management fees and expenses, appear in the
section on "The Portfolios" of this prospectus. Each Portfolio holds its assets
separately from the assets of the other Portfolios. In addition to the listed
Portfolios, Policyowners may also elect to allocate Net Premiums to the Fixed
Account which is available in most states. (See the section on General Account.)
HOW DOES THE LIFE INSURANCE COMPONENT OF AN ALLOCATOR 2000 POLICY WORK?
An Allocator 2000 Policy provides for the payment of a minimum Death Benefit
upon the death of the Insured. The amount of the minimum Death Benefit is chosen
by you at the time your Allocator 2000 Policy is established. However, Death
Benefit Proceeds -- the actual amount that will be paid after ANLIC receives Due
Proof of Death -- may vary over the life of your Allocator 2000 Policy,
depending on which of the two available coverage options you select.
If you choose Option A, the Death Benefit payable under your Allocator 2000
Policy will be the current face amount of your Allocator 2000 Policy or the
applicable percentage of Policy Account Value, whichever is greater. (See the
section on Applicable Percentage Table.) If you choose Option B, the Death
Benefit payable under your Allocator 2000 Policy will be the current face amount
of your Allocator 2000 Policy plus the Policy Account Value of your Allocator
2000 Policy, or if it is higher, the applicable percentage of the Policy Account
Value on the date of death. In either case, the applicable percentage is
established based on the Attained Age at the death of the Insured.
ARE THERE ANY RISKS INVOLVED IN OWNING AN ALLOCATOR 2000 POLICY?
Yes. Over the life of your Allocator 2000 Policy, the Sub-accounts to which you
allocate your premiums will fluctuate with changes in the stock market and
overall economic factors. These fluctuations will be reflected in the Policy
Account Value of your Allocator 2000 Policy and may result in loss of principal.
For this reason, the purchase of an Allocator 2000 Policy may not be suitable
for all individuals. It may not be advantageous to purchase an Allocator 2000
Policy to replace or augment your existing insurance arrangements. Appendix A
includes tables illustrating the impact that hypothetical market returns would
have on Policy Account Values under an Allocator 2000 Policy.
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP AN ALLOCATOR 2000 POLICY IN FORCE?
Like a traditional life insurance policy, an Allocator 2000 Policy requires the
payment of premiums in order to keep the Policy in force. You will be asked to
establish a payment schedule before your Allocator 2000 Policy becomes
effective.
ALLOCATOR 2000
7
<PAGE>
The distinction between a traditional life policy and an Allocator 2000 Policy
is an Allocator 2000 Policy will not lapse simply because premium payments are
not made according to that payment schedule. However, an Allocator 2000 Policy
will lapse, even if scheduled premium payments are made, if the Cash Surrender
Value of your Allocator 2000 Policy falls below zero or premiums paid do not, in
the aggregate, equal the premium necessary to satisfy the Benchmark Premium or
the Guaranteed Death Benefit requirements. (See the section on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your Allocator 2000 Policy will be issued after a completed application is
accepted, and the initial premium payment is received, by ANLIC at its
Administrative Office. ANLIC has contracted with Ameritas Life Insurance Corp.
("ALIC"), having its principal place of business at 5900 "O" Street. Lincoln,
Nebraska for it to provide ANLIC with certain administrative services for the
Flexible Premium Variable Life Policies.
On the Policy Date or when the initial premium is received whichever is later,
your initial Net Premium will be allocated to the Money Market Sub-account.
After a fifteen day period, the Policy Account Value of the Policy will be
allocated among the Investment Options according to the instructions in your
application. You have the right to examine your Allocator 2000 Policy and return
it for a refund for a limited time, even after the Policy Date. (See the section
on Examination of the Policy Privilege (Free Look).)
ANLIC will send premium payment notices to you according to any schedule you
select. You may make subsequent premium payments according to the Premium
schedule you select, although you are not required to do so. When ANLIC receives
your Premium Payment at its Administrative Office, the Net Premium will be
allocated to the Investment Options according to your selections . (See the
section on Allocation of Premiums and Policy Account Value.)
As already noted, Allocator 2000 provides you considerable flexibility in
determining the frequency and amount of premium payments. This flexibility is
not, however, unlimited. You should keep certain factors in mind in determining
the payment schedule that is best suited to your needs. These include the amount
of the Benchmark Premium and/or Guaranteed Death Benefit Premium requirement
needed to keep your Allocator 2000 Policy in force; maximum premium limitations
established under the Federal tax laws ; and the impact that reduced Premium
Payments may have on the Cash Surrender Value of your Allocator 2000 Policy.
(See the sections on Federal Tax Considerations, Premiums, and Surrender
Privileges.)
IS THE POLICY ACCOUNT VALUE OF MY ALLOCATOR 2000 POLICY AVAILABLE WITHOUT
SURRENDER CHARGES?
Yes, you may obtain a loan, secured by the Policy Account Value of your
Allocator 2000 Policy equal to 90% of the Cash Surrender Value. The Owner may
obtain Policy loans at any time the Policy has Loan Value. The minimum loan
request ANLIC allows is $1,000. There is an interest rate of 6.45% per year
charged for loans when the Policy Account Value is less than the cumulative
premiums paid. Otherwise, after the fifth Policy year the loan rate charged will
be 4.5% per year for the amount of the loan that equals or is less than the
amount that the Policy Account Value exceeds cumulative premiums paid. The
interest is due and payable at the end of each Policy Month. Loans and interest
may be repaid at any time prior to the Maturity Date. Loans may be taxable
transactions. (See the section on Loan Privileges.)
WHAT ARE THE CHARGES ASSOCIATED WITH OWNERSHIP OF AN ALLOCATOR 2000 POLICY?
SURRENDER CHARGE - Because ANLIC incurs expenses immediately upon the issuance
of an Allocator 2000 Policy that are recovered over a period of years, an
Allocator 2000 Policy that is Surrendered or lapses on or before its 9th Policy
Anniversary is subject to a Surrender Charge. Additional Surrender Charges may
apply if you increase the Face Amount of your Allocator 2000 Policy. Because the
Surrender Charge may be significant upon early surrender, you should purchase an
Allocator 2000 Policy only if you intend to maintain your Allocator 2000 Policy
for a substantial period. (See the section on Surrender Charge.) Partial
Surrender Charge - During the Surrender Charge period for the Policy and any
increase in Face Amount, there will be a charge for a partial surrender equal to
8% of the amount withdrawn or $25, whichever is greater. PREMIUM EXPENSE CHARGE
- - Certain states impose premium and other taxes in connection with insurance
policies such as Allocator 2000. ANLIC deducts 2.25% of each premium to cover
these charges.
ALLOCATOR 2000
8
<PAGE>
COST OF INSURANCE - Charges will be deducted monthly against the Policy Account
Value to cover the Cost of Insurance under the Policy. Cost of insurance rates
are based on the Insured's sex, Issue Age, policy duration, Face Amount, and
rate class. (See the section on Policy Account Value Charges.) ADMINISTRATIVE
EXPENSE CHARGE - Charges are deducted to compensate ANLIC for administering each
individual Allocator 2000 Policy. These charges equal $27 per month for the
first Policy year and $8 each month thereafter. MORTALITY AND EXPENSE RISK
CHARGE - As compensation for mortality and expense risks assumed in connection
with the Policy, ANLIC will deduct a daily Mortality and Expense Risk Charge
from the value of the net assets of the Variable Account. For the first 15 years
of your Policy, this charge is at the rate of 0.90% annually. Beginning in the
16th Policy year, this charge is reduced by 0.05% annually until it reaches
0.45% annually in Policy year 24; the rate remains level thereafter. No
mortality and expense risk charges will be deducted from the amounts in the
Fixed Account. (See the section on Daily Charges Against the Variable Account.)
INVESTMENT ADVISORY FEE - Policyowners who choose to allocate Net Premiums to
one or more of the Sub-accounts will also bear a pro rata share of the
investment advisory fee paid by each of the investment portfolios in which the
various Sub-accounts invest. No such fees are assessed against Net Premiums
allocated to the Fixed Account . (See the section on General Account.)
WHEN DOES MY ALLOCATOR 2000 POLICY TERMINATE?
You may terminate your Allocator 2000 Policy by surrendering the Policy while
the Insured is alive for its Cash Surrender Value. As noted above, your
Allocator 2000 Policy will terminate if you fail to pay required premiums or
maintain sufficient Policy Account Value to cover Policy Lapse charges. (See the
section on Policy Lapse.)
WHO CAN I CONTACT FOR MORE INFORMATION CONCERNING THE ALLOCATOR 2000 POLICY?
You can contact your Registered Representative or you can write to us at our
Administrative Office, Acacia National Life Insurance Company, 5900 "O" Street,
P.O. Box 81889, Lincoln, Nebraska 68501. ANLIC's telephone number is
888-837-6791 and its website address is www.acaciagroup.com.
ANLIC AND THE VARIABLE ACCOUNT
ACACIA NATIONAL LIFE INSURANCE COMPANY
Acacia National Life Insurance Company ("ANLIC") is a stock life insurance
company organized in the Commonwealth of Virginia. ANLIC was incorporated on
December 9, 1974. ANLIC is currently licensed to sell life insurance in 46
states, and the District of Columbia.
ANLIC is a wholly owned subsidiary of Acacia Life Insurance Company
("Acacia"), a District of Columbia stock company. Acacia is in turn a second
tier subsidiary of Ameritas Acacia Mutual Holding Company, a Nebraska mutual
insurance holding company. The Administrative Offices of both ANLIC and Acacia
Life are at 5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska 68501. ANLIC's
telephone number is 888-837-6791 and its website address is www.acaciagroup.com.
On January 1, 1999, Ameritas Mutual Insurance Holding Company ("Ameritas
Mutual"), a Nebraska mutual insurance holding company and Acacia Mutual
Insurance Holding Company ("Acacia Mutual"), a District of Columbia mutual
holding corporation merged and became Ameritas Acacia Mutual Holding Company
("Ameritas Acacia") a Nebraska mutual insurance holding company. Both Ameritas
Acacia and Ameritas Holding Company, an intermediate holding company, are
organized under the Nebraska Mutual Insurance Holding Company Act. Acacia Life
Insurance Company, a subsidiary of Ameritas Holding Company is regulated by the
District of Columbia Insurance Department. Ameritas Mutual and its subsidiaries
had total assets at December 31, 1999 of over $4.8 billion and Acacia Life and
its subsidiaries had total assets as of December 31, 1999 of $___ billion. The
combined group has total assets of over $___ billion.
Acacia Life also owns all of the outstanding stock of the Acacia Financial
Corporation, a holding company, which owns all of the stock of the Calvert
Group, Ltd. ("Calvert"), which in turn owns The Advisors
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Group, Inc. and Calvert Asset Management Company, Inc., the investment adviser
of Calvert Variable Series, Inc., a series of Funds available under the
Policies. The Advisors Group, Inc. is the principal underwriter for the Policies
described in this Prospectus. The Advisors Group, Inc. sells shares of other
mutual funds and other securities, and may also sell variable annuity or
variable life policies of other issuers.
THE VARIABLE ACCOUNT
Acacia National Variable Life Insurance Separate Account I ("Variable
Account") was established by ANLIC as a separate account on January 31, 1995.
The Variable Account will receive and invest the net premiums paid under this
Policy. Net premiums placed in the Variable Account constitute certain reserves
for benefits payable under the Policies, and these are actuarial reserves for
future benefits payable under the Policies. In addition, the Variable Account
may receive and invest net premiums for other flexible premium variable life
insurance policies issued by ANLIC.
Although the assets of the Variable Account are the property of ANLIC, the
Code of Virginia under which the Variable Account was established provides that
the assets in the Variable Account attributable to the Policies are generally
not chargeable with liabilities arising out of any other business which ANLIC
may conduct. The assets of the Variable Account shall, however, be available to
cover the liabilities of the General Account of ANLIC to the extent that the
Variable Account's assets exceed its liabilities arising under the Policies
supported by it. Thus while Owners neither hold legal title to, nor have any
beneficial ownership interest in Separate Account assets, because the assets are
legally segregated from other assets of ANLIC subject to the claims of
creditors, Owners have preferential rights to the ANLIC Variable Account assets.
The Variable Account is currently divided into 25 Sub-accounts. Each
Sub-account invests exclusively in shares of a single Portfolio of a Fund.
Income and both realized and unrealized gains or losses from the assets of each
Sub-account of the Variable Account are credited to or charged against that
Sub-account without regard to income, gains or losses from any other Sub-account
of the Variable Account or arising out of any other business ANLIC may conduct.
Each Sub-account reinvests all dividends and income and capital gain
distributions declared by the Portfolio.
The Variable Account has been registered as a unit investment trust under
the Investment Company Act of 1940, as amended (the "1940 Act"). Registration
with the Securities and Exchange Commission ("SEC") does not involve supervision
of the management or investment practices or policies of the Variable Account or
ANLIC by the SEC.
THE PORTFOLIOS
The investment objectives of each of the Portfolios are summarized below.
There is no assurance that any of the Portfolios will achieve its stated
objective. More detailed information about the Portfolios, including a
description of the risks may be found in the Prospectus for each of the
Portfolios which must accompany or precede this Prospectus. In addition, the
Variable Account purchases shares of each Portfolio subject to the terms
Participation Agreements between ANLIC and the Funds. A copy of the Agreements
have been filed as Exhibits to the Registration Statement for the Variable
Account. Each of the Funds has or may have additional Portfolios that are not
available to the Variable Account.
THE ALGER AMERICAN FUND
The Variable Account has three Sub-accounts that invest exclusively in
shares of the Alger American Fund. The LargeCap Growth Sub-account, the MidCap
Growth Sub-account and the SmallCap Growth Sub-account invest in the Alger
American Growth Portfolio, the Alger American MidCap Growth Portfolio, and the
Alger American Small Capitalization Portfolio, respectively, of the Alger
American Fund.
The Alger American Growth Portfolio seeks to provide long-term capital
appreciation. It invests in equity securities, such as common or preferred
stocks, or securities convertible into or exchangeable for equity securities,
including warrants and rights, primarily of companies with total market
capitalization of $1 billion or greater.
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The Alger American MidCap Growth Portfolio seeks to provide long-term
capital appreciation. It invests in equity securities, such as common or
preferred stocks, or securities convertible into or exchangeable for equity
securities, including warrants and rights. Except during temporary defensive
period, the Portfolio invests at least 65% of its total assets in equity
securities, of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the S & P
MidCap 400 index.
The Alger American Small Capitalization Portfolio seeks to provide
long-term capital appreciation. It invests in equity securities, such as common
or preferred stocks, or securities convertible into or exchangeable for equity
securities, including warrants and rights. Except during temporary defensive
period, the Portfolio invests at least 65% of its total assets in equity
securities, of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the
Russell 2000 Growth Index.
Fred Alger Management, Inc. serves as investment manager to the Alger
American Fund.
CALVERT VARIABLE SERIES, INC.
The Variable Account has five Sub-accounts that invest exclusively in
shares of Calvert Variable Series, Inc.. The Social Money Market, Social
Strategic Growth, Social Managed Growth, Social Global and Social Balanced
Sub-accounts of the Variable Account invest in shares of the Calvert Social
Money Market Portfolio, the Calvert Social Small Cap Growth Portfolio, the
Calvert Social Mid Cap Growth Portfolio, the Calvert Social International Equity
Portfolio, and the Calvert Social Balanced Portfolio, respectively, of Calvert
Variable Series, Inc. Calvert Variable Series, Inc. is one of eight registered
investment companies in the Calvert Group, Ltd. Funds ("Calvert"). Calvert is a
second tier holly-owned subsidiary of Acacia Life. Calvert is the sponsor of the
Fund.
These Portfolios seek to achieve competitive returns while encouraging
responsible corporate conduct. The Portfolios look for enterprises that make a
significant contribution to society through their products and the way they do
business. Each proposed portfolio investment that is deemed financially viable
is then screened according to the stated social criteria of the particular
Portfolio. Investments must, in the judgment of the investment adviser, be
consistent with these criteria. It should be noted that the Portfolios' social
criteria tend to limit the availability of investment opportunities more than is
customary with other investment portfolios. (See the individual Portfolio
Prospectuses for a complete description of each social screen.)
The Calvert Social Money Market Portfolio ("CS Money Market") seeks to
provide the highest level of current income, consistent with liquidity, safety
and security of capital, by investing in money market instruments, including
repurchase agreements with recognized securities dealers and banks secured by
such instruments, selected in accordance with the Portfolios' investment and
social criteria. CS Money Market attempts to maintain a constant net asset value
of $1.00 per share. There can be no assurance that the Portfolio will maintain a
constant net asset value of $1.00 per share. An investment in the Portfolio is
neither insured nor guaranteed by the United States government.
Calvert Social Small Cap Growth ("CS Small Cap") seeks, with a concern for
social impact to achieve long-term capital appreciation by investing primarily
in the equity securities of small companies publicly traded in the United
States. In seeking capital appreciation, the Portfolio invests primarily in
equity securities of small capitalized growth companies that have historically
exhibited exceptional growth characteristics and that in the advisor's opinion,
have strong earnings potential relative to the U.S. market as a whole.
