As filed with the Securities and Exchange Commission on
February 25, 2000
Registration No. 333-81057
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 1
to
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
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
Acacia National Life
Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Regent 2000 -- A Survivorship Flexible Premium Variable Universal Life
Insurance Policy issued by Acacia National Life Insurance Company
- --------------------------------------------------------------------------------
Regent 2000 is a survivorship flexible premium variable universal life insurance
Policy ("Policy"), issued by Acacia National Life Insurance Company ("ANLIC"),
that pays a Death Benefit upon the Second Death. There is no benefit payable on
the death of the first Insured. Like traditional life insurance policies, a
Regent 2000 Policy provides Death Benefits to Beneficiaries and gives you, the
Policy Owner, the opportunity to increase the Policy's value. Unlike traditional
policies, Regent 2000 lets you vary the frequency and amount of premium
payments, rather than follow a fixed premium payment schedule. It also lets you
change the level of Death Benefits as often as once each year.
A Regent 2000 Policy is different from traditional life insurance policies in
another important way: you select how Policy premiums will be invested. Although
each Policy Owner is guaranteed a minimum Death Benefit, the value of the
Policy, as well as the actual Death Benefit, will vary with the performance of
investments you select.
The Investment Options available through Regent 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 Regent 2000 prospectus. You
may also choose to allocate premium payments to the Fixed Account managed by
ANLIC.
A Regent 2000 Policy will be issued after ANLIC accepts a prospective Policy
Owner's application. Generally, an application must specify a Death Benefit no
less than $100,000. Regent 2000 Policies are available to cover individuals
between the ages of 20 and 90 at the time of purchase, although at least one of
the individuals must be no older than 85. A Regent 2000 Policy, once purchased,
may generally be canceled within 10 days after you receive it.
This Regent 2000 prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of a Regent 2000 Policy.
Prospective Policy Owners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the Regent
2000 Policy, information about ANLIC, a list of the investment portfolios to
which you may allocate premium payments, and a detailed description of the
Regent 2000 Policy. The appendix to the prospectus includes tables designed to
illustrate how values and Death Benefits may change with the investment
experience of the Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through Regent 2000.
Although the Regent 2000 Policy is designed to provide life insurance, a Regent
2000 Policy is considered to be a security. It is not a deposit with, an
obligation of, or guaranteed or endorsed by any banking institution, nor is it
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency. The purchase of a Regent 2000 Policy involves investment
risk, including the possible loss of principal. For this reason, Regent 2000 may
not be suitable for all individuals. It may not be advantageous to purchase a
Regent 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 survivorship flexible premium variable universal life insurance policy.
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 OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
May 1, 2000
REGENT 2000
1
<PAGE>
TABLE OF CONTENTS PAGE
DEFINITIONS............................................................... 3
SUMMARY................................................................... 6
YEAR 2000 ................................................................ 10
ANLIC, THE SEPARATE ACCOUNT AND THE FUNDS................................. 10
Acacia National Life Insurance Company............................. 10
The Separate Account............................................... 11
Performance Information............................................ 11
The Funds.......................................................... 11
Investment Objectives and Policies Of The Funds' Portfolios........ 12
Addition, Deletion or Substitution of Investments.................. 15
Fixed Account...................................................... 15
POLICY BENEFITS........................................................... 16
Purposes of the Policy............................................. 16
Death Benefit Proceeds............................................. 16
Death Benefit Options.............................................. 17
Methods of Affecting Insurance Protection.......................... 18
Duration of Policy................................................. 18
Accumulation Value................................................. 19
Payment of Policy Benefits......................................... 19
POLICY RIGHTS............................................................. 20
Loan Benefits...................................................... 20
Surrenders......................................................... 21
Partial Withdrawals................................................ 21
Transfers.......................................................... 22
Systematic Programs................................................ 22
Free Look Privilege................................................ 23
PAYMENT AND ALLOCATION OF PREMIUMS........................................ 23
Issuance of a Policy............................................... 23
Premiums........................................................... 23
Allocation of Premiums and Accumulation Value...................... 24
Policy Lapse and Reinstatement..................................... 25
CHARGES AND DEDUCTIONS.................................................... 26
Deductions From Premium Payments................................... 26
Charges from Accumulation Value.................................... 26
Surrender Charge................................................... 27
Daily Charges Against the Separate Account......................... 27
Fund Expense Summary............................................... 28
GENERAL PROVISIONS........................................................ 29
DISTRIBUTION OF THE POLICIES.............................................. 31
ADMINISTRATION............................................................ 32
FEDERAL TAX MATTERS....................................................... 32
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS.............................. 34
THIRD PARTY SERVICES...................................................... 35
VOTING RIGHTS............................................................. 35
STATE REGULATION OF ANLIC................................................. 35
EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC................................. 35
EXPERTS................................................................... 36
LEGAL MATTERS............................................................. 37
LEGAL PROCEEDINGS......................................................... 37
ADDITIONAL INFORMATION.................................................... 37
FINANCIAL STATEMENTS...................................................... 37
ACACIA NATIONAL LIFE INSURANCE COMPANY
ACACIA NATIONAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT I
APPENDICES................................................................ A-1
The Policy, certain Funds, and/or certain riders are not available
in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
REGENT 2000
2
<PAGE>
DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in Separate
Account I, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge which is part of the monthly deduction
to cover the cost of administering the Policy.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account I to provide for expenses of ongoing
administrative services to the Policy owners as a group.
ATTAINED AGE - The Issue Age of the younger Insured plus the number of complete
Policy Years that the Policy has been in force.
ANLIC ("WE, US, OUR") - Acacia National Life Insurance Company, a Virginia stock
company. ANLIC's Home Office is located at 7315 Wisconsin Avenue, Bethesda, MD
20814.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the Second Death. (See the sections on Beneficiary and Change of
Beneficiary.)
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection. The Cost of Insurance is calculated with
reference to an annual "Cost of Insurance Rate." This rate is based on the Issue
Age, sex, and risk class of each Insured and the policy duration. The Cost of
Insurance is part of the Monthly Deduction.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
ANLIC of Satisfactory Proof of Death of both Insureds while the Policy is in
force. It is equal to: (l) the Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any Outstanding Policy Debt; (4)
minus any Accrued Expense Charges, including the Monthly Deduction for the month
of the Second Death.
FIXED ACCOUNT - An account that is a part of ANLIC's General Account to which
all or a portion of Net Premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of ANLIC includes all of ANLIC's assets
except those assets segregated into separate accounts such as the Separate
Account I.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy owner's last known address. If the Policy owner makes the payment
specified in the notification of lapse, the policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period extends to Attained Age 85 but in no event is less than
10 years, and may be restricted as a result of state law. Not available in
Massachusetts. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
INSUREDS - The two persons whose lives are insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
REGENT 2000
3
<PAGE>
ISSUE AGE - The actual age of each Insured on the Policy Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MINIMUM PREMIUM - A specified premium which, if paid in advance on a monthly
prorated basis, will keep the Policy in force during the first sixty Policy
months ("Minimum Benefit" Period) so long as other Policy provisions are met,
even if the Net Cash Surrender Value is zero or less.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except should such Monthly Activity Date fall on a date other than a
Valuation Date, the Monthly Activity Date will be the next Valuation Date.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of Separate Account I to provide for the risk that mortality and
expense costs may be greater than expected.
NET AMOUNT AT RISK - The amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Surrender
Charges and any Outstanding Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge for Taxes.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE FOR TAXES - The amount deducted from each premium
received to cover certain expenses, expressed as a percentage of the premium.
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policy Owner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Minimum Benefit or the Guaranteed
Death Benefit.
POLICY - The survivorship flexible premium variable universal life insurance
Policy offered by ANLIC and described in this prospectus.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
POLICY OWNER - ("you, your") The owner of the Policy, as designated in the
application or as subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Policy Owner. A collateral assignee is not the
Policy Owner.
POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - The effective date for all coverage provided in the application.
The Policy Date is used to determine Policy Anniversary Dates, Policy Years and
Monthly Activity Dates. Policy Anniversaries are measured from the Policy Date.
The Policy Date and the Issue Date will be the same unless: (1) an earlier
Policy Date is specifically requested, or (2) unless there are additional
premiums or application amendments at time of delivery. (See the section on
Issuance of a Policy.)
REGENT 2000
4
<PAGE>
SATISFACTORY PROOF OF DEATH - Satisfactory Proof of Death must be provided to us
at the time of death of each Insured. Satisfactory Proof of Death means all of
the following must be submitted:
(1) A certified copy of both death certificates; (2) A Claimant Statement; (3)
The Policy; and
(4) Any other information that ANLIC may reasonably require to establish the
validity of the claim.
SECOND DEATH - The later of the dates of death of the Insureds.
SEPARATE ACCOUNT I- This term refers to Separate Account I, a separate
investment account established by ANLIC to receive and invest the Net Premiums
paid under the Policy and allocated by the Policy owner to Separate Account I.
Separate Account I is segregated from the General Account and all other assets
of ANLIC.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policy owner.
SUBACCOUNT - A subdivision of the Separate Account I. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy for the Net Cash Surrender Value while
at least one Insured is alive.
SURRENDER CHARGE - This charge is assessed against the Accumulation Value of the
Policy if the Policy is Surrendered on or before the 14th Policy Anniversary
Date or, in the case of an increase in the Specified Amount, on or before the
14th anniversary of the increase.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
VALUATION PERIOD - The period between two successive Valuation Dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and
ending at the close of the NYSE on the next succeeding Valuation Date.
REGENT 2000
5
<PAGE>
SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
PREMIUM PAYMENTS
You can vary amount and frequency.
DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes - currently 2.25% (maximum 3.0%)
NET PREMIUM
The net premium may be invested in the Fixed Account or in Separate Account I
which offers 19 different Subaccounts. The nineteen Subaccounts invest in the
corresponding portfolios of 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 Funds.
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders.
Monthly charge for administrative expenses of the Policy (maximum charge
$16.00/month plus a charge per month per $1000 of Specified Amount that varies
by the younger Insured's Issue Age).
Current Monthly Charge Plus Current Monthly Charge
For Specified Amounts: By Issue Age(/1000/month):
Up to $1,000,000 up $5,000,000
$1,000,000 to $5,000,000 or more 20-44 45-64 65+
---------- ------------- ------- ----- ----- ----
Policy Year:
1-5 $16.00 $8.00 $0.00 $.10 $.08 $.05
6+ $ 8.00 $4.00 $0.00 $.00 $.00 $.00
Maximum
Monthly Charge:$16.00 $16.00 $16.00 Plus $.10 $.08 $.05
Daily charge from the Subaccounts (not deducted from the Fixed Account):
Policy Years 1-15 Policy Years 16+
----------------- ----------------
Mortality and Expense Risk Charge 0.75% 0.30%
Asset-Based Administrative Expense Charge 0.15% 0.15%
----- -----
Combined annual rate of Subaccount
daily charges 0.90% 0.45%
Fund expense charges, which ranged from .26% to 1.65% at the most recent fiscal
year end, are also deducted.
<TABLE>
<CAPTION>
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LIVING BENEFITS RETIREMENT INCOME DEATH BENEFITS
<S> <C> <C>
You may make partial withdrawals, subject to Loans may be available on a Generally, Death Benefit
certain restrictions. The Death Benefit will be more favorable interest rate income is income tax
reduced by the amount of the partial withdrawal. basis after the tenth Policy Year. free to the Beneficiary.
ANLIC guarantees up to 15 free transfers Should the Policy lapse while The Beneficiary may be
between the Investment Options each Policy Year. loans are outstanding, the paid a lump sum or may
Under current practice, unlimited free transfers portion of the loan attributable select any of the five
are permitted. to earnings will become taxable payment methods
You may Surrender the Policy at any time for its distributions. (See page 21.) available as retirement
Net Cash Surrender Value. benefits.