CS Small Cap may invest up to 35% of its assets in debt securities,
excluding money market instruments. These debt securities may consist of
investment-grade obligations and junk bonds. (See the section on The Portfolios
Risks Attendant to Investments in Junk Bonds.)
Calvert Social Mid Cap Growth ("CS Mid Cap") seeks to provide long-term
capital appreciation by investing primarily in a nondiversified portfolio of the
equity securities of small- to mid-sized companies that are undervalued but
demonstrate a potential for growth.
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CS Mid Cap may also invest in debt securities and may invest up to 5% of
its assets in non-investment grade securities. (See the section on The
Portfolios - Risks Attendant to Investments in Junk Bonds.) and up to 25% of its
assets in foreign securities. (See the section on The Portfolios - Risks
Attendant to Investments in Foreign Securities.)
Calvert Social International Equity Portfolio ("CS International") seeks to
provide a high return consistent with reasonable risk by investing primarily in
a globally diversified portfolio of equity securities. The Portfolio seeks total
return through a globally diversified investment portfolio.
Under normal circumstances, CS International will invest at least 65% of
its assets in the securities of issuers in no less than three countries, other
than the United States. (See the section on The Portfolios - Risks Attendant to
Investments in Foreign Securities.) As an operating policy, the portfolio will
limit its investment in securities of U.S. issuers to 5% of its net assets. CS
International may also purchase unrated debt securities and may invest up to 5%
of its assets in non-investment grade bonds. (See the section on The Portfolios
Risks Attendant to Investments in Junk Bonds.)
Calvert Social Balanced Portfolio ("CS Balanced") seeks to achieve a total
return above the rate of inflation through an actively managed portfolio of
stocks, bonds and money market instruments (including repurchase agreements
secured by such instruments) selected with a concern for the investment and
social impact of each investment.
CS Balanced may invest up to 20% of its assets in non-investment grade debt
obligations ("junk bonds"). (See the section on The Portfolios - Risks Attendant
to Investments in Junk Bonds.)
Calvert Asset Management Company, Inc. ("CAM") is the investment adviser to
all the Portfolios of Calvert Variable Series, Inc.. CAM is a wholly owned
subsidiary of Calvert which is in turn a second tier wholly owned subsidiary of
Acacia Life. Pursuant to its investment advisory agreement, CAM manages the
investment and reinvestment of the assets of each Portfolio and is responsible
for the overall business affairs of each Portfolio. Calvert Administrative
Services, an affiliate of CAM, provides administrative services to each
Portfolio and is paid a fee by CAM of a percentage of net assets per year.
On behalf of CS International, CAM has entered into a subadvisory agreement
with Murray Johnstone International, Ltd. ("Murray Johnstone") of Glascow,
Scotland, which has its principal U.S. office in Chicago, Illinois, and is a
wholly-owned subsidiary of United Asset Management Company. Murray Johnstone
manages the investment and reinvestment of assets of CS International, although
CAM may manage part of CS International's cash reserves required for liquidity
purposes.
On behalf of CS Balanced, CAM has entered into a subadvisory agreement with
United States Trust Company of Boston, a Massachusetts chartered commercial bank
with full trust powers. On behalf of CS Small Cap, CAM has entered into a
subadvisory agreement with Awad & Associates of New York. The subadvisers manage
the investment and reinvestment of the assets of the Portfolio, although CAM may
screen potential investments for compatibility with the Portfolio's social
criteria. CAM continuously monitors and evaluates the performance of the
subadvisers.
BT INSURANCE FUNDS TRUST
The Variable Account has three Sub-accounts that invest exclusively in
shares of Portfolios of BT Insurance Funds. The Equity 500 Index Sub-account,
Small Cap Index Sub-account, and EAFE Equity Index Sub-account invest in shares
of the Equity 500 Index Fund, Small Cap Index Fund, and EAFE Equity Index Fund,
respectively, of Deutsche.
The Equity 500 Index Fund seeks to match, before expenses, the risk and
return characteristics of the Standard and Poor's 500 Composite Stock Price
("S&P 500 Index"). The Fund will invest primarily in common stocks of companies
that comprise the S&P 500 Index, which emphasizes stocks of large U.S.
companies. The Fund may
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also use stock index futures and options.
The Small Cap Index Fund seeks to match, before expenses, the risk and
return characteristics of the Russell 2000 Small Stock Index ("Russell 2000
Index"). The Fund will invest primarily in common stocks of companies that
comprise the Russell 2000 Index, which emphasizes stocks of small U.S.
companies. The Fund may also use stock index futures and options.
The EAFE Equity Index Fund seeks to match, before expenses, the risk and
return characteristics of the Morgan Stanley Capital International EAFE Index
("EAFE Index"). The Fund will invest primarily in common stocks of companies
that comprise the EAFE Index, which emphasizes stocks of companies in major
markets in Europe, Australia and the Far East. The Fund may also use stock index
futures and options.
Bankers Trust Company serves as investment adviser to the BT Insurance
Funds.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Variable Account has two Sub-accounts that invest exclusively in shares
of Portfolios of the Variable Insurance Products Fund ("VIP") and one
Sub-Account that invests exclusively in shares of a Portfolio of the Variable
Insurance Products Fund II ("VIP II"). Equity-Income: Service Class 2
("Equity-Income") and High Income: Service Class 2 ("High-Income") invest in
shares of the VIP Equity-Income: Service Class 2 and VIP High Income: Service
Class 2 Portfolios, respectively. Contrafund: Service Class 2 ("Contrafund")
invests in shares of the VIP 2 Contrafund: Service Class 2 Portfolio of VIP II.
Equity-Income seeks reasonable income. Will also consider the potential for
capital appreciation. Seeks a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's 500 by investing at least 65% in
income-producing equity securities, which tens to lead to investments in large
cap "value" stocks.
High Income seeks a high level of current income while also considering
growth of capital by investing at least 65% in income-producing equity
securities, which tens to lead to investments in large cap "value" stocks.
Contrafund seeks long-term capital appreciation by investing primarily in
common stocks and investing in securities of companies whose value it believes
is not fully recognized by the public.
Fidelity Management & Research Company serves as investment adviser to VIP
and VIP II.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
The Variable Account has two Sub-accounts that invest exclusively in shares
of Portfolios of the Franklin Templeton Variable Insurance Products Trust
("FTVIP" or "Templeton Portfolios"). The Asset Strategy and International
Securities Sub-accounts invest in shares of the Templeton Asset Strategy Fund -
Class 2 and Templeton International Securities Fund - Class 2 Portfolios,
respectively, of FTVIP.
Templeton Asset Strategy - Class 2 has the investment objective of high
total return. The fund will invest in equity securities of companies of any
nation, debt securities of companies and governments of any nation, and in money
market instruments.
Templeton International Securities - Class 2 has the investment objective
of long-term capital growth. The fund will invest in the equity securities of
companies located outside the U. S., including emerging markets.
The investment adviser for the Templeton Portfolios is Templeton Investment
Counsel, Inc.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
The Variable Account has three Sub-Accounts that invest exclusively in
shares of Portfolios of the Neuberger Berman Advisers Management Trust ("AMT").
The Limited Maturity Bond, Income and Growth, and Partners Sub-accounts of the
Variable Account invest in shares of the Limited Maturity Bond Portfolio, Growth
Portfolio,
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and Partners Portfolio respectively, of AMT.
The Neuberger Berman Limited Maturity Bond Portfolio. The investment
objective of the Limited Maturity Bond Portfolio is to provide the highest
current income consistent with low risk to principal and liquidity; and
secondarily, total return. Neuberger Berman Limited Maturity Bond invests in a
diversified portfolio of fixed and variable rate debt securities and seeks to
increase income and preserve or enhance total return by actively managing
average portfolio maturity in light of market conditions and trends.
The Neuberger Berman Limited Maturity Bond Portfolio invests in a
diversified portfolio of short-to-intermediate-term U.S. Government and Agency
securities and debt securities issued by financial institutions, corporations,
and others, of at least investment grade. These securities include
mortgage-backed and asset-backed securities, repurchase agreements with respect
to U.S. Government and Agency securities, and foreign investments. The Neuberger
Berman Limited Maturity Bond Portfolio may invest up to 5% of its net assets in
municipal securities when the portfolio manager believes such securities may
outperform other available issues. The Portfolio may purchase and sell covered
call and put options, interest-rate futures contracts, and options on those
futures contracts, and may engage in lending portfolio securities. The
Portfolio's dollar-weighted average portfolio maturity may range up to five
years.
The Neuberger Berman Growth Portfolio seeks capital appreciation, without
regard to income. The Neuberger Berman Growth Portfolio invests in securities
believed to have the maximum potential for long-term capital appreciation. It
does not seek to invest in securities that pay dividends or interest, and any
such income is incidental. The Portfolio expects to be almost fully invested in
common stocks, often of companies that may be temporarily out of favor in the
market. The Portfolios' aggressive growth investment program involves greater
risks and share price volatility than programs that invest in more conservative
securities. Moreover, the Portfolio does not follow a policy of active trading
for short-term profits. Accordingly, the Portfolio may be more appropriate for
investors with a longer-range perspective. While the Portfolio uses the AMT
value-oriented investment approach, when the portfolio manager believes that
particular securities have greater potential for long-term capital appreciation,
the Portfolio may purchase such securities at prices with higher multiples to
measures of economic value (such as earnings). In addition, the Portfolio
focuses on companies with strong balance sheets and reasonable valuations
relative to their growth rates. It also diversifies its investments into many
companies and industries.
The Neuberger Berman Partners Portfolio seeks capital growth. Principal
series investments are common stock of mid- to large-cap companies.
The investment adviser for the Limited Maturity Bond, Growth and Partners
Portfolios of AMT is Neuberger Berman Management Incorporated ("NB Management").
NB Management retains Neuberger Berman, L.P., without cost to AMT, as subadviser
to furnish it with investment recommendations and research information. NB
Management provides investment management services to each Portfolio that
include, among other things, making and implementing investment decisions and
providing facilities and personnel necessary to operate the Portfolio. NB
Management provides administrative services to each Portfolio that include
furnishing similar facilities and personnel for the Portfolio. With the
Portfolio's consent, NB Management is authorized to subcontract some of its
responsibilities under its administration agreement with the Portfolio to third
parties.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Variable Account has five Sub-accounts that invest exclusively in
shares of Portfolios of the Oppenheimer Variable Account Funds (the "Oppenheimer
Funds"). The Aggressive Growth, Capital Appreciation, Growth & Income, High
Income, and Strategic Bond Income Sub-Accounts of the Variable Account invest in
shares of the Aggressive Growth Fund/VA, Capital Appreciation Fund/VA, Main
Street Growth & Income Fund/VA, High Income Fund/VA and Strategic Bond Fund/VA
respectively, of the Oppenheimer Funds.
The Oppenheimer Funds are managed by Oppenheimer Funds, Inc. ("the
Manager"), which is responsible for selecting the Oppenheimer Funds' investments
and handles its day-to-day business. The Manager carries out its duties, subject
to the policies established by the Board of Trustees, under investment advisory
agreements for each Oppenheimer Fund which state the Manager's responsibilities.
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Oppenheimer Aggressive Growth Fund/VA ("Aggressive Growth Fund") seeks to
achieve capital appreciation by investing in "growth-type" companies. Such
companies are believed to have relatively favorable long-term prospects for
increasing demand for their goods or services, or to be developing new products,
services or markets, and normally retain a relatively larger portion of their
earnings for research, development and investment in capital assets.
Oppenheimer Capital Appreciation Fund/VA ("Capital Appreciation Fund")
seeks to achieve capital appreciation by investing insecurities of well-known
established companies. Such securities generally have a history of earnings and
dividends and are issued by seasoned companies.
Oppenheimer Main Street Growth & Income Fund/VA ("Growth & Income Fund")
seeks a high total return (which includes growth in the value of its shares as
well as current income) from equity and debt securities. Its equity investments
will include common stocks, preferred stocks, convertible securities and
warrants. Its debt securities will include bonds, participation interests,
asset-backed securities, private-label mortgage-backed securities and
collateralized mortgage obligations, zero coupon securities and U.S.
obligations. From time to time Growth & Income Fund may focus on small to medium
capitalization issuers, the securities of which may be subject to greater price
volatility than those of larger capitalized issuers.
The composition of Growth & Income Fund's Portfolio among equity and
fixed-income investments will vary from time to time based upon the Manager's
evaluation of economic and market trends and perceived relative total
anticipated return from such types of investments. Accordingly, there is neither
a minimum nor a maximum percentage of Growth & Income Fund's Assets that may, at
any given time, be invested in either type of investment.
Oppenheimer High Income Fund/VA ("High Income Fund") seeks a high level of
current income from investment in high yield fixed-income securities (including
long-term debt and preferred stock issues, including convertible securities).
High Income Fund's investment policy is to assume certain risks in seeking high
yield including securities in the lower rating categories, commonly known as
"junk bonds", which are subject to a greater risk of loss of principal and
nonpayment of interest than higher rated securities. These securities may be
considered to be speculative. (See the section on The Portfolios - Risks
Attendant to Investments in Junk Bonds.)
Oppenheimer Strategic Bond Fund ("Strategic Bond Fund') seeks a high level
of current income by investing primarily in a diversified portfolio of high
yield fixed-income securities. Such income is principally derived from interest
on debt securities and the Fund seeks to enhance such income by writing covered
call options on debt securities. The Fund intends to invest principally in (I)
foreign government and corporate debt securities (ii) U.S. Government
securities, and (iii) lower-rated high yield domestic debt securities, commonly
known as "junk bonds", which are subject to a greater risk of loss of principal
and nonpayment of interest than higher-rated securities. These securities may be
considered to be speculative. (See the section on The Portfolios - Risks
Attendant to Investments in Junk Bonds.) Under normal circumstances, the Fund's
assets will be invested in each of these three sectors. However, Strategic Bond
Fund may from time to time invest up to 100% of its total assets in any one
sector if, in the judgment of the Manager, the Fund has the opportunity of
seeking a high level of current income without undue risk to principal.
VAN ECK WORLDWIDE INSURANCE TRUST
The Hard Assets Sub-account of the Variable Account invests exclusively in
shares of the Van Eck Worldwide Hard Assets Fund.
Van Eck Worldwide Hard Assets Fund seeks long-term capital appreciation by
investing globally, primarily in "hard asset" securities. Income is a secondary
consideration. The Worldwide Hard Assets Fund will invest at least 65% of its
assets in "hard asset securities," defined as securities of companies that
derive at least 50% of gross revenue or profit from exploration, development,
production or distribution of precious metals, natural resources, real estate or
commodities. The Fund may concentrate as much as 50% of its assets in any single
"hard asset" sector.
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The production and marketing of hard assets may be affected by actions and
changes in government. In addition, hard assets and securities of hard assets
companies may be cyclical in nature. During periods of economic or financial
instability, the securities of some hard assets companies may be subject to
broad price fluctuations, reflecting volatility of energy and basic materials
prices and possible instability of supply of various hard assets. In addition,
some hard assets companies may also be subject to the risks generally associated
with extraction of natural resources, such as the risks of mining and oil
drilling, and the risks of hazards associated with natural resources, such as
fire, drought, increased regulatory and environmental costs, and others.
Securities of hard assets companies may also experience greater price
fluctuations than the relevant hard assets. In periods of rising hard assets
prices, such securities may rise at a faster rate, and conversely, in times of
falling hard assets prices, such securities may suffer a greater price decline.
(See the section on The Portfolios - Risks Attendant to Investments in Foreign
Securities.)
The investment adviser for the Van Eck Worldwide Hard Assets Fund is Van
Eck Associates Corporation.
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RESOLVING MATERIAL CONFLICTS
The Funds are used as the investment vehicle for variable life insurance
policies issued by ANLIC. In addition, the Funds are also available to
registered separate accounts of insurance companies other than ANLIC. As a
result, there is a possibility that a material conflict may arise between the
interest of Owners whose policies are allocated to the Variable Account and the
Owners of life insurance policies and variable annuities issued by such other
companies whose values are allocated to one or more other separate accounts
investing in any one of the Funds. In addition, one or more of the Funds may
sell shares to certain retirement plans qualifying under Section 401 of the Code
(including cash or deferred arrangements under Section 401(k) of the Code). As a
result, there is a possibility that a material conflict may arise between the
interests of Owners of policies generally, or certain classes of Owners, and
such retirement plans or participants in such retirement plans.
In the event of a material conflict, ANLIC will take any necessary steps,
including removing the Variable Account from that Fund, to resolve the matter.
The Board of Directors or Trustees of the Funds intend to monitor events in
order to identify any material conflicts that may possibly arise and to
determine what action, if any, should be taken in response to those events or
conflicts. (See the individual Fund prospectuses for more information.)
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
ANLIC cannot guarantee that shares of the Portfolios will always be
available for investment of premium or for transfers. ANLIC reserves the right,
subject to compliance with applicable law, to make additions, to, deletions
from, or substitutions for the shares that are held by the Variable Account or
that the Variable Account may purchase. ANLIC reserves the right to eliminate
the shares of any of the Portfolios of the Funds and to substitute shares of
another Portfolio of the Funds or of another open-end registered investment
company, if the shares of a Portfolio are no longer available for investment, or
if in its judgment further investment in any Portfolio should become
inappropriate in view of the purposes of the Variable Account. ANLIC will not
substitute any shares attributable to an Owner's interest in a Sub-account of
the Variable Account without notice and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained herein shall
prevent the Variable Account from purchasing other securities for other
Portfolios or classes of Policies, or from permitting a conversion between
Portfolios or classes of Policies on the basis of requests made by Owners.