- ---------------------------------------------------------------------------------------------------------------
REGENT 2000
6
<PAGE>
- ---------------------------------------------------------------------------------------------------------------
Some expenses that ANLIC incurs immediately You may Surrender the Policy
upon the issuance of the Policy are recovered or make a partial withdrawal and
over a period of years. Therefore, a Policy take values as payments under
Surrender on or before the 14th anniversary one or more of five different
date will be assessed a Surrender Charge. The payment options.
charge decreases each year until no Surrender
Charge is applied after the 14th Policy Year.
Increases in coverage after issue will also
have a Surrender Charge associated with them.
(See pages 21 and 26.) Accelerated payment of up
to 50% of the lowest scheduled Death Benefit
is available under certain conditions if the
surviving Insured is suffering from terminal illness.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SUMMARY
The following summary is intended to highlight the most important features of a
Regent 2000 POLICY that you, as a prospective POLICY OWNER, should consider. You
will find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. As you review this Summary,
take note that capitalized term is defined in the Definitions section that
begins on page 3 of this prospectus. This summary and all other parts of this
prospectus are qualified in their entirety by the terms of the Regent 2000
POLICY, which is available upon request from ANLIC.
WHO IS THE ISSUER OF A REGENT 2000 POLICY?
ANLIC is the issuer of each Regent 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 Insurance Holding Company. (See the section
on Acacia National Life Insurance Company.)
WHY SHOULD I CONSIDER PURCHASING A REGENT 2000 POLICY?
The primary purpose of a Regent 2000 POLICY is to provide life insurance
protection on the two INSUREDs named in the POLICY. This means that, so long as
the POLICY is in force, it will provide for: |X| payment of a DEATH BENEFIT,
which will never be less than the SPECIFIED AMOUNT the POLICY OWNER selects.
(See the section on Death Benefit Options.) |X| POLICY loan, SURRENDER and
withdrawal features. (See the section on Policy Rights.)
A Regent 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 a Regent 2000 POLICY
will reflect your investment choices over the life of the POLICY.
HOW DOES THE INVESTMENT COMPONENT OF MY REGENT 2000 POLICY WORK?
ANLIC has established SEPARATE ACCOUNT I, which is separate from all other
assets of ANLIC, as a vehicle to receive and invest premiums received from
Regent 2000 POLICY OWNERS and owners of certain other variable universal life
products offered by ANLIC. SEPARATE ACCOUNT I is divided into separate
SUBACCOUNTS. Each SUBACCOUNT invests exclusively in shares of one of the
investment portfolios available through Regent 2000. Each POLICY OWNER may
allocate NET PREMIUMS to one or more SUBACCOUNTS, or to ANLIC's FIXED ACCOUNT in
the initial application. These allocations may be changed, without charge, by
notifying ANLIC's Home Office. The aggregate value of your interests in the
SUBACCOUNTS, the FIXED ACCOUNT and any amount held in the GENERAL ACCOUNT to
secure POLICY debt will represent the Accumulation Value of your Regent 2000
Policy. (See the Section on Accumulation Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE REGENT 2000 POLICY?
The INVESTMENT OPTIONS available through Regent 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
REGENT 2000
7
<PAGE>
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
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, and management fees and expenses, appear in the sections
on Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. In addition to the listed portfolios, POLICY OWNERS may also elect to
allocate NET PREMIUMS to ANLIC's FIXED ACCOUNT. (See the section on the Fixed
Account.)
HOW DOES THE LIFE INSURANCE COMPONENT OF A REGENT 2000 POLICY WORK?
A Regent 2000 POLICY provides for the payment of a minimum DEATH BENEFIT upon
the SECOND DEATH. There is no benefit payable on the death of the first Insured.
The amount of the minimum death benefit -- sometimes referred to as the
SPECIFIED AMOUNT of your Regent 2000 POLICY -- is chosen by you at the time your
Regent 2000 POLICY is established. However, DEATH BENEFIT PROCEEDS -- the actual
amount that will be paid after ANLIC receives SATISFACTORY PROOF OF DEATH -- may
vary over the life of your Regent 2000 POLICY, depending on which of the two
available coverage options you select.
If you choose Option A, the DEATH BENEFIT payable under your Regent 2000 POLICY
will be the SPECIFIED AMOUNT of your Regent 2000 POLICY OR the applicable
percentage of its ACCUMULATION VALUE, whichever is greater. If you choose Option
B, the DEATH BENEFIT payable under your Regent 2000 POLICY will be the SPECIFIED
AMOUNT of your Regent 2000 POLICY PLUS the ACCUMULATION VALUE of your Regent
2000 POLICY, or if it is higher, the applicable percentage of the ACCUMULATION
VALUE on the SECOND DEATH. In either case, the applicable percentage is
established based on the ATTAINED AGE at the SECOND DEATH. (See the section on
Death Benefit Options.)
ARE THERE ANY RISKS INVOLVED IN OWNING A REGENT 2000 POLICY?
Yes. Over the life of your Regent 2000 POLICY, the SUBACCOUNTS to which you
allocate your premiums will fluctuate with changes in the stock market and
overall economic factors. These fluctuations will be reflected in the
ACCUMULATION VALUE of your Regent 2000 POLICY and may result in loss of
principal. For this reason, the purchase of a Regent 2000 POLICY may not be
suitable for all individuals. It may not be advantageous to purchase a Regent
2000 POLICY to replace or augment your existing insurance arrangements. Appendix
A includes tables illustrating the impact that hypothetical market returns would
have on ACCUMULATION VALUES under a Regent 2000 POLICY (page A- 1).
REGENT 2000
8
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WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A REGENT 2000 POLICY IN FORCE?
Like traditional life insurance policies, a Regent 2000 POLICY requires the
payment of periodic premiums in order to keep the POLICY in force. You will be
asked to establish a payment schedule before your Regent 2000 POLICY becomes
effective.