ANLIC also reserves the right to establish additional Sub-accounts of the
Variable Account, each of which would invest in a new series or Portfolio of the
Funds, or in shares of another investment company, with a specified investment
objective. New Sub-accounts may be established when, in the sole discretion of
ANLIC, marketing needs or investment conditions warrant, and any new
Sub-accounts will be made available to existing Owners on a basis to be
determined by ANLIC. ANLIC may also eliminate one or more Sub-accounts if, in
its sole discretion, marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, ANLIC may, by appropriate
endorsement, make such changes in this and other policies as may be necessary or
appropriate to reflect such substitution or change. If deemed by ANLIC to be in
the best interest of persons having voting rights under the Policies, the
Variable Account may be operated as a management company under the 1940 Act, it
may be deregistered under that Act in the event such registration is no longer
required, or it may be combined with other ANLIC separate accounts.
POLICY BENEFITS
DEATH BENEFITS
As long as the Policy remains in force (See the section on Policy Lapse and
Reinstatement -- Lapse.), ANLIC will, upon proof of the Insured's death, pay the
death benefit proceeds of a Policy to the named Beneficiary in accordance with
the designated death benefit option. The amount of Death Benefit payable will be
determined as of the end of the Valuation Period on the date of death, and will
not reflect subsequent Variable Account investment performance. The proceeds may
be paid in a lump sum or under one or more of the settlement options set forth
in the Policy. The death benefit proceeds will be reduced by any outstanding
indebtedness and
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any due and unpaid charges. These proceeds will be increased by any additional
insurance provided by rider and by the monthly deduction for the month in which
death occurred.
The Policy provides two death benefit options: Death Benefit Option A
("Option A") and Death Benefit Option B ("Option B"). The Owner designates the
death benefit option in the application. ANLIC guarantees that as long as the
Policy remains in force (See the section on Policy Lapse and Reinstatement --
Lapse.), under either option the death benefit will never be less than the
current face amount of the Policy. These proceeds will be reduced by any
outstanding indebtedness and any due and unpaid charges.
OPTION A. The death benefit is the greater of the current face amount of
the Policy or the applicable percentage of Policy Account Value on the date of
death. The applicable percentage is 250% for an Insured age 40 or below on the
Policy Anniversary prior to the date of death. For Insureds with an Attained Age
over 40 on a Policy Anniversary, the percentage declines as shown in the
Applicable Percentage Table. (See the section on Applicable Percentage Table.)
Accordingly, under Option A, the death benefit will remain level unless the
applicable percentage of Policy Account Value exceeds the current face amount,
in which case the amount of the death benefit will vary as the Policy Account
Value varies.
ILLUSTRATION OF OPTION A. For purposes of this illustration, assume that
the Insured's Attained Age is between 30 and 40 and that there is no outstanding
indebtedness. Under Option A, a Policy with a $100,000 face amount will
generally pay $100,000 in Death Benefit Proceeds. However, because the death
benefit must be equal to or be greater than 250% of Policy Account Value, any
time the Policy Account Value of the Policy exceeds $40,000 the death benefit
will exceed the $100,000 face amount. Each additional dollar added to the Policy
Account Value above $40,000 will increase the death benefit by $2.50. Thus, if
the Policy Account Value exceeds $40,000 and increases by $100 because of
investment performance or premium payments, the death benefit will increase by
$250. An Owner with a Policy Account Value of $50,000 will be entitled to a
death benefit of $125,000 ($50,000 x 250%); a Policy Account Value of $75,000
will yield a death benefit of $187,500 ($75,000 x 250%); a Policy Account Value
of $100,000 will yield a death benefit of $250,000 ($100,000 x 250%).
Similarly, so long as the Policy Account Value exceeds $40,000, each dollar
taken out of the Policy Account Value will reduce the death benefit by $2.50.
If, for example, the Policy Account Value is reduced from $75,000 to $70,000
because of partial surrenders, charges or negative investment performance, the
death benefit will be reduced from $187,500 to $175,000. If at any time,
however, the Policy Account Value multiplied by the applicable percentage is
less than the face amount, the death benefit will equal the current face amount
of the Policy.
The applicable percentage becomes lower as the Insured's Attained Age
increases. If the Attained Age of the Insured in the illustration above were,
for example, 50 (rather than between 30 and 40), the applicable percentage would
be 185%. The death benefit would not exceed the $100,000 face amount unless the
Policy Account Value exceeded approximately $54,055 (rather than $40,000), and
each $1 then added to or taken from the Policy Account Value would change the
death benefit by $1.85 (rather than $2.50).
APPLICABLE PERCENTAGE TABLE
ATTAINED AGE APPLICABLE PERCENTAGE ATTAINED AGE APPLICABLE PERCENTAGE
- ------------ --------------------- ------------ ---------------------
41............ 243% 61......... 128%
42............ 236 62......... 126
43............ 229 63......... 124
44............ 222 64......... 122
45............ 215 65......... 120
46............ 209 66......... 119
47............ 203 67......... 118
48............ 197 68......... 117
49............ 191 69......... 116
50............ 185 70......... 115
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51............ 178 71.......... 113
52............ 171 72.......... 111
53............ 164 73.......... 109
54............ 157 74.......... 107
55............ 150 75-90....... 105
56............ 146 91.......... 104
57............ 142 92.......... 103
58............ 138 93.......... 102
59............ 134 94.......... 101
60............ 130 95 or older. 100
OPTION B. The death benefit is equal to the greater of the current Face
Amount plus the Policy Account Value of the Policy or the applicable percentage
of the Policy Account Value on the date of death. The applicable percentage is
250% for an Insured age 40 or below on the Policy anniversary prior to the date
of death. For Insureds with an Attained Age over 40 on a Policy anniversary, the
percentage declines as shown in the Applicable Percentage Table. Accordingly,
under Option B the amount of the death benefit will always vary as the Policy
Account Value varies.
ILLUSTRATION OF OPTION B. For purposes of this illustration, assume that
the Insured is under the age of 40 and that there is no outstanding
indebtedness. Under Option B, a Policy with a face amount of $100,000 will
generally pay a death benefit of $100,000 plus the Policy Account Value. Thus,
for example, a Policy with a Policy Account Value of $20,000 will have a death
benefit of $120,000 ($100,000 + $20,000); a Policy Account Value of $40,000 will
yield a death benefit of $140,000 ($100,000, + $40,000). The death benefit,
however, must be at least 250% of the Policy Account Value. As a result, if the
Policy Account Value of the Policy exceeds approximately $66,667, the death
benefit will be greater than the face amount plus the Policy Account Value. Each
additional dollar of the Policy Account Value above $66,667 will increase the
death benefit by $2.50. Thus, if the Policy Account Value exceeds $66,667 and
increases by $100 because of investment performance or premium payments, the
death benefit will increase by $250. An Owner with a Policy Account Value of
$75,000 will be entitled to a death benefit of $187,500 ($75,000 X 250%); a
Policy Account Value of $100,000 will yield a death benefit of $250,000
($100,000 X 250%); a Policy Account Value of $125,000 will yield a death benefit
of $312,500 ($125,000 X 250%).
Similarly, any time the Policy Account Value exceeds $66,667, each dollar
taken out of the Policy Account Value will reduce the death benefit by $2.50.
If, for example, the Policy Account Value is reduced from $75,000 to $70,000
because of partial surrenders, charges, or negative investment performance, the
death benefit will be reduced from $187,500 to $175,000. If at any time,
however, the Policy Account Value multiplied by the applicable percentage is
less than the face amount plus the Policy Account Value, then the death benefit
will be the current face amount plus the Policy Account Value of the Policy.
The applicable percentage becomes lower as the Insured's Attained Age
increases. If the Attained Age of the Insured in the illustration above were,
for example, 50 (rather than under 40), the applicable percentage would be 185%.
The amount of the death benefit would be the sum of the Policy Account Value
plus $100,000 unless the Policy Account Value exceeded approximately $117,647
(rather than $66,667), and each $1 then added to or taken from the Policy
Account Value would change the death benefit by $1.85 (rather than $2.50).
CHANGE IN FACE AMOUNT. Subject to certain limitations, an Owner may
increase or decrease the face amount of a Policy. A change in face amount may
affect the cost of insurance rate and the net amount at risk, both of which may
affect an Owner's cost of insurance charge. (See the section on Charges and
Deductions -- Cost of Insurance.) A change in face amount may affect whether the
Policy is a "modified endowment contract" for federal income tax purposes. (See
the section on Federal Tax Considerations.)
DECREASES. Any decrease in the face amount will become effective on the
monthly anniversary date on or following receipt by ANLIC of a written request.
Generally, no decrease in the face amount will be permitted during the first
Policy year (other than a decrease indirectly resulting from a partial
surrender) but ANLIC may waive this restriction. The face amount remaining in
force after any requested decrease may not be less than
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$25,000. If, following the decrease in face amount, the Policy would not comply
with the maximum premium limitations required by federal tax law. (See the
section on Premiums -- Premium Limitations.), the decrease may be limited (or,
if the Policyholder so elects, the Policy Account Value may be returned to the
Owner) to the extent necessary to meet these requirements. For purposes of
determining the cost of insurance charge, a decrease in the face amount will
reduce the face amount in the following order:
(a) The face amount provided by the most recent increase;
(b) The next most recent increase successively; and
(c) The face amount when the Policy was issued.
(See the section on Charges and Deductions--Cost of Insurance.)
INCREASES. Increases in the Face Amount will be allowed after the first
Policy year. For an increase in the Face Amount, you must submit a written
supplemental application. ANLIC may also require additional evidence of
insurability. Although an increase need not necessarily be accompanied by an
additional premium, in certain cases an additional premium will be required to
put the requested increase in effect. The minimum amount of any increase is
$25,000. An increase in the Face Amount will also increase Surrender Charges. An
increase in the Face Amount during the time either the Benchmark Premium or the
Guaranteed Death Benefit Premium is in effect will increase the respective
premium requirements. (See the section on Charges and Deductions.)
CHANGE IN DEATH BENEFIT OPTION. Generally, the death benefit option in
effect may be changed at any time by sending ANLIC a written request for change.
If the death benefit option is changed from Option B to Option A, the face
amount will be increased by an amount equal to the Policy Account Value on the
effective date of change. Changing from Option B to Option A does not require
evidence of insurability. The effective date of such a change will be the
monthly anniversary on or following receipt of the request. A change in the
death benefit option may affect whether the Policy will be treated as a
"modified endowment contract" for federal tax purposes. (See the section on
Federal Tax Considerations.)
If the death benefit option is changed from Option A to Option B, the face
amount will be decreased by an amount equal to the Policy Account Value on the
effective date of the change. This change may not be made if it would result in
a face amount less than $25,000. Changing from Option A to Option B may require
evidence of insurability satisfactory to ANLIC. The effective date of such a
change will be the monthly anniversary on or following the date the change is
approved by ANLIC.
No charges will be imposed upon a change in death benefit option, nor will
such a change in and of itself result in an immediate change in the amount of
the Policy Account Value. If, however, prior to or accompanying a change in the
death benefit option there has been an increase in the face amount, the method
of calculating the insurance charge may change. (See the section on Charges and
Deductions--Cost of Insurance.)
HOW DEATH BENEFITS MAY VARY IN AMOUNT. As long as the Policy remains in
force, ANLIC guarantees that the death benefit will never be less than the
current face amount of the Policy. These proceeds will be reduced by any
outstanding indebtedness and any due and unpaid charges. The death benefit may,
however, vary with the Policy Account Value. Under Option A, the death benefit
will only vary whenever the Policy Account Value multiplied by the applicable
percentage exceeds the face amount of the Policy. The death benefit under Option
B will always vary with the Policy Account Value because the death benefit
equals either the face amount plus the Policy Account Value or the applicable
percentage of Policy Account Value.
HOW THE DURATION OF THE POLICY MAY VARY. The duration of the Policy depends
upon the Policy's Cash Surrender Value. The Policy will remain in force so long
as the Cash Surrender Value is sufficient to pay the monthly deduction. (See the
section on Charges and Deductions--Policy Account Value Charges.) Where,
however, the Cash Surrender Value is insufficient to pay the monthly deduction
or indebtedness exceeds Policy Account Value, and a grace period expires without
an adequate payment by the Owner, the Policy will lapse and terminate without
value. Special provisions apply if the Owner has paid either the GDBP or
Benchmark Premiums. (See the section on Policy Lapse and Reinstatement --
Lapse.)
PAYMENT OF POLICY BENEFITS
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Death Benefit Proceeds under the Policy will ordinarily be paid within
seven days after ANLIC receives due proof of death. Policy Account Value
benefits will ordinarily be paid within seven days of receipt of a written
request. Payments may be postponed in certain circumstances. (See the section on
Postponement of Payments.) The Owner may decide the form in which the benefits
will be paid. During the Insured's lifetime, the Owner may arrange for the Death
Benefit Proceeds to be paid in a lump sum or under one or more of the settlement
options described below. These choices are also available if the Policy is
surrendered or matures. If no election is made, ANLIC will pay the benefits in a
lump sum upon submission of due proof of death.
When Death Benefit Proceeds are payable in a lump sum, the beneficiary may
select one or more of the settlement options. If Death Benefit Proceeds become
payable under a settlement option and the beneficiary has the right to withdraw
the entire amount, the beneficiary may name and change contingent beneficiaries.
SETTLEMENT OPTIONS. Owners and beneficiaries may elect to have benefits
paid in a lump sum or in accordance with a wide variety of settlement options
offered under the Policy. Once a settlement option is in effect, there will no
longer be value in the Variable Account. ANLIC may make other settlement options
available in the future. For additional information concerning these options,
see the Policy itself.
Interest for Life. Interest on the amount retained will be paid during the
lifetime of the payee. When the payee dies, the amount held by ANLIC will
be paid as agreed.
Interest for a Fixed Period. Interest or compound interest will be paid for
a fixed period. The fixed period cannot exceed 30 years. At the end of the
period the principal amount will be paid as agreed.
Payments for a Fixed Period. The amount retained plus interest will be paid
in equal monthly installments for the period chosen. The period chosen may
not exceed 30 years.
Payments of a Fixed Amount. The amount retained plus interest will be paid
in equal monthly installments until the fund has been paid in full. The
total payments in any year must be at least 5% of the amount retained.
Life Income. The amount retained plus interest will be paid in equal
installments for the guaranteed payment period elected and continue for the
life of the person on whose life the option is based. Guaranteed payment
periods may be elected for 10 or 20 years, or the period in which the total
payments will equal the amount retained.
Joint and Survivor Life Income. The amount retained plus interest will be
paid during the joint lifetime of two persons and continue during the
lifetime of the survivor. Payments are guaranteed for 10 years.
Additional Settlements. At the request of the Owner, ANLIC will pay the
amount retained in any manner acceptable to the Company.
PAYMENT AND ALLOCATION OF PREMIUMS
POLICY ISSUE
Premiums are payable at ANLIC's Administrative Office. (See the section on
Acacia National Life Insurance Company.) or to one of ANLIC's authorized agents.
A properly completed application must precede or accompany the initial premium.
No coverage will take effect unless (a) the application is approved; (b) the
first Planned Periodic Premium is paid; and (c) the Policy is accepted by the
Applicant. This must be during the lifetime of all persons proposed for
insurance. Also, their eligibility and health must remain as described in the
application.
The minimum face amount to issue a Policy is $100,000, under ANLIC's
current rules. ANLIC reserves the right to revise its rules from time to time to
specify a different minimum face amount at issue. A Policy will generally be
issued only to Insureds 80 years of age or under who supply satisfactory
evidence of insurability sufficient to ANLIC. ANLIC may, however, at its sole
discretion, issue a Policy to an individual above the age of
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80. Acceptance is subject to ANLIC's underwriting rules and ANLIC reserves the
right to reject an application for any reason. The Policy Date is the date used
to determine Policy years and Policy Months. If a premium is submitted with the
application, insurance coverage will begin as of the Policy Date. If a premium
is not paid with the application, the Policy Date will ordinarily be
approximately 15 days after underwriting approval. Insurance coverage will begin
on the later of the Policy date or the date the premium is received. A Policy
Date may also be any other date mutually agreeable to ANLIC and the Owner. ANLIC
will allocate net premiums on the later of the Policy Date or the date the
premium is received. (See the section on Allocation of Premiums and Policy
Account Value.)
PREMIUMS
Subject to certain limitations, an Owner has flexibility in determining the
frequency and amount of premiums.
PREMIUM FLEXIBILITY. Unlike conventional insurance policies, this Policy
frees the Owner from the requirement that premiums be paid in accordance with a
rigid and inflexible premium schedule. You must pay the first Planned Periodic
Premium for coverage to take effect. Thereafter, subject to the minimum and
maximum premium limitations described below, an Owner may make unscheduled
premium payments at any time in any amount. The Policy, therefore, provides the
Owner with the flexibility to vary the frequency and amount of premium payments
to reflect changing financial conditions. The level of premium payments is an
important factor in determining whether the Policy will be treated as a
"modified endowment contract" for federal tax purposes. (See the section on
Federal Tax Considerations.)
PLANNED PERIODIC PREMIUMS. Each Owner will determine a Planned Periodic
Premium schedule that provides for the payment of a level premium at a fixed
interval over a specified period of time. The Owner is not required to pay
premiums in accordance with this schedule. Furthermore, the Owner has
considerable flexibility to alter the amount, frequency, and the time period
over which Planned Periodic Premiums are paid.
The payment of a Planned Periodic Premium will not guarantee that the
Policy remains in force. Instead, the duration of the Policy depends upon the
Policy Account Value. Thus, even if planned periodic premiums are paid by the
Owner, the Policy will nonetheless lapse at any time indebtedness exceeds Policy
Account Value or the Cash Surrender Value is insufficient to pay certain monthly
charges, and a grace period expires without a sufficient payment. (See the
section on Policy Lapse and Reinstatement--Lapse.) Exceptions may occur if the
Owner pays an amount equal to or greater than either the scheduled Benchmark
Premiums or Guaranteed Death Benefit Premiums.
BENCHMARK PREMIUMS. When the Owner pays the monthly Benchmark Premiums as
stated in the Policy and if the sum of the premiums paid equals or exceeds the
sum of the scheduled Benchmark Premiums for the face amount and any increase,
then the Policy is guaranteed not to lapse during the first five years that the
Policy is in force. Payment of only the Benchmark Premium may reduce the
flexibility of premium payments.
GUARANTEED DEATH BENEFIT PREMIUM ("GDBP"). The Owner may also elect to pay
a GDBP premium for the Policy or any increase in coverage. The GDBP premium is
stated in the Policy and is calculated based on the Face Amount and the
Insured's age, sex and rate class at the time coverage is applied for. Provided
GDBP is paid and the Owner makes no loans or partial surrenders, the Policy is
guaranteed not to lapse before the Insured reaches age 65 or for ten years from
the effective date of coverage, whichever is later.
For all Policies sold in the State of Maryland, all references to the
phrases "the Guaranteed Death Benefit" and the "Guaranteed Death Benefit
Premium" are replaced with the phrases "Extended No Lapse Guarantee" and
"Extended No Lapse Guarantee Premium." For all Policies sold in the Commonwealth
of Massachusetts, the Guaranteed Death Benefit Premium does not apply.
PREMIUM LIMITATIONS. In no event may the total amount of all premiums paid,
both scheduled and unscheduled, exceed the current maximum premium limitations
which are required by federal tax laws. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium limitation,
ANLIC will only accept that portion of the premium which will make total
premiums equal the maximum limitation. Any part of the premium in excess of that
amount will be returned and no further premiums will be
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accepted until allowed by the current maximum premium limitations set forth in
the Policy. Every premium payment, whether scheduled or unscheduled, must be at
least $25. Premium payments less than this minimum amount will be returned to
the Owner.
PAYMENT OF PREMIUMS. Payments made by the Owner will be treated first as
payment of premium, not indebtedness unless the Owner indicates that the payment
should be treated otherwise. Charges will be deducted from each premium payment
as stated in the Policy. (See the section on Charges and Deductions--Premium
Expense Charges.)
ALLOCATION OF PREMIUMS AND POLICY ACCOUNT VALUE
NET PREMIUM. The net premium equals the premium paid less the premium
expense charge. (See the section on Charges and Deductions--Premium Expense
Charges.)
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Owner may
allocate net premiums or portions thereof to the Investment Options. The portion
of the net premium allocated to Sub-accounts will be allocated initially to the
Money Market Portfolio on the Policy Date or the date the first premium is
received by ANLIC, whichever is later. After 15 days, the Policy Account Value
will be allocated among the Investment Options according to the instructions in
your application.
Net premiums paid after the expiration of the initial fifteen day period
will be allocated in accordance with the Owner's instructions in the application
as of the end of the Valuation Date in which they are received. The minimum
percentage of each premium that may be allocated to the Fixed Account or any
Sub-account is 5%; percentages must be in whole numbers. The allocation for
future net premiums may be changed without charge at any time by providing ANLIC
with written notification. No charge is imposed for any reallocations. No more
than ten different Sub-accounts may be chosen to receive premium payments.
The value of amounts allocated to Sub-accounts will vary with the
investment experience of these Sub-accounts and the Owner bears the entire
investment risk. Owners should periodically review their allocations of premiums
and values in light of market conditions and overall estate planning
requirements.
TRANSFERS
TRANSFERS FROM THE GENERAL ACCOUNT. The Owner may ask to transfer value
from the General Account, up to a maximum each Policy year of 25% of the General
Account Value as of the last Policy anniversary date. The minimum amount each
that may be transferred is $100. During the first Policy year, the Owner may
transfer a maximum of 25% of the General Account Value on the transfer date.
TRANSFERS FROM SUB-ACCOUNTS. The Owner may ask ANLIC to transfer all or
part of the amount in one of the Sub-accounts to another Sub-account or to the
General Account. The minimum amount for such transfer is $50.
The transfer will be made as of the date ANLIC receives the written request.
AUTOMATIC REBALANCING AND DOLLAR COST AVERAGING PROGRAMS. The Owner may
also elect from either the Automatic Rebalancing Program or the Dollar Cost
Averaging Program by filing a written authorization with ANLIC. ANLIC reserves
the right to alter, including the right to assess a charge, or terminate these
administrative programs upon 30 days advance written notice.
Under the Automatic Rebalancing Program, the Owner may have automatic
transfers on either a monthly, quarterly, semi-annual or annual basis, to adjust
the values among the Sub-accounts and the General Account to meet the Owner's
designated percentage account value proportions the Owner has on file with
ANLIC. The allocations are subject to a minimum 5% designated percentage
proportion per account.
Under the Dollar Cost Averaging Program, the Owner may elect to have a
specific dollar amount automatically transferred from the Money Market
Sub-account to designated Sub-accounts on either a monthly, quarterly,
semi-annual, or annual basis. The specific dollar amount is subject to a $50
minimum transfer amount pursuant to the Owner's election with a minimum 5%
designated percentage proportion per Sub-account. If the periodic transfer would
reduce the value in the Money Market Sub-account below the
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specific dollar amount, ANLIC reserves the right to include the entire remaining
value to meet the transfer election. ANLIC also reserves the right to establish
a minimum Money Market Sub-account balance before we allow you to elect the
program.
Transfers and adjustments pursuant to these Programs will occur on the
Policy's Monthly Anniversary date in the month in which the transaction is to
take place or the next succeeding business day if the Monthly Anniversary date
falls on a day other than a Valuation Date.
TELEPHONE REQUESTS. At the time an application for a Policy is completed,
or at any subsequent time, an Owner may request a telephone transfer
authorization form. If the form is properly completed and on file with ANLIC,
transfers may be made pursuant to telephone instructions, subject to the above
terms and the terms of the authorization form. Otherwise, transfer requests must
be in writing in a form acceptable to ANLIC. Transfer requests made by telephone
are processed upon the date of receipt, if received prior to 4:00 p.m. Eastern
Time. ANLIC may, at any time, revoke or modify the transfer privilege.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Cash Surrender Value is insufficient to cover the
monthly deduction and a Grace Period expires without a sufficient payment,
unless the Benchmark Premium or Guaranteed Death Benefit provision is in effect.
The Grace Period is 62 days from the date ANLIC mails you a notice that the
Grace Period has begun. ANLIC will notify you at the beginning of the Grace
Period by mail addressed to your last known address on file with ANLIC. The
notice will specify the premium required to keep the Policy in force. The
required premium will equal the lesser of 1) monthly deductions plus Premium
Expense Charges for the three Policy Months after commencement of the Grace
Period, plus projected loan interest that would accrue over that period, or 2)
the premium required under the Benchmark Premium or Guaranteed Death Benefit
provisions, if applicable, to keep the Policy in effect for three months from
the commencement of the Grace Period. Failure to pay the required premium within
the Grace Period will result in lapse of the Policy. If the Insured dies during
the Grace Period, any indebtedness and past due charges will be deducted from
the Death Benefit Proceeds.
REINSTATEMENT. A lapsed Policy may be reinstated any time within 5 years
after the date of lapse and before the maturity date by submitting the following
items to ANLIC:
1. A written application for reinstatement;
2. Evidence of insurability satisfactory to ANLIC; and
3. A premium that, after the deduction of premium expense charges, is
large enough to cover the monthly deductions for at least three Policy
Months commencing with the effective date of reinstatement for the
Policy and any rider benefits. Any indebtedness on the date of lapse
must be paid at the time of reinstatement.
Upon approval of the application for reinstatement, the effective date of
reinstatement will be the monthly anniversary on or prior to the date of
approval.
To the extent permitted under state law, ANLIC may contest the
reinstatement of the Policy, and any rider attached, for any statements made in
the application for reinstatement, until it has been in force during the
lifetime of the Insured for two years from the effective date of reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy and any optional
insurance benefits added by rider to compensate ANLIC for: (1) providing the
insurance benefits set forth in the Policy and any riders; (2) administering the
Policy; (3) assuming certain risks in connection with the Policy; and (4)
incurring expenses in distributing the Policy and any riders. The nature and
amount of these charges are described more fully below.
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SURRENDER CHARGE
Surrender Charges will not exceed the maximum charges as specified in the
Policy. The surrender charge for the original face amount is determined by
multiplying a surrender charge factor by the actual premiums paid up to Target
Premium. The Surrender Charge factor depends on the number of years the Policy
has been in force, as follows:
POLICY YEAR SURRENDER CHARGE FACTOR
---------- -----------------------
1-7 30%
8 20%
9 10%
10 + 0%
Paying less premium may reduce the surrender charge but will increase the
cost of insurance for the Policy and may cause the Policy to lapse.
Surrender Charges for any increase in face amount will be based solely on
the Target Premium associated with the increase as stated in the Policy. The
maximum surrender charge for an increase in face amount is 30% of the Target
Premium for the increase during the seven years following the increase, and then
declines by 10% per year until it reaches 0% in the tenth year following the
increase. Surrender Charges are computed separately for the original face amount
and each increase in face amount, and then combined.
PARTIAL SURRENDER CHARGE
During the surrender charge period for the Policy and any increase, there
will be a charge for a partial surrender equal to 8% of the amount withdrawn or
$25, whichever is greater. Partial Surrender Charges will reduce the remaining
Surrender Charge.
PREMIUM EXPENSE CHARGE
ANLIC will deduct 2.25% from each premium before allocation to the
Investment Options. The deduction represents an amount ANLIC considers necessary
to pay all premium taxes imposed by the states and any subdivisions thereof and
does not necessarily equal the premium taxes paid by ANLIC for a particular
Policy.
POLICY ACCOUNT VALUE CHARGES
MONTHLY DEDUCTION. On each Monthly Anniversary, a charge will be deducted
from the Policy Account Value to compensate ANLIC for administrative expenses
and insurance provided. The monthly deduction consists of the cost of insurance,
the administrative expense charge, and charges for any optional insurance
benefits added by riders. The monthly deduction will be allocated pro-rata among
the Investment Options.
COST OF INSURANCE. Because the cost of insurance depends upon a number of
variables, the cost for each Policy month can vary from month to month. ANLIC
will determine the monthly cost of insurance charge by multiplying the
applicable cost of insurance rate or rates by the net amount at risk for each
Policy Month. The net amount at risk for a Policy Month is based on the
difference between the Death Benefit and the Policy Account Value on the Monthly
Anniversary.
COST OF INSURANCE RATE. Cost of insurance rates will be based on the Face
Amount and the Insured's sex, Issue Age, Policy duration, and rate class. The
rates reflect ANLIC's expectations of future experience with regard to
mortality, interest, persistency, and expenses, but will not exceed the Schedule
of Guaranteed Annual Cost of Insurance Rates shown in the Policy. For standard
risks, these guaranteed rates are based on the 1980 Commissioners Standard
Ordinary Mortality Table with smoker and non-smoker distinction and the
Insured's sex (unless unisex rates are required by law). Any change in the cost
of insurance rates will apply to all Insureds of the same Issue Age, sex, rate
class, and whose Policies have been in force for the same length of time.
The cost of insurance rate will also depend on the face amount of the
Policy. At ANLIC's discretion, a Policy
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with a face amount in excess of $500,000 may incur a lower cost for each
thousand dollars of net amount at risk than an otherwise identical Policy with a
face amount less than that amount. ANLIC may, at its sole discretion, reduce the
cost of insurance for other face amounts. Because the cost of insurance rate
varies with the face amount, any increase or decrease in face amount, including
those resulting from a change in the death benefit option and those resulting
from partial surrenders, may affect the cost of insurance.
RATE CLASS. The rate class of an Insured will affect the cost of insurance
rate. ANLIC currently places Insureds into standard rate classes or substandard
rate classes involving higher mortality risk. In an otherwise identical Policy,
an Insured in the standard rate class will have a lower cost of insurance rate
than an Insured in a substandard rate class.
ADMINISTRATIVE EXPENSE CHARGE. As reimbursement for administrative expenses
related to the maintenance of each Policy and the Variable Account, ANLIC
assesses a charge of $27 per Policy Month during the first Policy Year and $8
per Policy Month thereafter. ANLIC does not anticipate that it will make any
profit on this charge.
OPTIONAL INSURANCE BENEFITS CHARGES. The monthly deduction will include
charges for any optional insurance benefits added to the Policy by rider. (See
the section on Optional Insurance Benefits.)
DAILY CHARGES AGAINST THE VARIABLE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. ANLIC has developed a new method of
calculating mortality and expense charges which it believes is more favorable to
Policy Owners. As compensation for mortality and expense risks assumed in
connection with the Policy, ANLIC will deduct a daily mortality and expense risk
charge from the value of the net assets of the Variable Account. For the first
15 years of your Policy, this charge is at the rate of 0.90% annually
(0.0024590% daily). Beginning in the 16th Policy year, this charge is reduced by
0.05% annually until it reaches 0.45% annually (0.0012295% daily) in Policy year
24; the rate remains level thereafter. The daily charge will be deducted from
the net asset value of the Variable Account, and therefore the Sub-accounts, on
each Valuation Date. Where the previous day or days was not a Valuation Date,
the deduction on the Valuation Date will be the applicable daily rate multiplied
by the number of days since the last Valuation Date. No mortality and expense
risk charges will be deducted from the amounts in the Fixed Account.
The mortality risk assumed by ANLIC is that Insureds may live for a shorter
time than projected, and that an aggregate amount of Death Benefit Proceeds
greater than that projected will be payable. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
limits on administrative charges set in the Policies, which are in excess of the
amount necessary to meet expenses currently. If the expenses do not increase to
an amount in excess of the limits, ANLIC may profit from this charge. Any
shortfall in meeting the distribution expenses will be met from ANLIC's general
corporate funds which may include profit from the mortality and expense risk
charge. ANLIC also assumes risks with respect to other contingencies, including
the pattern of transfers between the Variable Account and the General Account
which may cause ANLIC to incur greater costs than anticipated.
TAXES. Currently no charge is made to the Variable Account for federal
income taxes that may be attributable to the Variable Account. ANLIC may,
however, make such a charge in the future. Charges for other taxes, if any,
attributable to the Variable Account may also be made. (See the section on
Federal Tax Considerations.)
INVESTMENT ADVISORY FEE
Because the Variable Account purchases shares of the Portfolios, the net
assets of the Variable Account will reflect the investment advisory fees
incurred by the Portfolios. The specific charges associated with each Fund are
described in the table below. The amount of this charge will depend on the
Portfolio or Portfolios selected by the Owner for premium allocation. These
charges are set by the fund managers and are subject to change.
PORTFOLIO ANNUAL EXPENSES
(Expressed as a Percentage of Net Assets of each Portfolio)
PORTFOLIO MANAGEMENT FEES OTHER TOTAL PORTFOLIO
EXPENSES ANNUAL EXPENSES
- --------------------------------------------------------------------------------
Alger American Growth Portfolio 0.75% 0.04% 0.79%
Alger American MidCap Growth Portfolio 0.80% 0.04% 0.84%
Alger American Small Capitalization
Portfolio 0.85% 0.04% 0.89%
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Calvert Social Money Market Portfolio 0.50% 0.16% 0.66%/1
Calvert Social Small Cap Growth Portfolio 0.90% 0.33% 1.33%/1
Calvert Social Mid Cap Growth Portfolio 0.80% 0.16% 1.06%/1
Calvert Social International
Equity Portfolio 1.10% 0.70% 1.80%/1
Calvert Social Balanced Portfolio 0.70% 0.18% 0.88%/1
Neuberger & Berman Advisers Management
Trust Limited Maturity Bond Portfolio 0.65% 0.11% 0.76%
Neuberger & Berman Advisers Management
Trust Growth Portfolio 0.83% 0.09% 0.92%
Oppenheimer Aggressive Growth Fund/VA 0.69% 0.02% 0.71%/2
Oppenheimer Capital Appreciation Fund/VA 0.72% 0.03% 0.75%
Oppenheimer Main Street Growth & Income
Fund/VA 0.74% 0.05% 0.79%
Oppenheimer High Income Fund/VA 0.74% 0.04% 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.06% 0.80%
Van Eck Worldwide Hard Assets Fund 1.00% 0.20% 1.20%/3
- ---------------------
/1 The figures are based on expenses for fiscal year 1998, and have been
restated to reflect the elimination of the performance adjustment in CVS
Balanced and Mid Cap Portfolios. The restatement includes the addition of 0.01%
to both portfolios.