The distinction between traditional life policies and a Regent 2000 POLICY is
that a Regent 2000 POLICY will not lapse simply because premium payments are not
made according to that payment schedule. However, a Regent 2000 POLICY will
lapse, even if scheduled premium payments are made, if the NET CASH SURRENDER
VALUE of your Regent 2000 POLICY falls below zero or premiums paid do not, in
the aggregate, equal the premium necessary to satisfy the MINIMUM BENEFIT or the
GUARANTEED DEATH BENEFIT requirements. (See the section on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your Regent 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's Administrative Office is located at 5900 "O"
Street, P.O. Box 82550, Lincoln, NE 68501. Your initial NET PREMIUM will be
allocated on the ISSUE DATE to the SUBACCOUNT and/or the FIXED ACCOUNT according
to the selections you made in your application. If state or other applicable law
or regulation requires return of at least your premium payments should you
return the POLICY pursuant to the Free-Look Privilege, your initial NET PREMIUM
will be allocated to the Money Market Subaccount. Thirteen days after the ISSUE
DATE, the ACCUMULATION VALUE of the POLICY will be allocated among the
SUBACCOUNTS and/or the FIXED ACCOUNT according to the instructions in your
application. You have the right to examine your Regent 2000 POLICY and return it
for a refund for a limited time, even after the ISSUE DATE. (See the section on
Issuance of a Policy.)
You may make subsequent premium payments according to your PLANNED PERIODIC
PREMIUM schedule, although you are not required to do so. ANLIC will send
premium payment notices to you according to any schedule you select. When ANLIC
receives your premium payment at its Administrative Office, we will deduct any
applicable Percent of Premium Charge for Taxes and the NET PREMIUM will be
allocated to the SUBACCOUNTS and/or the FIXED ACCOUNT according to your
selections. ( See the sections on Premiums and Allocations of Premiums and
Accumulation Value.)
As already noted, Regent 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 MINIMUM PREMIUM, GUARANTEED DEATH BENEFIT PREMIUM and/or NET POLICY
FUNDING requirement needed to keep your Regent 2000 POLICY in force; maximum
premium limitations established under the Federal tax laws; and the impact that
reduced premium payments may have on the NET CASH SURRENDER VALUE of your Regent
2000 POLICY. (See the Section on Premiums.)
IS THE ACCUMULATION VALUE OF MY REGENT 2000 POLICY AVAILABLE WITHOUT SURRENDER?
Yes. You may access the value of your Regent 2000 POLICY in one of two ways.
First, you may obtain a loan, secured by the ACCUMULATION VALUE of your Regent
2000 POLICY. The maximum interest rate on any such loan is 6% annually; the
current rate is 5.5% annually. After the tenth POLICY ANNIVERSARY, you may
borrow against a limited amount of the NET CASH SURRENDER VALUE of your Regent
2000 POLICY at a maximum annual interest rate of 4%; the current rate for such
loans is 3.5% annually. (See the section on Loan Benefits.)
You may also access the value of your Regent 2000 POLICY by making a partial
withdrawal. A partial withdrawal is not subject to SURRENDER CHARGES, but is
subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount
withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%).
(See the section on Partial Withdrawals.)
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF A REGENT 2000 POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as Regent 2000. ANLIC may deduct up to 3% of each premium as a
PERCENT OF PREMIUM CHARGE FOR TAXES. Currently, 2.25% is deducted for this
purpose.
Charges are deducted against the ACCUMULATION VALUE to cover the COST OF
INSURANCE under the POLICY and to compensate ANLIC for administering each
individual Regent 2000 POLICY. These charges, which are part of the MONTHLY
DEDUCTION, are calculated and paid on each MONTHLY ACTIVITY DATE. The COST OF
INSURANCE is calculated based on risk factors relating to the INSUREDS as
reflected in relevant actuarial tables. The ADMINISTRATIVE EXPENSE CHARGES are
based on your SPECIFIED AMOUNT and the POLICY duration. Currently, the level per
Policy charge for Specified Amounts between $100,000 and $999,999 is $16 per
month in Policy Years 1-5 and $8 per month thereafter; for Specified Amounts
between $1,000,000 and $4,999,999, the charge is currently $8 per month in
Policy Years 1-5 and $4 per month thereafter; and there is currently no charge
for Specified Amounts $5,000,000 or
REGENT 2000
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greater. In addition, for all Specified Amounts there currently is a charge per
month per $1000 of Specified Amount, as follows: for Issue Ages 20-44, the rate
is $.10, for Issue Ages 45-64, the rate is $.08, and for Issue Ages 65 and over,
the rate is $.05. At the current time we anticipate the charge per $1000 of
Specified Amount will reduce to $0 in year 6. The Administrative Expense Charge
is levied throughout the life of the Policy and is guaranteed not to increase
above $16 per month plus $.10 per month per $1000 of SPECIFIED AMOUNT.
For its services in administering SEPARATE ACCOUNT I and SUBACCOUNTS and as
compensation for bearing certain mortality and expense risks, ANLIC is also
entitled to receive fees. These fees are calculated daily during the first 15
years of each Regent 2000 POLICY, at a combined annual rate of 0.90% of the
value of the net assets of the SEPARATE ACCOUNT I. After the 15th POLICY
ANNIVERSARY DATE, the combined annual rate will decrease to .45% of the daily
net assets of SEPARATE ACCOUNT I. These charges will not be deducted from the
amounts in the FIXED ACCOUNT. (See the section on Daily Charges Against the
Separate Account.)
Finally, because ANLIC incurs expenses immediately upon the issuance of a Regent
2000 POLICY that are recovered over a period of years, a Regent 2000 POLICY that
is Surrendered on or before its 14th POLICY ANNIVERSARY DATE is subject to a
SURRENDER CHARGE. Additional SURRENDER CHARGES may apply if you increase the
SPECIFIED AMOUNT of your Regent 2000 POLICY. Because the SURRENDER CHARGE may be
significant upon early SURRENDER, you should purchase a Regent 2000 POLICY only
if you intend to maintain your Regent 2000 POLICY for a substantial period. (See
the section on Surrender Charge.)