/2 Total expenses are presented net of expenses waivers and reimbursements.
For the CVS International Equity Portfolio, total expenses are 1.65% and
expenses reimbursed 0.15%, therefore gross expenses are 1.80%. There were no
expenses waivers or reimbursements in any other CVS Portfolios.
"Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly (again restated for CVS Balanced and Mid
Cap) would be 0.86% for CVS Balanced, 1.01% for CVS Mid Cap, ).63% for CVS Money
Market, 1.53% for CVS International Equity and 1.12% for CVS Small Cap.
/3 Expense is reduced to 1.16% by the directed brokerage and custodian fee
arrangement.
REDUCTION OF CHARGES
ANLIC may reduce monthly administration charges, other charges, and the
minimum initial face amount in special circumstances that result in lower sales,
administrative or mortality expenses. For example, special circumstances may
exist in connection with group or sponsored arrangements, sales to Policyowners
of ANLIC or its affiliates, or sales to employees or clients of subsidiaries and
affiliates of Ameritas Acacia Mutual Holding Corporation. Group arrangements
include those in which a trustee or an employer, for example, purchases
contracts covering a group of individuals on a group basis. Sponsored
arrangements include those in which an employer allows us to sell contracts to
its employees on an individual basis. The amounts of any reductions will reflect
the reduced sales effort and administrative costs resulting from, or the
different mortality experience expected as a result of, the special
circumstances. Reductions will not be unfairly discriminatory against any
person, including the affected Owners and Owners of all other policies funded by
the Variable Account.
POLICY RIGHTS
LOAN PRIVILEGES
POLICY LOAN. The Owner may borrow money from ANLIC using the Policy as the
only security for the loan. The maximum amount that may be borrowed at any time
is the loan value. The loan value equals 90% of the Cash
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Surrender Value. Loans usually are paid within seven days after ANLIC receives a
written request. Loans have priority over the claims of any assignee or other
person. The loan may be repaid all or in part at any time while the Insured is
living. Loans from certain Policies may be taxed as Distributions. (See the
section on Federal Tax Considerations.)
INTEREST. ANLIC charges interest on Policy loans at regular and reduced
rates. Regular loans will accrue interest at the daily equivalent of 6.45% per
year. After the fifth Policy year, you may borrow a limited amount of the Cash
Surrender Value at a reduced rate. Reduced rate loans will accrue interest at
the daily equivalent of 4.50% per year. The amount available at the reduced loan
rate is (1) the Policy Account Value, minus (2) total premiums paid minus any
partial surrenders previously taken, and minus (3) any indebtedness held at a
reduced rate. However, this amount may not exceed the maximum loan amount
described above. If unpaid when due, interest will be added to the amount of the
loan and bear interest at the same rate.
EFFECT OF POLICY LOANS. When a loan is made, Policy Account Value equal to
the amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Policy Account Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. If no instructions are given, the amounts will
be transferred first from the Fixed Account. Any excess amount will be
transferred from the sub-accounts in the same proportion that the Policy Account
Value in each Sub-account bears to the Variable Account Value.
Value in the General Account held as security for the loan will be credited
with interest at 4.5% per year. NO ADDITIONAL INTEREST WILL BE CREDITED TO THIS
VALUE. The interest earned will be credited once each Policy Month. Upon partial
repayment of indebtedness, value in the General Account equal to the amount of
repayment will be released as security for the loan, and may be reallocated by
the owner among the Investment Options. Upon full repayment of indebtedness, all
collateral in the General Account may be reallocated by the Owner to the
Investment Options.
Interest earned on amounts held in the General Account will be allocated to
the Investment Options on each Policy anniversary in the same proportion that
Net Premiums are being allocated to the Investment Options at the time.
INDEBTEDNESS. Indebtedness equals the total of all Policy Loans and accrued
interest on Policy loans. If indebtedness exceeds Policy Account Value less
Surrender Charges, ANLIC will notify the Owner and any assignee of record. If a
sufficient payment equal to excess indebtedness is not made to ANLIC within 62
days from the date notice is sent, the Policy will lapse and terminate without
value. The Policy, however, may later be reinstated. (See the section on Policy
Lapse and Reinstatement.)
REPAYMENT OF INDEBTEDNESS. Indebtedness may be repaid any time before
the Maturity Date. (See the section on Payment of Policy Benefits.) ANLIC will
deduct indebtedness from any amount payable under the Policy. Payments made by
the Owner will be treated first as payment of premium and not as repayment of
any outstanding Policy debt unless the Owner indicates that the payment should
be treated otherwise. Loan repayments are not subject to the Premium Expense
Charge.
SURRENDER PRIVILEGES
The Owner may surrender the Policy for its Cash Surrender Value on any
Valuation Date during the lifetime of the Insured by sending a written request
to ANLIC. The amount available for surrender is the Cash Surrender Value at the
end of the Valuation Period during which the surrender request is received at
ANLIC's principal office. The Cash Surrender Value equals the Policy Account
Value less the surrender charge and indebtedness. Surrenders from the Variable
Account will generally be paid within seven days of receipt of the written
request. Postponement of payments may, however, occur in certain circumstances.
(See the section on Postponement of Payments.) Surrenders may have adverse tax
consequences. (See the section on Federal Tax Considerations.)
A surrender charge is imposed if the Policy is surrendered either partially
or totally. For partial surrenders, the charge is 8% of the amount withdrawn or
$25, whichever is greater, but will never exceed the
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charges for a total surrender. Decreases do not affect Surrender Charges, since
Surrender Charges for coverage associated with the decrease will be taken at the
time of Policy lapse or surrender.
The Policy surrender charge is a product of a surrender charge factor
multiplied by the actual premium paid up to the Target Premium from the Policy
Date or the Increase Date of any increase in face amount, as applicable. The
factor varies by the year of surrender measured from the Policy Date or increase
date, as applicable. (The surrender charge will never exceed the Policy Account
Value.) Any charge assessed for a partial surrender will reduce the remaining
surrender charge dollar for dollar.
PARTIAL SURRENDER
After the first Policy year, you may partially surrender the Policy on any
Valuation Date during the lifetime of the Insured by sending us a written
request. The amount of the partial surrender must not exceed the Cash Surrender
Value. You may place on file with us a written request for systematic partial
surrenders. The partial surrenders may be monthly, quarterly or annually in
amounts of no less than $100.
Unless you request otherwise, the partial surrender will be allocated among
the Investment Options in the same proportion that the Policy's value in each
Investment Option bears to the total Policy Account Value in the Investment
Options on the Valuation Date we receive the request.
Any partial surrender will reduce the Policy Account Value by the amount of
the partial surrender. The amount of reduction in the face amount will be:
1. For Death Benefit Option A, 100% of the amount of the partial
surrender.
2. For Death Benefit Option B, no reduction.
The face amount remaining in force after a partial surrender may not be
less than the minimum face amount ANLIC allows.
Each partial surrender will reduce the face amount in the following order:
1. Each increase in order, starting with the last increase; and
2. The face amount when the Policy was issued.
For a partial surrender, the amount paid will be deducted from the Policy
Account Value at the end of the Valuation Period during which the request is
received.
COVERAGE BEYOND THE MATURITY DATE
Unless prohibited under state law, you may elect to continue coverage
beyond the Maturity Date provided the Policy is in force on the Maturity Date.
If you so elect, on the Maturity Date the Variable Account Value will be
transferred to the General Account where it will continue to earn interest as
described in the Policy. Monthly deduction amounts will continue to be deducted,
with the Cost of Insurance Rate equal to zero. Only payments required to keep
the Policy in force will be accepted beyond the Maturity Date. All other rights
and benefits as described in the Policy will be available.
The Policy may be subject to certain adverse tax consequences when
continued beyond the Maturity Date.
EXAMINATION OF POLICY PRIVILEGE ("FREE LOOK")
You may cancel the Policy within 20 days after you receive it or within 45
days of completing Part I of the application, whichever is later. You should
mail or deliver the Policy to either our Administrative Service Office. (See the
section on Acacia National Life Insurance Company.) or the registered
representative who sold the Policy. If the Policy is canceled within the Free
Look Period, ANLIC will refund the total premium paid. A refund of premium paid
by check may be delayed until the check has cleared the Owner's bank. This
privilege also applies to an increase for coverage under the Policy. (See the
section on Postponement of Payments.)
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GENERAL ACCOUNT
You may allocate net premiums and transfer value to the General Account of
ANLIC via an allocation to the Fixed Account. Because of exemptive and
exclusionary provisions, interests in the General Account have not been
registered as securities under the Securities Act of 1933, as amended (the "1933
Act") and the General Account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the General Account nor any interests
therein are subject to the provisions of these Acts and, as a result, the staff
of the SEC has not reviewed the disclosures in this Prospectus relating to the
General Account.
GENERAL DESCRIPTION
The General Account consists of all assets owned by ANLIC other than those
in the Variable Account and other separate accounts. Subject to applicable law,
ANLIC has sole discretion over the investment of the assets in the General
Account.
You may elect to allocate net premiums to the Fixed Account, the Variable
Account, or both. You may also transfer value from the Sub-accounts to the Fixed
Account, or from the Fixed Account to the Sub-accounts. The allocation or
transfer of funds to the Fixed Account does not entitle an Owner to share in the
investment experience of the General Account. Instead, ANLIC guarantees that
value in the Fixed Account will accrue interest at an effective annual rate of
at least 4.5%, independent of the actual investment experience of the General
Account. Any excess interest rate when declared will remain in effect at least
one year.
THE POLICY
This Prospectus describes a Flexible Premium Variable Life Insurance
Policy. This Prospectus is generally intended to serve as a disclosure document
for the aspects of the Policy involving the Variable Account. For complete
details regarding the General Account, see the Policy itself.
GENERAL ACCOUNT VALUE
Net premiums allocated to the General Account via the Fixed Account are
credited to the Policy. ANLIC bears the full investment risk for these amounts.
ANLIC guarantees that interest credited to the Fixed Account will not be less
than 4.5% per year. ANLIC MAY, AT ITS SOLE DISCRETION, CREDIT A HIGHER RATE OF
INTEREST, although it is not obligated to credit interest in excess of 4.5% per
year, and might not do so. ANY INTEREST CREDITED TO THE FIXED ACCOUNT IN EXCESS
OF THE GUARANTEED RATE OF 4.5% PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF ANLIC. THE OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT
EXCEED THE GUARANTEED MINIMUM RATE OF 4.5% PER YEAR. The value in the Fixed
Account will be calculated on each Monthly Anniversary.
ANLIC guarantees that, at any time prior to the Maturity Date, the value in
the Fixed Account will not be less than the amount of the net premiums allocated
or value transferred to the Fixed Account, plus interest at the rate of 4.5% per
year, plus any excess interest which ANLIC credits and any amounts transferred
into the Fixed Account, less the sum of all charges allocable to the Fixed
Account and any amounts deducted from the Fixed Account in connection with
partial surrenders or transfers to the Variable Account.
GENERAL POLICY PROVISIONS
POSTPONEMENT OF PAYMENTS
GENERAL. Payment of any amount upon complete or partial surrender, Policy
loan, or benefits payable at death or Maturity may be postponed whenever: (1)
ANLIC or the New York Stock Exchange is closed such as customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the SEC; (2) the SEC by order permits postponement for the
protection of Owners; or (3) an emergency exists, as determined by the SEC, as a
result of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable Account's net
assets. Transfers may also be postponed under these circumstances.
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PAYMENT BY CHECK. Payments under the Policy of any amounts derived from
premiums paid by check may be delayed until such time as the check has cleared
the Owner's bank.
THE CONTRACT
The Policy, riders and attached copy of the application and any
supplemental applications are the entire contract. Only statements in the
application and any supplemental applications can be used to void the Policy or
defend a claim. The statements are considered representations and not
warranties. Only Officers of ANLIC can agree to change or waive any provisions
of the Policy. The change or waiver must be in writing and signed by an officer
of ANLIC.
SUICIDE
In most states, if the Insured, while sane or insane, commits suicide
within two years after the Policy Date, ANLIC will pay only the premium
received, less any partial surrenders and outstanding indebtedness. If the
Insured, while sane or insane, commits suicide within two years after the
effective date of any increase in face amount requiring evidence of
insurability, ANLIC will not pay the increase but will pay only an amount equal
to the monthly deductions previously made for the increase.
INCONTESTABILITY
ANLIC cannot contest this Policy or any attached rider after it has been in
force for two years from its effective date. It cannot contest an increase in
face amount or in rider face amount after it has been in force for two years
from its effective date. Reinstatement of a Policy, and any rider attached to
the Policy, may be contested by ANLIC for any statements made in the application
for reinstatement any time within two years of the effective date of
reinstatement.
CHANGE OF OWNER OR BENEFICIARY
Generally, as long as the Policy is in force, the Owner or Beneficiary may
be changed by written request in a form acceptable to ANLIC. The Policy need not
be returned unless requested by ANLIC. The change will take effect as of the
date the request is signed, whether or not the Insured is living when the
request is received by ANLIC. ANLIC will not, however, be liable for any payment
made or action taken before acknowledgment of the request. A change of Owner or
Beneficiary may have tax consequences. (See the section on Federal Tax
Considerations.)
COLLATERAL ASSIGNMENT
The Policy may be assigned as collateral. ANLIC will not be bound by the
assignment until a copy has been received by ANLIC and it assumes no
responsibility for determining whether an assignment is valid or the extent of
the assignee's interest. An Assignment may have tax consequences. (See the
section on Federal Tax Considerations.)
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Insured has been misstated, the benefits will be
those which the monthly deductions would have provided for the correct age and
sex. In the case of policies issued with unisex rates, if the age of the Insured
has been misstated, the benefits will be those which the monthly deductions
would have provided for the correct age.
REPORTS AND RECORDS
ANLIC will maintain all records relating to the Variable Account. ANLIC
will mail to Owners, at their last known address of record, any reports required
by applicable law or regulation. Each Owner will also be sent an annual and
semi-annual report for Portfolios of the Funds that hold or have held Policy
value during the reporting period and a list of the portfolio securities held in
each Portfolio of the Funds, as required by the 1940 Act.
OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the following optional
insurance benefits may be added to a Policy by rider. The cost of any optional
insurance benefits will be deducted as part of the monthly deduction.
(See the section on Charges and Deductions--Monthly Administration Charge.)
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ACCELERATED DEATH BENEFIT RIDER. Subject to certain terms and conditions, a
reduced death benefit will be paid in advance to the Owner of the Policy if the
Insured suffers from a terminal illness or injury. There is no charge for this
rider but it will be subject to ANLIC's underwriting requirements. If certain
requirements are satisfied, however, accelerated Death Benefit Proceeds paid
under the Accelerated Death Benefit Rider to a terminally or chronically ill
insured individual as defined in the Code, may not be subject to tax. A
qualified tax advisor should be consulted before adding such a rider to a
Policy.
OTHER INSURED RIDER. Provides for level renewable term insurance on the
life of any family member. Under the terms of this rider, ANLIC will pay the
face amount of the rider to the Beneficiary upon receipt of proof of the other
Insured's death. Subject to certain restrictions, the face amount of the rider
may be increased or decreased. This rider may also be converted to a new Policy
on the family member within 31 days after the Insured's death. Generally, the
new Policy must meet the minimum face amount requirement, but ANLIC, in its sole
discretion, may waive this provision. Additional evidence of insurability will
not be required for conversion.
CHILDREN'S INSURANCE RIDER. Provides for level term insurance on the
Insured's children, as defined in the rider. Under the terms of the rider, the
death benefit will be payable to the named Beneficiary upon the death of any
Insured child. Upon receipt of proof of the Insured's death, the rider will
continue in force without additional monthly charges.
GUARANTEED INSURABILITY RIDER. Provides that the Owner can purchase
additional insurance at certain future dates without evidence of insurability.
Under the terms of the rider the Owner may only increase the face amount of the
Policy on an option date. An option date falls on the Policy Anniversary
following certain birthdates and the Monthly Anniversary following the
occurrence of certain events such as marriage of the Insured. Each increase in
face amount will be subject to the maximum stated in the Policy. No evidence of
insurability is required for any increase made under this rider. Increases may
have tax consequences. (See the section on Federal Tax Considerations.)
ACCIDENTAL DEATH BENEFIT RIDER. Provides additional insurance if the
Insured's death results from accidental bodily injury, as defined in the rider.
Under the terms of the rider, the additional benefits provided in a Policy will
be paid upon receipt of proof by ANLIC that death resulted directly and
independently of all other causes from accidental bodily injury; occurred while
the rider was in force; and occurred on or after the rider anniversary following
the Insured's 5th birthday. The rider will terminate on the earliest of either
the date of lapse, the rider anniversary following the Insured's 70th birthday
or the Maturity Date of the Policy.