POLICY OWNERS who choose to allocate NET PREMIUMS to one or more of the
SUBACCOUNTS will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various SUBACCOUNTS
invest. No such management fees are assessed against NET PREMIUMS allocated to
the FIXED ACCOUNT. (See the section on Fund Expense Summary.)
WHEN DOES MY REGENT 2000 POLICY TERMINATE?
You may terminate your Regent 2000 POLICY by surrendering the POLICY while at
least one INSURED is alive for its NET CASH SURRENDER VALUE. As noted above,
your Regent 2000 POLICY will terminate if you fail to pay required premiums or
maintain sufficient NET CASH SURRENDER VALUE to cover POLICY charges. (See the
sections on Surrender and Premiums.)
YEAR 2000
Like other insurance companies and their separate accounts, ANLIC and Separate
Account I could be adversely affected if the computer systems they rely upon do
not properly process date-related information and data involving the years 2000
and after. This issue arose because both mainframe and PC-based computer
hardware and software have traditionally used two digits to identify the year.
For example, the year 1998 is input, stored and calculated as "98." Similarly,
the year 2000 would be input, stored and calculated as "00." If computers assume
this means 1900, it could cause errors in calculations, comparisons, and other
computing functions.
Like all insurance companies, 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. We expect to be fully compliant by July 31, 1999. 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.
In the event we or our service providers, vendors, financial institutions or
others with which we conduct business, fail to be Y2K - compliant, there would
be a materially adverse effect on us.
Certain vendors and/or business partners, due to their exposure to foreign
markets, may face additional Y2K issues. Please see the Funds' prospectuses for
information on the Funds' preparedness for Y2K.
ANLIC, THE SEPARATE ACCOUNT AND THE FUNDS
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
REGENT 2000
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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.
THE SEPARATE ACCOUNT
Acacia National Life Insurance Company Separate Account I ("Separate Account I")
was established under Virginia law on January 31, 1995. The assets of Separate
Account I are held by ANLIC segregated from all of ANLIC's other assets, are not
chargeable with liabilities arising out of any other business which ANLIC may
conduct, and income, gains, or losses of ANLIC. Although the assets maintained
in Separate Account I will not be charged with any liabilities arising out of
ANLIC's other business, all obligations arising under the Policies are
liabilities of ANLIC who will maintain assets in Separate Account I of a total
market value at least equal to the reserve and other contract liabilities of
Separate Account I. The Separate Account I will at all times contain assets
equal to or greater than Accumulation Values invested in Separate Account I.
Nevertheless, to the extent assets in Separate Account I exceed ANLIC's
liabilities in Separate Account I, the assets are available to cover the
liabilities of ANLIC's General Account. ANLIC may, from time to time, withdraw
assets available to cover the General Account obligations.
Separate Account I is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. This does not involve
any SEC supervision of the management or investment policies or practices of
Separate Account I. For state law purposes, Separate Account I is treated as a
Division of ANLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account I and the Funds
available for investment by Separate Account I may appear in advertisements,
sales literature, or reports to Policy owners or prospective purchasers. ANLIC
may also provide a hypothetical illustration of Accumulation Value, Net Cash
Surrender Value and Death Benefit based on historical investment returns of the
Funds for a sample Policy based on assumptions as to age, sex, and risk class of
each Insured, and other Policy specific assumptions.
ANLIC may also provide individualized hypothetical illustrations of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds. These illustrations will reflect deductions for Fund
expenses and Policy and Separate Account I charges, including the Monthly
Deduction, Percent of Premium Charge for Taxes, and the Surrender Charge. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently 25 Subaccounts within the Separate Account I available to
Policy Owners for new allocations. The assets of each Subaccount are invested in
shares of a corresponding portfolio of one of the following mutual funds
(collectively, the "Funds"): 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 Fund is registered with the
SEC under the Investment Company Act of 1940 as an open-end management
investment company.
Alger American, which is managed by Fred Alger Management, Inc. ("Alger"),
offers the following portfolios: Alger American Growth, Alger American MidCap
Growth, and Alger American Small Capitalization. Calvert Social, which is
managed by Calvert Asset Management Company, Inc. ("Calvert"), offers the
following portfolios: Calvert Social Money Market, Calvert Social Small Cap
Growth, Calvert Social Mid Cap Growth, Calvert Social International Equity, and
Calvert Social Balanced. Bankers Trust Company ("Bankers") is the investment
adviser
REGENT 2000
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for BT Insurance Funds Trust, which offers the following portfolios: Equity 500
Index Fund, Small Cap Index Fund, and EAFE Equity Index Fund. VIP, which is
managed by Fidelity Research & Management Company ("Fidelity"), offers the
following portfolios: VIP Equity-Income: Service Class 2 and VIP High Income:
Service Class 2. VIP II, also managed by Fidelity, offers the VIP II Contrafund:
Service Class 2. Templeton Investment Counsel, Inc. is the investment adviser
for FTVIP, which offers the following portfolios: Templeton Asset Strategy Fund
- - Class 2 and Templeton International Securities Fund - Class 2. AMT offers the
following portfolios: Limited Maturity Bond, Growth, and Partners. The
investment adviser for these AMT portfolios is Neuberger Berman Management
Incorporated ("NB Management"). NB Management retains Neuberger Berman, L.P.,
without cost to AMT, as subadviser. Oppenheimer Funds, which are managed by
Oppenheimer Funds, Inc. ("Oppenheimer"), offers the following portfolios:
Aggressive Growth Fund/VA, Capital Appreciation Fund/VA, Main Street Growth &
Income Fund/VA, High Income Fund/VA, and Strategic Bond Fund Strong/VA. Van Eck
Associates Corporation ("Van Eck") is the investment adviser for Van Eck Funds,
which offers the following portfolio: Worldwide Hard Assets Fund.