LEVEL RENEWABLE TERM RIDER. Provides for level renewable term insurance
coverage to increase the face amount of the Policy. The Owner may purchase
additional insurance on a renewable term basis without evidence of insurability
up to Insured's age 70. The rider will terminate on the earliest of either the
date lapse, the rider anniversary following the Insured's 70th birthday or the
Maturity Date of the Policy.
TOTAL DISABILITY RIDER. Provides for the payment of the total disability
amount by ANLIC as premiums while the Owner is disabled. Under the terms of the
rider, the total disability amount will be paid as a premium upon receipt of
proof adequate to ANLIC that: (1) the Insured is totally disabled as defined in
the rider; (2) the disability commenced while the rider was in force; (3) the
disability began on or after the rider anniversary following the Insured's 15th
birthday; and (4) total disability continued without interruption for four
months. The total disability amount is set forth in the Policy. The amount may,
under certain circumstances, be increased. Evidence of insurability will
generally be required for any increase. Because the total disability amount is a
fixed dollar amount while the monthly deduction varies from month to month, the
fixed dollar amount may be more or less than the amount necessary to keep the
Policy in force.
Upon approval of the claim, ANLIC will begin crediting total disability
amounts, less premium expense charges, on the Monthly Anniversary after the date
disability began. No amount will be credited for a period of more than 12 months
before notice of disability is received by ANLIC unless it is shown that notice
was given as soon as reasonably possible. ANLIC will continue to credit the net
total disability amount while the Insured is
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totally disabled and the Policy is in force. However, if the disability begins
on or after the rider Anniversary after the Insured's 60th birthday, payment
will be credited only for the later of two years or until the rider Anniversary
after the Insured's 65th birthday.
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The following summary provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is not intended as tax
advice. No attempt has been made to consider in detail any applicable state or
other tax laws except premium taxes. This discussion is based upon ANLIC's
understanding of the relevant laws at the time of filing. Counsel or other
competent tax advisors should be consulted for more complete information before
a Policy is purchased. ANLIC makes no representation as to the likelihood of the
continuation of present federal income tax laws nor of the interpretations by
the Internal Revenue Service. Federal tax laws are subject to change and thus
tax consequences to the Insured, Policy Owner or Beneficiary may be altered.
(1) TAXATION OF ANLIC. ANLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code".) At this
time, since Separate Account I is not a separate entity from ANLIC, and its
operations form a part of ANLIC, it will not be taxed separately as a "regulated
investment company" under Subchapter M of the Code. Net investment income and
realized net capital gains on the assets of Separate Account I are reinvested
and automatically retained as a part of the reserves of the Policy and are taken
into account in determining the Death Benefit and Accumulation Value of the
Policy. ANLIC believes that Separate Account I net investment income and
realized net capital gains will not be taxable to the extent that such income
and gains are retained as reserves under the Policy.
ANLIC does not currently expect to incur any federal income tax liability
attributable to Separate Account I with respect to the sale of the Policies.
Accordingly, no charge is being made currently to Separate Account I for federal
income taxes. If, however, ANLIC determines that it may incur such taxes
attributable to Separate Account I, it may assess a charge for such taxes
against Separate Account I.
ANLIC may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made). At present, they are not
charges against Separate Account I. If there is a material change in state or
local tax laws, charges for such taxes attributable to Separate Account I, if
any, may be assessed against Separate Account I.
(2) TAX STATUS OF THE POLICY. The Code (Section 7702) includes a definition of a
life insurance contract for federal tax purposes, which places limitations on
the amount of premiums that may be paid for the Policy and the relationship of
the Accumulation Value to the Death Benefit. ANLIC believes that the Policy
meets the statutory definition of a life insurance contract.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a modified
endowment contract, distributions from it (including loans) are taxed as
ordinary income to the extent of any gain. This Policy will become a "modified
endowment contract" if the premiums paid into the Policy fail to meet a 7-pay
premium test as outlined in Section 7702A of the Code.
Certain benefits the Policy Owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are not
limited to, changes in Death Benefits and changes in the Specified Amount.
Should the Policy become a "modified endowment contract" partial withdrawals,
full Surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of any gain under the
Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer's age 59 1/2. The 10% penalty tax does
not apply if the distribution is made because the taxpayer becomes disabled as
defined under the Code or if the distribution is paid out in the form of a life
annuity on the life of the taxpayer or the joint lives of the taxpayer and
Beneficiary. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits. Should
one
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deposit excessive premiums during a Policy Year, that portion that is returned
by the insurance company within 60 days after the policy anniversary date will
reduce the premiums paid to avoid the policy becoming a modified endowment
contract. All modified endowment policies issued by ANLIC to the same Policy
Owner in any 12 month period are treated as one modified endowment contract for
purposes of determining taxable gain under Section 72(e) of the Internal Revenue
Code. Any life insurance policy received in exchange for a modified endowment
contract will also be treated as a modified endowment contract. You should
contact a competent tax professional before paying additional premiums or making
other changes to the Policy to determine whether such payments or changes would
cause the Policy to become a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury
(the "Treasury") to set standards by regulation or otherwise for the investments
of Separate Account I to be "adequately diversified" in order for the Policy to
be treated as a life insurance contract for federal tax purposes. If the Policy
is not treated as life insurance because it fails the diversification
requirements, the Policy Owner is then subject to federal income tax on gain in
the Policy as it is earned. Separate Account I, through the Funds, intends to
comply with the diversification requirements prescribed by the Treasury in
regulations published in the Federal Register on March 2, 1989, which affect how
the Fund's assets may be invested.
While Calvert, an ANLIC affiliate, is the adviser to certain of the
portfolios, ANLIC does not have control over any of the Funds or their
investments. However, ANLIC believes that the Funds will be operated in
compliance with the diversification requirements of the Internal Revenue Code.
Thus, ANLIC believes that the Policy will be treated as a life insurance
contract for federal tax purposes.
In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations do
not provide guidance concerning the extent to which policy owners may direct
their investments to particular divisions of a separate account. Regulations in
this regard may be issued in the future. It is not clear what these regulations
will provide nor whether they will be prospective only. It is possible that when
regulations are issued, the Policy may need to be modified to comply with such
regulations. For these reasons, ANLIC reserves the right to modify the Policy as
necessary to prevent the Policy Owner from being considered the owner of the
assets of Separate Account I or otherwise to qualify the Policy for favorable
tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
(3) TAX TREATMENT OF POLICY PROCEEDS. ANLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy for
federal income tax purposes. Thus, ANLIC believes that the Death Benefit payable
prior to the original Maturity Date will generally be excludable from the gross
income of the Beneficiary under Section 101(a)(1) of the Code and the Policy
Owner will not be deemed to be in constructive receipt of the Accumulation Ialue
under the Policy until its actual Surrender. However there are certain
exceptions to the general rule that death benefit proceeds are non-taxable.
Federal, state and local tax consequences of ownership or receipt of proceeds
under a Policy depends on the circumstances of each Policy Owner and
Beneficiary.
DISTRIBUTIONS FROM POLICIES THAT ARE NOT "MODIFIED ENDOWMENT CONTRACTS."
Distributions (while the Insured is still alive) from a Policy that is not a
modified endowment contract are generally treated as first a recovery of the
investment in the Policy and then only after the return of all such investment,
as disbursing taxable income. However, in the case of a decrease in the Death
Benefit, a partial withdrawal, a change in Death Benefit option, or any other
such change that reduces future benefits under the Policy during the first 15
years after a Policy is issued an that results in a cash distribution to the
Policy Owner in order for the Policy to continue complying with the Section 7702
defined limits on premiums and Accumulation Values, such distributions may be
taxable in whole or in part as ordinary income to the Policy Owner (to the
extent of any gain in the Policy) as prescribed in Section 7702. In addition,
upon a complete Surrender or lapse of a Policy that is not a "modified endowment
contract," if the amount received plus the amount of any outstanding Policy debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income for tax purposes. Investment in the Policy means (1) the
total amount of any premiums paid for the Policy plus the amount of any loan
received under the Policy to the extent the
ALLOCATOR 2000
34
<PAGE>
loan is included in gross income of the Policy Owner minus(2) the total amount
received under the Policy by the Policy Owner that was excludable from gross
income, excluding any non-taxable loan received under the Policy.
ANLIC also believes that loans received under a Policy will be treated as
debt of the Policy Owner and that no part of any loan under a Policy will
constitute income to the Policy Owner so long as the Policy remains in force.
Should the Policy lapse while Policy loans are outstanding the portion of the
loans attributable to earnings will become taxable. Generally, interest paid on
any loan under a Policy owned by an individual will not be tax-deductible.
Except for policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps and debt limits, the Health Insurance Portability
and Accountability Act of 1996 (the "Health Insurance Act") generally repeals
the deduction for interest paid or accrued after October 13, 1995 on loans from
corporate owned life insurance policies on the lives of officers, employees or
persons financially interested in the taxpayer's trade or business. Certain
transitional rules for then existing debt are included in the Health Insurance
Act. The transitional rules include a phase-out of the deduction for debt
incurred (1) before January 1, 1996, or (2) before January 1, 1997, for policies
entered into in 1994 or 1995. The phase-out of the interest expense deduction
occurs over a transition period between October 13, 1995 and January 1, 1999.
There is also a special rule for pre-June 21, 1986 policies. The Taxpayer Relief
Act of 1997 ("TRA '97"), further expanded the interest deduction disallowance
for businesses by providing, with respect to policies issued after June 8, 1997,
that no deduction is allowed for interest paid or accrued on any debt with
respect to life insurance covering the life of any individual (except as noted
above under pre-'97 law with respect to key persons and pre-June 21, 1986
policies). Any material change in a policy (including a material increase in the
death benefit) may cause the policy to be treated as a new policy for purposes
of this rule. TRA '97 also provides that no deduction is permissible for
premiums paid on a life insurance policy if the taxpayer is directly or
indirectly a beneficiary under the policy. Also under TRA '97 and subject to
certain exceptions, for policies issued after June 8, 1997, no deduction is
allowed for that portion of a taxpayer's interest expense that is allocable to
unborrowed policy cash values. This disallowance generally does not apply to
policies owned by natural persons. Policy Owners should consult a competent tax
advisor concerning the tax implications of these changes for their Policies.
DISTRIBUTIONS FROM POLICIES THAT ARE "MODIFIED ENDOWMENT CONTRACTS." Should
the Policy become a "modified endowment contract" partial withdrawals, full
Surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under th Policy will be taxable to the extent of any gain under the
Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer is disabled as defined under the Code or
if the distribution is paid out in the form of a life annuity on the life of the
taxpayer or the joint lives of the taxpayer and Beneficiary.
The right to change Policy Owners (See the section on General Provisions.),
and the provision for partial withdrawals (See the section on Partial
Surrender.) may have tax consequences depending on the circumstances of such
exchange, change, or withdrawal. Upon complete Surrender or when Maturity
Benefits are paid, if the amount received plus any Outstanding Policy Debt
exceeds the total premiums paid (the "basis") that are not treated as previously
withdrawn by the Policy Owner, the excess generally will be taxed as ordinary
income.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit Proceeds depend on
applicable law and the circumstances of each Policy Owner or Beneficiary. In
addition, if the Policy is used in connection with tax-qualified retirement
plans, certain limitations prescribed by the Internal Revenue Service on, and
rules with respect to the taxation of, life insurance protection provided
through such plans may apply. Further, the tax consequences of using the Policy
in nonqualified plan arrangements may vary depending on the particular facts and
circumstances of the arrangement. The advice of competent counsel should be
sought in connection with use of life insurance in a qualified or nonqualified
plan.
YOU SHOULD CONSULT QUALIFIED TAX AND/OR LEGAL ADVISORS TO OBTAIN COMPLETE
INFORMATION OF FEDERAL, STATE AND LOCAL TAX CONSIDERATIONS APPLICABLE TO YOUR
PARTICULAR SITUATION.
ALLOCATOR 2000
35
<PAGE>
POLICIES ISSUED IN CONJUNCTION WITH EMPLOYEE BENEFIT PLANS
Policies may be acquired in conjunction with employee benefit plans ("EBS
Policies"), including the funding of qualified pension plans meeting the
requirements of Section 401 of the Code.
For EBS Policies, the maximum mortality rates used to determine the monthly
Cost of Insurance Charge are based on the Commissioner's 1980 Standard Ordinary
Mortality Tables. Under these Tables, mortality rates are the same for male and
female Insureds of a particular Attained Age and rate class. (See the section on
Cost of Insurance.)
Illustrations reflecting the premiums and charges for EBS Policies will be
provided upon request to purchasers of such Policies.
There is no provision for misstatement of sex in the EBS Policies. (See the
section on Misstatement of Age or Sex.) Also, the rates used to determine the
amount payable under a particular Settlement Option will be the same for male
and female Insureds. (See the section on Settlement Options.)
LEGAL DEVELOPMENTS REGARDING UNISEX ACTUARIAL TABLES
In 1983, the United States Supreme Court held in Arizona Governing
Committee v. Norris that optional annuity benefits provided under an employee's
deferred compensation plan could not, under Title VII of the Civil Rights Act of
1964, vary between men and women on the basis of sex. In that case, the Court
applied its decision only to benefits derived from contributions made on or
after August 1, 1983. Subsequent decisions of lower federal courts indicate that
in other factual circumstances the Title VII prohibition of sex-distinct
benefits may apply at an earlier date. In addition, legislative, regulatory, or
decisional authority of some states may prohibit use of sex-distinct mortality
tables under certain circumstances. The Policies offered by this Prospectus
(other than Policies issued in states which require "unisex" policies (currently
Montana) and EBS Policies. (See the section on Policies Issued in Conjunction
with Employee Benefit Plans.) are based upon actuarial tables which distinguish
between men and women and, thus, the Policy provides different benefits to men
and women of the same age. Accordingly, employers and employee organizations
should consider, in consultation with legal counsel, the impact of these
authorities on any employment-related insurance or benefits program before
purchasing the Policy and in determining whether an EBS Policy is appropriate.
VOTING RIGHTS
All of the assets held in the Sub-accounts of the Variable Account will be
invested in shares of corresponding Portfolios of the Funds. The Funds do not
hold routine annual shareholders' meetings. Shareholders' meetings will be
called whenever each Fund believes that it is necessary to vote to elect the
Board of Directors of the Fund and to vote upon certain other matters that are
required by the 1940 Act to be approved or ratified by the shareholders of a
mutual fund. ANLIC is the legal owner of Fund shares and as such has the right
to vote upon any matter that may be voted upon at a shareholders' meeting.
However, in accordance with its view of present applicable law, ANLIC will vote
the shares of the Funds at meetings of the shareholders of the appropriate Fund
or Owner in accordance with instructions received from Owners. Fund shares held
in each Sub-account for which no timely instructions from Owners are received
will be voted by ANLIC in the same proportion as those shares in that Subaccount
for which instructions are received.
Each Owner having a voting interest will be sent proxy material and a form
for giving voting instructions. Owners may vote, by proxy or in person, only as
to the Portfolios that correspond to the Sub-accounts in which their Policy
values are allocated. The number of shares held in each Sub-account attributable
to a Policy for which the Owner may provide voting instructions will be
determined by dividing the Policy's value in that account by the net asset value
of one share of the corresponding Owner as of the record date for the
shareholder meeting. Fractional shares will be counted. For each share of an
Owner for which Owners have no interest, ANLIC will cast votes, for or against
any matter, in the same proportion as Owners vote.
ALLOCATOR 2000
36
<PAGE>
If required by state insurance officials, ANLIC may disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the investment objectives or policies of one or more of the
Owners, or to approve or disapprove an investment Policy or investment advice of
one or more of the Owners. In addition, ANLIC may disregard voting instructions
in favor of changes initiated by an Owner or a Fund's Board of Directors
provided that ANLIC's disapproval of the change is reasonable and is based on a
good faith determination that the change would be contrary to state law or
otherwise inappropriate, considering the Portfolio's objectives and purposes,
and the effect the change would have on ANLIC. If ANLIC does disregard voting
instructions, it will advise Owners of that action and its reasons for such
action in the next semi-annual report to Owners.
Shares of the Portfolios may be offered to variable life insurance and
variable annuity separate accounts of life insurance companies other than ANLIC
that are not affiliated with ANLIC. ANLIC understands that shares of these
Portfolios also will be voted by such other life insurance companies in
accordance with instructions from their Owners invested in such separate
accounts. This will dilute the effect of voting instructions of Owners of the
Policies.
EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC
This list shows name and position(s) with ANLIC followed by the principal
occupations for the last five years. Where an individual has held more than one
position with an organization during the last 5-year period, the last position
held has been given.
CHARLES T. NASON, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER*
Vice Chairman of Board and President, Director: Ameritas Acacia Mutual Holding
CompanyVice Chairman of Board and President, Director: Ameritas Holding Company
Chairman of the Board and Chief Executive Officer: Acacia Life Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
ROBERT W. CLYDE, PRESIDENT AND CHIEF OPERATING OFFICER*
Executive Vice President, Director: Ameritas Acacia Mutual Holding Company
Executive Vice President, Director: Ameritas Holding Company
President and Chief Operating Officer: Acacia Life Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
HALUK ARITURK, SENIOR VICE PRESIDENT, PRODUCT MANAGEMENT AND ADMINISTRATION**
Senior Vice President, Product Management and Administration: Acacia Life
Insurance Company
Executive Vice President, Ameritas Acacia Shared Services Center: Ameritas Life
Insurance Corp.