The assets of each portfolio of the Funds are held separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus. All
underlying fund information, including Fund prospectuses, has been provided to
ANLIC by the underlying Funds. ANLIC has not independently verified this
information. One or more of the Portfolios may employ investment techniques that
involve certain risks, including investing in non-investment grade, high risk
debt securities, entering into repurchase agreements and reverse repurchase
agreements, lending portfolio securities, hedging instruments, interest rate
swaps, engaging in "short sales against the box," investing in instruments
issued by foreign banks, entering into firm commitment agreements and investing
in warrants and restricted securities. For example, the Calvert Social Balanced
Portfolio may invest up to 20% of its assets in non-investment grade
obligations, commonly referred to as "junk bonds". Oppenheimer High Income
Fund/VA may also invest in "junk bonds". In addition, certain of the portfolios
may invest in securities of foreign issuers, such as the Calvert Variable
Series, Inc. MidCap Portfolio which may invest up to 25% of its funds in foreign
securities.
Other portfolios invest primarily in the securities markets of developing
nations. Investments of this type involve different risks than investments in
more established economies, and will be affected by greater volatility of
currency exchange rates and overall economic and political factors. Such
portfolios include the Calvert Variable Series, Inc. Social International Equity
Portfolio, Strong International Stock Fund II Portfolio and Van Eck Worldwide
Hard Assets Fund Portfolio. The Van Eck Worldwide Hard Assets Fund will also
invest at least 25% of its total assets in "Hard Assets" including precious
metals, ferrous and non-ferrous metals, gas, petroleum, petrochemicals or other
hydrocarbons, forest products, real estate and other basic non-agricultural
commodities. It may invest up to 50% of its assets in any one of these sectors.
Therefore it may be subject to greater risks and market fluctuations than other
investment companies with more diversified portfolios. Further information about
the risks associated with investments in each of the Funds and their respective
portfolios is contained in the prospectus relating to that Fund. These
prospectuses, together with this prospectus, should be read carefully and
retained.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
Each Policy owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.
Separate Account I will purchase and redeem shares from the Portfolios at the
net asset value. Shares will be redeemed to the extent necessary for ANLIC to
collect charges, pay the Surrender Values, partial withdrawals, and
REGENT 2000
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make policy loans or to transfer assets among Investment Options as you
requested. Any dividend or capital gain distribution received is automatically
reinvested in the corresponding Subaccount.
Since each of the Funds is designed to provide investment vehicles for variable
annuity and variable life insurance contracts of various insurance companies and
will be sold to separate accounts of other insurance companies as investment
vehicles for various types of variable life insurance policies and variable
annuity contracts, there is a possibility that a material conflict may arise
between the interests of Separate Account I and one or more of the Separate
Account is of another participating insurance company. In the event of a
material conflict, the affected insurance companies agree to take any necessary
steps, including removing its Separate Account is from the Funds, to resolve the
matter. The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
<TABLE>
<CAPTION>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- --------- -------------------- ---------
<S> <C> <C>
THE ALGER AMERICAN FUND
Alger American Focuses on growing companies that generally have broad Seeks to provide long-term
Growth Portfolio product lines, markets, financial resources and depth of capital appreciation.
management. Under normal circumstances, the
portfolio invests primarily in the equity securities
of large companies. The portfolio considers a large
company to have a market capitalization of $1
billion or greater.
Alger American Focuses on midsize companies with promising growth Seeks to provide long-term
MidCap Growth potential. Under normal circumstances, the portfolio capital appreciation.
Portfolio invests primarily in the equity securities of companies
having a market capitalization within the range of
companies in the S&P MidCap 400 Index.
Alger American Focuses on small, fast-growing companies that offer Seeks to provide long-ter
Small innovative products, services or technologies to a rapidly capital appreciation.
Capitalization expanding marketplace. Under normal circumstances,
Portfolio the portfolio invests primarily in the equity securities
of small capitalization companies. A small
capitalization company is one that has a market
capitalization within the range of the Russell 2000
Growth Index or the S&P SmallCap 600 Index.
CALVERT VARIABLE SERIES, INC.
Social Money Invests in high quality, money market instruments, such Seeks to provide current
Market Portfolio as commercial paper, variable rate demand notes, income by investing in
corporate, agency and taxable municipal obligations. All enterprises that make a
investments must comply with the SEC money market significant contribution to
fund requirements.* society through their products
and services and through the
way they do business.
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Social Small Cap Invests at least 65% of assets in the common stocks of Seeks to provide long-term
Growth Portfolio small-cap companies. Returns in the portfolio will be capital appreciation by
mostly from the changes in the price of the portfolio's investing primarily in equity
holdings (capital appreciation). The portfolio currently securities of companies that
defines small-cap companies as those with market have small market
capitalization of $1 billion or less at the time the capitalizations.
portfolio initially invests. *
Social Mid Cap Invests primarily in the common stocks of mid-size Seeks to provide long-term
Growth Portfolio companies. Returns in the portfolio will be mostly from capital appreciation by
the changes in the price of the portfolio's holdings investing primarily in a
(capital appreciation.) The portfolio currently defines nondiversified portfolio of the
mid-cap companies as those within the range of market equity securities of mid-sized
capitalizations of the S&P's Mid-Cap 400 Index. Most companies that are
companies in the Index have a capitalization of $500 undervalued but demonstrate
million to $10 billion. * a potential for growth.
Social Invests primarily in the common stocks of mid- to large- Seeks to provide a high total
International cap companies using a value approach. The portfolio return consistent with
Equity Portfolio identifies those countries with markets and economies reasonable risk by investing
that it believes currently provide the most favorable primarily in a globally
climate for investing. The portfolio invests primarily in diversified portfolio for equity
more developed economies and markets. No more that securities.