Formerly: Senior Vice President, Operations and Chief Actuary: Acacia Life
Insurance Company.
JOANN M. MARTIN, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, DIRECTOR**
Senior Vice President, Chief Financial Officer and Corporate Treasurer: Ameritas
Acacia Mutual Holding Company and Ameritas Holding Company
Senior Vice President and Chief Financial Officer: Acacia Life Insurance Company
Senior Vice President - Controller and Chief Financial Officer: Ameritas Life
Insurance Corp.
Also serves as officer and /or director of subsidiaries and/or affiliates of
Ameritas Life Insurance Corp.
BRIAN J. OWENS, SENIOR VICE PRESIDENT, CAREER DISTRIBUTION*
Senior Vice President, Career Distribution: Acacia Life Insurance Company;
Director: The Advisors Group, Inc.
BARRY C. RITTER, SENIOR VICE PRESIDENT AND CHIEF INFORMATION OFFICER**
Senior Vice President and Chief Information Officer, Acacia Life Insurance
Company
Senior Vice President - Information Services: Ameritas Life Insurance Corp.
ROBERT-JOHN H. SANDS, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE
SECRETARY*
Senior Vice President and General Counsel: Ameritas Acacia Mutual Holding
Company
ALLOCATOR 2000
37
<PAGE>
Senior Vice President and General Counsel: Ameritas Holding Company
Senior Vice President, General Counsel and Corporate Secretary: Acacia Life
Insurance Company
Also serves as a Director of direct and indirect subsidiaries of Acacia Life
Insurance Company.
JANET L. SCHMIDT, SENIOR VICE PRESIDENT, HUMAN RESOURCES*
Senior Vice President and Director of Human Resources: Ameritas Acacia Mutual
Holding Company
Senior Vice President and Director of Human Resources: Ameritas Holding Company
Senior Vice President, Human Resources: Acacia Life Insurance Company
RICHARD W. VAUTRAVERS, SENIOR VICE PRESIDENT AND CORPORATE ACTUARY**
Senior Vice President and Corporate Actuary: Ameritas Life Insurance Corp.
Senior Vice President and Corporate Actuary: Acacia Life Insurance Company
WILLIAM W. LESTER, VICE PRESIDENT AND TREASURER**
Treasurer: Ameritas Life Insurance Corp.
Also serves as officer of subsidiaries of Ameritas Life Insurance Corp.
Vice President and Treasurer, Acacia Life Insurance Company
RENO J. MARTINI, DIRECTOR***
Senior Vice President, Calvert Group, Ltd.
* The principal business address of each person is Acacia National Life
Insurance Company, 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
**The principal business address of each person is Ameritas Life Insurance
Corp., 5900 "O" Street, Lincoln, Nebraska 68510.
*** The principal business address of each person is Calvert Group, Ltd., 4550
Montgomery Avenue, Bethesda, Maryland 20814.
DISTRIBUTION OF THE POLICIES
Applications for the Policies are solicited by agents who are licensed by
state insurance authorities to sell ANLIC's variable life insurance policies,
and who are also registered representatives of The Advisors Group, Inc. ("TAG")
or registered representatives of broker/dealers who have Selling Agreements with
TAG or registered representatives of broker/dealers who have Selling Agreements
with such broker/dealers. TAG, whose address is 7315 Wisconsin Avenue, Bethesda,
Maryland 20814, is a registered broker/dealer under the Securities Exchange Act
of 1934 ("1934 Act") and a member of the National Association of Securities
Dealers, Inc. ("NASD"). TAG is a second tier wholly-owned subsidiary of Acacia
Life Insurance Company of Washington, D.C. TAG acts as the principal
underwriter, as defined in the 1940 Act, of the Policies (as well as other
variable life policies) pursuant to an Underwriting Agreement with ANLIC. The
Policies are offered and sold only in those states where their sale is lawful.
The insurance underwriting and the determination of a proposed Insured's
Rate Class and whether to accept or reject an application for a Policy is done
by ANLIC. ANLIC will refund any premiums paid if a Policy ultimately is not
issued or will refund the applicable amount if the Policy is returned under the
Free Look provision.
Agents are compensated for sales of the Policies on a commission and
service fee basis and with other forms of compensation. Agents may also receive
expense allowances or bonuses. The agent may be required to return the
commissions if a Policy is not continued.
ALLOCATOR 2000
38
<PAGE>
ADMINISTRATION
ANLIC has contracted with Ameritas Life Insurance Corp. ("ALIC"), having
its principal place of business at 5900 "O" Street, Lincoln, Nebraska for it to
provide ANLIC with certain administrative services for the Flexible Premium
Variable Life Policies. Pursuant to the terms of a Service Agreement, ALIC will
act as Recordkeeping Service Agent for the policies and riders for an initial
term of three years and any subsequent renewals thereof. ALIC under the guidance
and direction of ANLIC will perform Administration functions including: issuance
of policies for reinstatement, term conversion, plan changes and guaranteed
insurability options, generation of billing and posting of premium, computation
of valuations, calculation of benefits payable, maintenance of administrative
controls over all activities, correspondence, and data, and providing management
reports to ANLIC.
PREPARATIONS FOR THE YEAR 2000
Like other insurance companies and their separate accounts, ANLIC and the
Separate Account could be adversely affected if the computer systems they rely
upon do not properly process date-related information and data involving the
years 2000 and after. This issue arose because both mainframe and PC-based
computer hardware and software have traditionally used two digits to identify
the year. For example, the year 1999 is input, stored and calculated as "99."
Similarly, the year 2000 would be input, stored and calculated as "00." If
computers assume this means 1900, it could cause errors in calculations,
comparisons, and other computing functions.
Like all insurance companies, ANLIC makes extensive use of dates and date
calculations. We began a corporate-wide Year 2000 (Y2K) project in mid-1997. Our
goal is to ensure that our computer systems continue to operate smoothly with no
service disruptions before, during or after the year 2000.
As of April 15, 2000, ANLIC has experienced no known Y2K problems. All of
our computer application and operating systems had been updated for the year
2000 by July 31, 1999. Continuous testing and monitoring throughout the
remainder of 1999 helped ANLIC continue to meet our contractual and service
obligations to our customers. In addition to our internal efforts, ANLIC is
working closely with vendors and other business partners to confirm that they
too are addressing Y2K issues on a timely basis. We except to be fully compliant
by July 31, 1999; however, in the event we or our service providers, vendors,
financial institutions or others with which we conduct business, fail to be Y2K
- - compliant, there would be a materially adverse effect on us.
POLICY REPORTS
At least once each Policy year a statement will be sent to the Owner
describing the status of the Policy, including setting forth the Face Amount,
the current Death Benefit, any Policy loans and accrued interest, the current
Policy Account Value, the General Account Value, indebtedness, the value in each
Sub-account, premiums paid since the last report, charges deducted since the
last report, any partial surrenders since the last report, and the current Cash
Surrender Value. At the present time, ANLIC plans to send these Policy
Statements on a quarterly basis. In addition, a statement will be sent to the
Owner showing the status of the Policy following the transfer of amounts from
one Sub-account to another, the taking out of a loan, a repayment of a loan, a
partial surrender and the payment of any premiums (excluding those paid by bank
draft which has not cleared). An Owner may request that a similar report be
prepared at other times. ANLIC may charge a reasonable fee for such requested
reports and may limit the scope and frequency of such requested reports.
An Owner will be sent a semi-annual report containing the financial
statements of the Funds as required by the 1940 Act.
ALLOCATOR 2000
39
<PAGE>
STATE REGULATION
ANLIC is subject to regulation and supervision by the Insurance Department
of the Commonwealth of Virginia which periodically examines its affairs. It is
also subject to the insurance laws and regulations of all jurisdictions where it
is authorized to do business. A copy of the Policy form has been filed with and,
where required, approved by insurance officials in each jurisdiction where the
Policies are sold. ANLIC is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business for the purposes of determining
solvency and compliance with local insurance laws and regulations.
EXPERTS
Actuarial matters included in the prospectus have been examined by Russell
J. Wiltgen, Vice President Individual Product Management of Ameritas Life
Insurance Corp., as stated in his opinion filed as an exhibit to the
Registration Statement.
LEGAL MATTERS
Matters of the State of Virginia law pertaining to the Policies, including
ANLIC's right to issue the Policies and its qualification to do so under
applicable laws and regulations issued thereunder, have been passed upon by
Robert-John H. Sands, Senior Vice President and General Counsel of ANLIC.
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC, under the 1933 Act
with respect to the Policy offered hereby. This prospectus does not contain all
the information set forth in the registration statement and the amendments and
exhibits to the registration statement, to all of which reference is made for
further information concerning the Variable Account, ANLIC and the Policy
offered hereby. Statements contained in this prospectus as to the contents of
the Policy and other legal instruments are summaries. For a complete statement
of the terms thereof, reference is made to such instruments as filed.
ALLOCATOR 2000
40
<PAGE>
APPENDIX A
ILLUSTRATIONS
The following tables indicate how the account values and Death Benefit
Proceeds vary with the investment experience of the Funds and differences
between the guaranteed and current costs of the Policy. The tables show how the
account values and Death Benefit Proceeds of a Policy, issued to an Insured of a
certain age with regular annual premiums, differ over time if the investment
return on the assets of each Portfolio were a uniform annual rate of 0%, 8% and
12%. The tables beginning on page A-2 illustrate a Policy issued to a male, age
35, under a standard non-smoker rate class. The account values and Death Benefit
Proceeds would be different from those shown if the gross annual investment
rates of return averaged 0%, 8% and 12% over a period of years but fluctuated
above and below those averages for individual Policy years. The values also
assume that no loans or partial surrenders are made by the Owner.
The columns headed Guaranteed Charges reflect that throughout the life of
the Policy the monthly charge for the cost of insurance is based on the maximum
level permitted under the Policy, a Premium expense charge of 2.25%, a monthly
administrative charge of $27 for the first Policy year and $8 each month
thereafter, and a daily charge for mortality and expense risks equal to an
annual rate of .90% for the first fifteen years. This charge is then reduced by
.05% each year until it reaches .45% in the 25th year and thereafter. The
columns headed Current Charges assume that, throughout the life of the Policy,
the monthly cost of insurance is based on the current cost of insurance rate, a
Premium expense charge of 2.25%, a monthly administrative charge of $27 for the
first Policy year and $8 each month thereafter and a daily charge for mortality
and expense risks equal to an annual rate of .90% for the first fifteen years.
This charge is then reduced by .05% each year until it reaches .45% in the 25th
year and thereafter.
The amounts shown in the tables for account values and Death Benefit
Proceeds reflect that the net investment return of the Portfolios is lower than
the gross return listed due to investment advisory and other fees of the Funds.
The Policy values reflect a daily investment advisory fee and expenses at an
annual rate of .95% which represents an average charge for all the Portfolios.
After a deduction of these amounts, the illustrated gross investment rates of
0%, 8%, and 12% correspond to approximate net annual rates of -1.85%, 6.15% and
10.15% respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes against the Variable Account, since ANLIC is not currently
making such charges. However, such charges may be made in the future and, in
that event, the gross annual investment rate of return would have to exceed 0%,
8% and 12% by an amount to cover the tax charges to produce the Death Benefit
Proceeds and account values illustrated. (See the section on Federal Tax
Considerations.)
The tables illustrate the Policy values that would result based upon
hypothetical investment rates and premium payment schedules, if all net premiums
are allocated to the Variable Account and if no Policy loans, partial surrenders
or changes in benefits are applied for. Upon request, ANLIC will provide a
comparable illustration based upon the Insured's age, sex, rate class, face
amount or premium schedule requested, and additional benefits. For unisex
policies, ANLIC will supply such illustrations without regard to the Insured's
sex. ANLIC reserves the right to charge a fee not to exceed $25 for this
service.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option A Face amount: $250,000
- ---------------------------------------------------------------------------------------
0.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,028 477 250,000 477 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,245 1,693 250,000 1,681 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 3,412 2,861 250,000 2,837 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 4.528 3.977 250,000 3,941 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 5,595 5,044 250,000 4,994 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 6,604 6,052 250,000 5,989 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 7,553 7,001 250,000 6,925 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 8,444 8,076 250,000 7,984 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 9,271 9,087 250,000 8,980 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 10,033 10,033 250,000 9,908 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 10,724 10,724 250,000 10,580 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 11,339 11,339 250,000 11,176 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 11,877 11,877 250,000 11,693 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 12,332 12,332 250,000 12,125 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 12,699 12,699 250,000 12,467 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 12,974 12,974 250,000 12,715 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 13,146 13,146 250,000 12,856 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 13,198 13,198 250,000 12,877 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 13,117 13,117 250,000 12,760 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 12,888 12,888 250,000 12,489 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 8,895 8,895 250,000 8,209 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 0 0 250,000 0 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
31 66 1,838 0 0 0 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option A Face amount: $250,000
- -------------------------------------------------------------------------------------------
8.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,140 588 250,000 588 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,567 2,016 250,000 2,003 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 4,054 3,503 250,000 3,477 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 5,603 5,052 250,000 5,011 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 7,218 6,667 250,000 6,609 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 8,894 8,343 250,000 8,266 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 10,633 10,081 250,000 9,985 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 12,439 12,071 250,000 11,952 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 14,310 14,310 250,000 13,982 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 16,249 16,249 250,000 16,076 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 18,255 18,255 250,000 18,049 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 20,324 20,324 250,000 20,083 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 22,460 22,460 250,000 22,180 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 24,663 24,663 250,000 24,339 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 26,930 26,930 250,000 26,557 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 29,271 29,271 250,000 28,843 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 31,681 31,681 250,000 31,192 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 34,153 34,153 250,000 33,597 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 36,683 36,683 250,000 36,049 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 39,264 39,264 250,000 38,543 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 52,698 52,698 250,000 51,353 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 65,220 65,220 250,000 62,736 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
35 70 1,838 77,180 77,180 250,000 67,621 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
40 75 1,838 90,660 90,660 250,000 54,408 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
45 80 1,838 101,345 101,345 250,000 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
50 85 1,838 100,048 100,048 250,000 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
55 90 1,838 51,717 51,717 250,000 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
58 93 1,838 0 0 0 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option A Face amount: $250,000
- ------------------------------------------------------------------------------------------
12.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,196 645 250,000 645 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,735 2,184 250,000 2,171 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 4,403 3,851 250,000 3,824 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 6,209 5,658 250,000 5,615 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 8,171 7,620 250,000 7,557 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 10,293 9,742 250,000 9,657 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 12,591 12,040 250,000 11,932 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 15,084 14,716 250,000 14,580 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 17,786 17,602 250,000 17,434 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 20,718 20,718 250,000 20,513 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 23,897 23,897 250,000 23,649 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 27,346 27,346 250,000 27,050 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 31,091 31,091 250,000 30,741 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 35,160 35,160 250,000 34,748 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 39,583 39,583 250,000 39,100 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 44,411 44,411 250,000 43,847 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 49,682 49,682 250,000 49,028 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 55,442 55,442 250,000 54,684 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 61,740 61,740 250,000 60,865 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 68,638 68,638 250,000 67,627 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 114,972 114,972 250,000 112,954 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 191,773 191,773 250,000 187,874 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
35 70 1,838 322,567 322,567 374,178 314,643 364,986
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
40 75 1,838 537,955 537,955 575,612 520,271 556,691
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
45 80 1,838 894,036 894,036 938,738 857,683 900,567
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
50 85 1,838 1,471,234 1,471,234 1,544,796 1,392,389 1,462,008
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
55 90 1,838 2,391,212 2,391,212 2,510,773 2,220,081 2,331,085
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
60 95 1,838 3,902,562 3,902,562 3,941,587 3,567,421 3,603,095
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option B Face amount: $250,000
- ------------------------------------------------------------------------------------------
0.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,025 474 251,025 474 251,025
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,238 1,687 252,238 1,674 252,226
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 3,398 2,847 253,398 2,823 253,374
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 4,505 3,954 254,505 3,918 254,469
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 5,560 5,008 255,560 4,958 255,509
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 6,553 6,001 256,553 5,937 256,488
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 7,483 6,932 257,483 6,854 257,405
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 8,352 7,984 258,352 7,890 258,258
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 9,152 8,969 259,152 8,859 259,043
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 9,884 9,884 259,884 9,757 259,757
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 10,541 10,541 260,541 10,394 260,394
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 11,116 11,116 261,116 10,950 260,950
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 11,609 11,609 261,609 11,421 261,421
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 12,014 12,014 262,014 11,803 261,803
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 12,326 12,326 262,326 12,088 262,088
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 12,539 12,539 262,539 12,274 262,274
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 12,642 12,642 262,642 12,347 262,347
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 12,620 12,620 262,620 12,293 262,293
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 12,456 12,456 262,456 12,093 262,093
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 12,136 12,136 262,136 11,732 261,732
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 7,622 7,622 257,622 6,943 256,943
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 0 0 250,000 0 250,000
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
31 66 1,838 0 0 0 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option B Face amount: $250,000
- ------------------------------------------------------------------------------------------
8.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,137 586 251,137 586 251,137
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,559 2,008 252,559 1,995 252,546
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 4,038 3,486 254,038 3,460 254,011
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 5,574 5,022 255,574 4,981 255,533
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 7,171 6,619 257,171 6,560 257,112
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 8,822 8,271 258,822 8,193 258,744
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 10,529 9,978 260,529 9,879 260,430
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 12,294 11,927 262,294 11,804 262,172
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 14,114 13,930 264,114 13,782 263,966
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 15,989 15,989 265,989 15,812 265,812
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 17,916 17,916 267,916 17,704 267,704
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 19,888 19,888 269,888 19,640 269,640
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 21,908 21,908 271,908 21,619 271,619
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 23,969 23,969 273,969 23,634 273,634
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 26,067 26,067 276,067 25,680 275,680
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 28,204 28,204 278,204 27,761 277,761
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 30,371 30,371 280,371 29,863 279,863
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 32,552 32,552 282,552 31,973 281,973
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 34,732 34,732 284,732 34,073 284,074
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 36,896 36,896 286,896 36,147 286,147
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 46,768 46,768 296,768 45,373 295,373
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 51,420 51,420 301,420 48,900 298,900
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
35 70 1,838 48,880 48,880 298,880 37,876 287,876
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
40 75 1,838 38,392 38,392 288,392 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
45 80 1,838 7,636 7,636 257,636 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
46 81 1,838 0 0 0 0 0
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
<TABLE>
<CAPTION>
ACACIA NATIONAL LIFE INSURANCE COMPANY
ALLOCATOR 2000 FLEXIBLE PREMIUM VARIABLE LIFE
Prepared for: John Doe ANNUAL Premium: $ 1,838
MALE Age 35 NON-SMOKER Riders: NONE Option B Face amount: $250,000
- ------------------------------------------------------------------------------------------
12.00 % Hypothetical Gross Annual Rate of Return
- ------------------------------------------------------------------------------------------
Current Charges Guaranteed Charges
- ------------------------------ ------------------------------------ ----------------------
End of Age Net Annual Account Surrender Death Surrender Death
Year Outlay Value Value Benefit Value Benefit
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 36 1,838 1,193 642 251,193 642 251,193
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
2 37 1,838 2,727 2,176 252,727 2,162 252,714
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
3 38 1,838 4,385 3,833 254,385 3,806 254,357
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
4 39 1,838 6,176 5,625 256,176 5,582 256,133
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
5 40 1,838 8,116 7,565 258,116 7,501 258,052
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
6 41 1,838 10,208 9,657 260,208 9,571 260,122
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
7 42 1,838 12,465 11,914 262,465 11,803 262,354
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
8 43 1,838 14,904 14,536 264,904 14,396 264,764
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
9 44 1,838 17,535 17,351 267,535 17,178 267,362
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
10 45 1,838 20,375 20,375 270,375 20,164 270,164
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
11 46 1,838 23,438 23,438 273,438 23,182 273,182
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
12 47 1,838 26,739 26,739 276,739 26,433 276,433
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
13 48 1,838 30,298 30,298 280,298 29,935 279,935
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
14 49 1,838 34,135 34,135 284,135 33,706 283,706
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
15 50 1,838 38,269 38,269 288,269 37,765 287,765
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
16 51 1,838 42,737 42,737 292,737 42,148 292,148
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
17 52 1,838 47,562 47,562 297,562 46,876 296,876
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
18 53 1,838 52,767 52,767 302,767 51,970 301,970
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
19 54 1,838 58,377 58,377 308,377 57,453 307,453
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
20 55 1,838 64,421 64,421 314,421 63,351 313,351
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
25 60 1,838 102,349 102,349 352,349 100,181 350,181
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
30 65 1,838 155,456 155,456 405,456 151,212 401,212
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
35 70 1,838 233,370 233,370 483,370 218,233 468,233
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
40 75 1,838 354,604 354,604 604,604 300,340 550,340
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
45 80 1,838 537,471 537,471 787,471 388,506 638,506
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
50 85 1,838 807,684 804,684 1,057,685 464,815 714,815
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
55 90 1,838 1,189,654 1,189,654 1,439,654 487,271 737,271
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
60 95 1,838 1,762,950 1,762,950 2,012,950 394,553 644,553
- --------- -------- ----------- ------------ ----------- ----------- ----------- ----------
</TABLE>
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and depend on a number of factors, including
the investment allocations by an owner and the different investment rate of
return for the fund portfolios. The Death Benefit and account value for a policy
would be different from those shown if the actual investment rate of return
averaged 0% over a period of years, but fluctuated above or below those averages
for individual policy years. No representation can be made by ANLIC or the funds
that this hypothetical investment rate of return can be achieved for any one
year or over a period of time.
<PAGE>
APPENDIX B
AUTOMATIC REBALANCING AND DOLLAR COST AVERAGING PROGRAMS
To assist the Owner in making a premium allocation decision among
Sub-accounts, ANLIC offers automatic transfer programs. These programs are
designed to meet individual needs of the Owner and are not guaranteed to improve
performance of the Policy.
The Owner may elect the Automatic Rebalancing Program which will adjust
values in the Sub-accounts to align with a specific percentage of total value in
the Variable Account. By placing a written allocation election form on file with
ANLIC, the Owner may have amounts automatically transferred from the
Sub-accounts on either a quarterly, semi-annual or annual basis.
The Owner chooses the percentages to be used under the Automatic
Rebalancing Program. To assist the Owner, TAG representatives offer a service
created by Ibbotson Associates to match the Owner's risk tolerance and
investment objectives with a model Sub-account percentage allocation formula. To
use this service, the Owner first completes a questionnaire about risk tolerance
and Policy performance objectives. The TAG representative uses the completed
responses to match the Owner's needs to one of ten different model percentage
allocation formulas designed by Ibbotson. The Owner may then elect to follow the
recommended percentage allocation formula, or select a different formula.
Ibbotson Associates provides a valuable service to an Owner who seeks to
follow the science of asset allocation. Some research studies have shown that
the asset allocation decision is the single largest determinant of Portfolio
performance. Asset allocation combines the concepts of asset-liability
management, mean-variance optimization, simulation and economic forecasting. Its
objectives are to match asset classes and strategies to achieve better returns,
to reduce volatility and to attain specific goals such as avoidance of interest
rate or market risk.
As an alternative, ANLIC also offers the Owner the option to elect the
Dollar Cost Averaging Program. Dollar cost averaging is a long term investment
method that uses periodic premium allocations from the Money Market Sub-account
to other Sub-accounts. Under the theory of dollar cost averaging, the Owner may
pursue a strategy of regular and systematic purchases to take advantage of
market value fluctuations. More Sub-account accumulation units will be purchased
when Sub-account unit values are low and fewer units will be purchased when unit
values are high. There is no guarantee that the Dollar Cost Averaging Program
will protect against market loss or improve performance of the Policy.
The Dollar Cost Averaging Program provides a valuable service to an
Owner who is able to sustain a long term transfer schedule and who seeks to
avoid the volatility often associated with equity investments.
<PAGE>
INCORPORATION BY REFERENCE
The Registrant, Separate Account I, purchases or will purchase units from the
portfolios of these Funds at the direction of its Policy Owners. The
prospectuses of these Funds will be distributed with this prospectus and are
hereby incorporated by reference. The prospectuses incorporated by reference are
as follows:
The Alger American Fund
SEC File No. 33-21722
Calvert Variable Series, Inc.
SEC File No. 2-80154
BT Insurance Funds Trust
SEC File No. 333-00479
Variable Insurance Products Fund
SEC File No. 2-75010
Variable Insurance Products Fund II
SEC File No. 33-20773
Franklin Templeton Variable Insurance Products Trust
SEC File No. 33-23493
Neuberger Berman Advisers Management Trust
SEC File No. 2-88566
Oppenheimer Funds
SEC File No. 2-931-77
Van Eck Worldwide Insurance Trust
SEC File No. 33-13019
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
Registrant makes the following representation pursuant to the National
Securities Markets Improvements Act of 1996:
Acacia National Life Insurance Company represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
RULE 484 UNDERTAKING
ANLIC'S By-laws provide as follows:
In the event any action, suit or proceeding is brought against a present or
former Director, elected officer, appointed officer or other employee because of
any action taken by such person as a Director, officer or other employee of the
Company or which he omitted to take as a Director, officer or employee of the
Company, the Company shall reimburse or indemnify him for all loss reasonably
incurred by him in connection with such action to the fullest extent permitted
by ss.13.1-696 through ss.13.1-704 of the Code of Virginia, as is now or
hereafter amended, except in relation to matters as to which such person shall
have been finally adjudged to be liable by reason of having been guilty of gross
negligence or willful misconduct in the performance of duties as such Director,
officer or employee. In case any such suit, action or proceeding shall result in
a settlement prior to final judgment and if, in the judgment of the Board of
Directors, such person in taking the action or failing to take the action
complained of was not grossly negligent or guilty of wilful misconduct in the
performance of his duty, the Company shall reimburse or indemnify him for the
amount of such settlement and for all expenses reasonably incurred in connection
with such action and its settlement. This right of indemnification shall not be
exclusive of any other rights to which such person may be entitled.
REPRESENTATION PURSUANT TO RULE 6E-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
<PAGE>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 48 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
The Following Exhibits:
1. The Following exhibits correspond to those required by paragraph IX A of the
instructions as to exhibits in Form N-8B-2.
(A)(1) Board Resolution Establishing Separate Account I-Incorporated by
reference to the like numbered exhibit to the Pre-effective Amendment #3 filed
on October 11, 1995 to the Form S-6 Registration #33-90208.
(A)(2) Not applicable
(A)(3)(a) Underwriting Agreement between The Advisors Group, Inc. and Acacia
National Life Insurance Company Incorporated by reference to the initial
Registration Statement for Acacia National Life Insurance Company Separate
Account II on Form N-4 ( File No 333 -03963), August 26, 1996.
(A)(3)(b) Representative Agent Agreement, Supplement and Schedule proposed form
of Selling Agreement Incorporated by reference to the initial Registration
Statement for Acacia National Life Insurance Company Separate Account II on Form
N-4 ( File No 333 -03963), Filed August 26, 1996.
(A)(3)(c) None
(A)(3)(d) Form of Selling Agreement between the Advisors Group, Inc. ('TAG")and
Broker Dealers - Incorporated by reference to the like numbered to the initial
Form S-6 Registration Statement #33-90208, filed March 10, 1995. (
A)(4) Not Applicable
(A)(5)(a) Individual Flexible Premium Variable Life Insurance Policy -
Incorporated by reference to the like numbered exhibit to the Pre-Effective
Amendment #3 filed on October 11, 1995 to the Form S-6 Registration Statement #
33-90208.
(A)(6) Restated Articles of Incorporation of Acacia National Life Insurance
Company - Incorporated by reference to the like numbered exhibit to the
Post-Effective Amendment #3 filed on May 1, 1997 to the Form S-6 Registration
Statement # 33-90208.
(A)(6) Bylaws of Acacia National Life Insurance Company - Incorporated by
reference to the like numbered exhibit to the Post-Effective Amendment #3 filed
on May 1, 1997 to the Form S-6 Registration Statement # 33-90208.
(A)(7) Not applicable
(A)(8)(a) Participation Agreement Alger American Fund
(A)(8)(b) Participation Agreement Calvert Variable Series, Inc.
(A)(8)(d) Participation Agreement Neuberger Berman Advisers Management Trust
(A)(8)(f) Participation Agreement Van Eck Worldwide Hard Assets Fund All
incorporated by reference to the like numbered exhibit to the Pre-Effective
Amendment #3 filed on October 11, 1995 to the Form S-6 Registration Statement #
33-90208.
(A)(8)(g) Participation Agreement Oppenheimer Variable Account Funds -
Incorporated by reference to the like numbered exhibit to the Post-Effective
Amendment #3 filed on May 1, 1997 to the Form S-6 Registration Statement #
33-90208.
(A)(8)(h) Participation Agreement - BT Insurance Funds Trust
(A)(8)(i) Participation Agreement - Franklin Templeton Variable Insurance
Products Trust
Incorporated by reference to the like named exhibit to the Post-Effective
Amendment #1 filed on February 25, 2000 to the Form S-6 Registration Statement
# 333-81057.
(A)(8)(j) Participation Agreement - Variable Insurance Products Fund - To be
provided.
(A)(8)(k) Participation Agreement - Variable Insurance Products Fund II - To be
provided.
(A)(9) Not Applicable
(A)(10) Application for Policy - Incorporated by reference to the like numbered
exhibit to the Pre-effective Amendment #2 filed on July 19,1995 to the Form S-6
Registration Statement #33-90208.
2. (a)(b) Opinion and Consent of Robert-John H. Sands.
3. No financial statements will be omitted from the final Prospectus pursuant to
Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
6. Consent of Actuary - To Be Provided.
7. Consent of Independent Auditors - To Be Provided.
8. Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Acacia National Life Insurance Company Separate Account I, certifies that it
meets all the requirements for effectiveness of this Post-Effective Amendment
No. 7 to the Registration Statement pursuant to Rule 485(a) under the Securities
Act of 1933 and has caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Bethesda, County of Montgomery, State of Maryland on this 24th day of February,
2000.
ACACIA NATIONAL VARIABLE LIFE SEPARATE ACCOUNT I, Registrant
ACACIA NATIONAL LIFE INSURANCE COMPANY, Depositor
Attest: /s/ Robert-John H. Sands By: /s/ Charles T. Nason
--------------------------- -------------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Acacia
National Life Insurance Company on the dates indicated.
SIGNATURE TITLE DATE
/s/ Charles T. Nason Chairman of the Board February 24, 2000
- ------------------------ and Chief Executive Officer
Charles T. Nason and Director
/s/ Robert W. Clyde President and Chief February 24, 2000
- ------------------------ Operating Officer and
Robert W. Clyde Director
/s/ Robert-John H. Sands Senior Vice President, February 24, 2000
- ------------------------ General Counsel, Corporate
Robert-John H. Sands Secretary and Director
/s/ Haluk Ariturk Senior Vice President, February 24, 2000
- ------------------------ Product Management and
Haluk Ariturk Administration and Director
/s/ JoAnn M. Martin Senior Vice President, February 24, 2000
- ------------------------ Chief Financial Officer
JoAnn M. Martin and Director
/s/ Reno J. Martini Director February 24, 2000
- ------------------------
Reno J. Martini
<PAGE>
/s/ Brian J. Owens Senior Vice President, February 24, 2000
- ------------------------ Career Distribution
Brian J. Owens
/s/ Janet L. Schmidt Senior Vice President February 24, 2000
- ------------------------ Human Resources
Janet L. Schmidt
/s/ Barry C. Ritter Senior Vice President February 24, 2000
- ------------------------ and Chief Information Officer
Barry C. Ritter
/s/ Richard W. Vautravers Senior Vice President February 24, 2000
- ------------------------ and Corporate Actuary
Richard W. Vautravers
<PAGE>
EXHIBIT INDEX
EXHIBIT
2.(a)(b) Opinion and Consent of Donald R. Stading
<PAGE>
EXHIBIT 2. (A)(B)
Opinion and Consent of Robert-John H. Sands
<PAGE>
ACACIA NATIONAL LIFE INSURANCE COMPANY LOGO
THE ACACIA GROUP
7315 Wisconsin Avenue Bethesda, Maryland 20814 (301)280-1000
February 25, 2000
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Gentlemen:
With reference to the Post-Effective Amendment No. 7 to Registration Statement
33-90208 on Form S-6 filed by Acacia National Life Insurance Company and Acacia
National Life Insurance Company Separate Account I with the Securities &
Exchange Commission covering flexible premium life insurance policies, I have
examined such documents and such laws as I considered necessary and appropriate,
and on the basis of such examination, it is my opinion that:
1. Acacia National Life Insurance Company is duly organized and validly
existing under the laws of the Commonwealth of Virginia and has been
duly authorized to issue individual flexible premium variable life
policies by the Insurance Department of the Commonwealth of Virginia.
2. Acacia National Life Insurance Company Separate Account I is a duly
authorized and existing separate account established pursuant to the
provisions of Virginia, ss.38.2-3113.
3. The survivorship flexible premium variable universal life policies, when
issued as contemplated by said Form S-6 Registration Statement, will
constitute legal, validly issued and binding obligations of Acacia
National Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment No. 7 to said Form S-6 Registration Statement and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Robert-John H. Sands
Robert-John H. Sands
Senior Vice President and General Counsel
Acacia Mutual Holding Corporation, Acacia Financial Group, Ltd., Acacia Life
Insurance Company, Acacia National Life Insurance Company, Acacia Financial
Corporation, Calvert Group, Ltd., Acacia Federal Savings Bank, Enterprise
Resources, LLC, Acacia Realty Corporation, The Advisors Group, Inc.
- --------------------------------------------------------------------------------
NATIONAL HEADQUARTERS, Washington, DC