5% of Portfolio assets are invested in the U.S.*
Social Balanced Typically invests about 60% of its assets in stocks and Seeks to achieve a
Portfolio 40% in bonds or other fixed-income investments. Stock competitive total return
investments are primarily common stock in large-cap through an actively managed
companies, while the fixed-income investments are portfolio of stocks, bonds and
primarily a wide variety of investment grade bonds. * money market instruments
which offer income and
capital growth opportunity
and which satisfy the
investment and social criteria.
*The portfolio invests with the philosophy that
long-term rewards to investors will come from those
organizations whose products, services, and methods
enhance the human condition and the traditional
American values of individual initiative, equality
of opportunity and cooperative effort. Investments
are selected on the basis of their ability to
contribute to the dual objectives of financial
soundness and social criteria.
BT INSURANCE FUNDS TRUST
Equity 500 Index The Fund will invest primarily in common stocks of Seeks to match, before
Fund companies that comprise the Standard &Poor's 500 expenses, the risk and return
Composite Stock Price Index ("S&P 500 Index(R)"), characteristics of the S&P 500
which emphasizes stocks of large U.S. companies. The Index.
Fund may also use stock index futures and options.
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<PAGE>
Small Cap Index The Fund will invest primarily in common stocks of Seeks to match, before
Fund companies that comprise the Russell 2000 Small Stock expenses, the risk and return
Index ("Russell 2000 Index(R)"), which emphasizes stocks characteristics of the Russell
of small U.S. companies. The Fund may also use stock 2000 Index.
index futures and options.
EAFE Equity The Fund will invest primarily in common stocks of Seeks to match, before
Index Fund companies that comprise the Morgan Stanley Capital expenses, the risk and return
International EAFE Index(R) ("EAFE Index(R)"), which characteristics of the EAFE(R)
emphasizes stocks of companies in major markets in Index.
Europe, Australia and the Far East. The Fund may also
use stock index futures and options.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
VIP Equity- Investing at least 65% in income-producing equity Seeks reasonable income.
Income: securities, which tens to lead to investments in large cap Will also consider the
Service Class 2 "value" stocks. potential for capital
appreciation. Seeks a yield
which exceeds the composite
yield on the securities
comprising the Standard &
Poor's 500.
VIP High Income: Investing at least 65% of total assets in income- Seeks a high level of current
Service Class 2 producing debt securities, preferred stocks and income while also considering
convertible securities, with an emphasis on lower-quality growth of capital.
debt securities.
VIP II Contrafund: Investing primarily in common stocks. Investing in Seeks long-term capital
Service Class II securities of companies whose value it believes is not appreciation.
fully recognized by the public.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset The fund will invest in equity securities of companies of High total return.
Strategy any nation, debt securities of companies and
governments of any nation, and in money market
instruments.
Templeton The fund will invest in the equity securities of companies Long-term capital growth.
International located outside the U. S., including emerging markets.
Securities
NEUBERGER BERMAN ADVISORS MANAGEMENT TRUST
Limited Maturity The portfolio will invest in a diversified portfolio of Seeks to provide the highest
Bond Fund fixed and variable debt securities and seeks to increase current income consistent
income and preserve or enhance total return by with low risk to principal and
actively managing average portfolio maturity in light liquidity.
conditions and trends.
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The portfolio invests mainly in common stocks of mid- Seeks growth of capital.
Growth Portfolio cap companies. It does not seek to invest in securities
that pay dividends or interest, and such income is incidental.
Partners Portfolio Principal series investments are common stocks of mid- Seeks capital growth.
to large-cap companies.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer The portfolio will invest in securities of companies Seeks to achieve capital
Aggressive believed to have relatively favorable long-term prospects appreciation, by investing in
Growth Fund/VA for increasing demand for their goods or services, or to "growth-type" companies.
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 The portfolio will emphasize investments in securities of Seeks capital appreciation by
Capital well-known and established companies. Such securities investing in securities of well
Appreciation generally have a history of earnings and dividends and known established companies.
Fund/VA are issued by seasoned companies.
Oppenheimer Its equity investments may include common stocks, Seeks a high total return
Main Street preferred stocks, convertible securities and warrants. Its (which includes growth in the
Growth & Income debt securities may include U.S. government securities, value of its shares as well as
Fund/VA foreign securities, and foreign and domestic corporate current income) from equity
bonds, notes, and debentures. and debt securities.
Oppenheimer High Investments in high yield fixed-income securities Seeks a high level of current
Income Fund/VA (including long-term debt and preferred stock issues, income.
including convertible securities) believed by the
Manager not to involve undue risk. Fund will assume
certain risks in seeking high yield including
securities in the lower ratings categories, commonly
known as "junk bonds".
Oppenheimer Income is principally derived from interest on debt Seeks a high level of current
Strategic Bond securities and the Fund seeks to enhance such income by income by investing primarily
Fund/VA writing covered call options on debt securities. The in a diversified portfolio of
Fund intends to invest primarily in (i) foreign high yield fixed-income
government and corporate debt securities (ii) U.S. securities.
government securities, and (iii) lower-rated high
yield domestic debt securities, commonly known as
junk bonds.
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard The Worldwide Hard Assets Fund will invest at least Seeks long-term capital
Assets Fund 65% of its assets in "hard asset securities," defined as appreciation by investing
securities of companies that derive at least 50% of globally, primarily in "hard
gross revenue or profit from exploration, development, assets" securities. Income is a
production or distribution of precious metals, natural secondary consideration.
resources, real estate or commodities. The fund may
concentrate as much as 50% of its assets in any
single "hard asset" sector.
</TABLE>
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ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
ANLIC reserves the right, subject to applicable law, to add, delete, combine or
substitute investments in Separate Account I if, in our judgment, marketing
needs, tax considerations, or investment conditions warrant. This may happen due
to a change in law or a change in a Fund's objectives or restrictions, or for
some other reason. ANLIC may operate Separate Account I as a management company
under the 1940 Act, it may be deregistered under that Act if registration is no
longer required, or it may be combined with other ANLIC separate accounts. ANLIC
may also transfer the assets of Separate Account I to another separate account.
If necessary, we will notify the SEC and/or state insurance authorities and will
obtain any required approvals before making these changes.
If any changes are made, ANLIC may, by appropriate endorsement, change the
policy to reflect the changes. In addition, ANLIC may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account I. ANLIC will determine the basis for
making any new Subaccounts available to existing Policy Owners.
You will be notified of any material change in the investment policy of any Fund
in which you have an interest.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between Separate Account I and
the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from Separate Account V
to the Fixed Account are placed in ANLIC's General Account. The General Account
includes all of ANLIC's assets, except those assets segregated in ANLIC's
separate accounts. ANLIC has the sole discretion to invest the assets of the
General Account, subject to applicable law. ANLIC bears an investment risk for
all amounts allocated or transferred to the Fixed Account, plus interest
credited thereto, less any deduction for charges and expenses. The Policy Owner
bears the investment risk that the declared rate, described below, will fall to
a lower rate after the expiration of a declared rate period. Because of
exemptions and exclusionary provisions, interests in the General Account have
not been registered under the Securities Act of 1933 (the "1933 Act"), nor is
the General Account registered as an investment company under the Investment
Company Act of 1940. Accordingly, neither the General Account nor any interest
in it is generally subject to the provisions of the 1933 or 1940 Act. We
understand that the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the Fixed Account portion of the Policy; however, these
disclosures may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy and completeness of statements made in
prospectuses.
ANLIC guarantees that it will credit interest at a declared rate of at least
3.5%. ANLIC may, at its discretion, set a higher declared rate(s ). Each month
ANLIC will establish the declared rate for the Policies with a Policy Date or
Policy Anniversary Date in that month. Each month is assumed to have 30 days,
and each year to have 360 days for purposes of crediting interest on the Fixed
Account. The Policy Owner will earn interest on the amounts transferred or
allocated to the Fixed Account at the declared rate effective for the month in
which the Policy was issued, which rate is guaranteed for the remainder of the
first Policy Year. During later Policy Years, all amounts in the Fixed Account
will earn interest at the declared rate in effect in the month of the last
Policy Anniversary. Declared interest rates may increase or decrease from
previous periods, but will not fall below 3.5%. ANLIC reserves the right to
change the declaration practice, and the period for which a declared rate will
apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from ANLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide the Policy owner with both lifetime insurance
protection and flexibility in the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may adjust the level of Death Benefits payable under
the Policy without having to purchase a new Policy by increasing (with evidence
of insurability) or decreasing the Specified Amount. An increase in the
Specified Amount will increase both the Minimum Premium and the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Minimum Premium and Guaranteed Death Benefit Premium will not decrease. Thus, as
insurance needs or financial conditions
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change, you have the flexibility to adjust life insurance benefits and vary
premium payments.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account I. Thus the Policy
owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy continues in force may depend in part upon the investment
experience of the chosen Subaccounts. The failure to pay a Planned Periodic
Premium will not necessarily cause the Policy to lapse, but the Policy could
lapse even if Planned Periodic Premiums have been paid, depending upon the
investment experience of Separate Account I. If the Minimum Premium or
Guaranteed Death Benefit Premium is satisfied by Net Policy Funding, ANLIC will
keep the Policy in force during the appropriate period and provide a Death
Benefit. In certain instances, this Net Policy Funding will not, after the
payment of Monthly Deductions, generate positive Net Cash Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, ANLIC will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Second Death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Second Death occurs. The Death Benefit Proceeds may be paid in
a lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.) There is no benefit payable on the death
of the first Insured.
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or as subsequently changed. If
you do not choose a Beneficiary, the proceeds will be paid to you, as the Policy
owner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options. The Policy owner selects one of
the options in the application. The Death Benefit under either option will never
be less than the current Specified Amount of the Policy as long as the Policy
remains in force. (See the section on Policy Lapse and Reinstatement.) The
minimum initial Specified Amount is $100,000. The Net Amount at Risk for Option
A will generally be less than the Net Amount at Risk for Option B. If you choose
Option A, your Cost of Insurance deduction will generally be lower than if you
choose Option B. (See the section on Charges and Deductions.) The following
graphs illustrate the differences in the two Death Benefit options.
OPTION A.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
Death Benefit Option A. Pays a Death Benefit equal to the Specified Amount
or the Accumulation Value multiplied by the Death Benefit percentage (as
illustrated at Point A) whichever is greater.
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Accumulation Value at the Second
Death. The applicable percentage is 250% for Attained Ages 40 or younger on the
Policy Anniversary Date prior to the Second Death. For Attained Ages over 40 on
that Policy Anniversary Date, the percentage declines. For example, the
percentage at Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained
Age 60 is 130%, at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at
Attained Age 90 is 105%. The applicable percentage will never be less than 101%.
Accordingly, under Option A the Death Benefit will remain level at the Specified
Amount unless the applicable percentage of Accumulation Value exceeds the
current Specified Amount, in which case the amount of the Death Benefit will
vary as the Accumulation Value varies. Policy owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
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OPTION B.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
Death Benefit Option B. Pays a Death Benefit equal to the Specified Amount
plus the Policy's Accumulation Value or the Accumulation Value multiplied
by the Death Benefit percentage, whichever is greater.
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Accumulation Value of the Policy or, if greater, the applicable percentage
of the Accumulation Value at the Second Death. The applicable percentage is the
same as under Option A: 250% for Attained Ages 40 or younger on the Policy
Anniversary Date prior to the Second Death. For Attained Ages over 40 on that
Policy Anniversary Date the percentage declines. Accordingly, under Option B the
amount of the Death Benefit will always vary as the Accumulation Value varies
(but will never be less than the Specified Amount.). Policy owners who prefer to
have favorable investment performance, if any, reflected in increased insurance
coverage, rather than higher Accumulation Values, generally should select Option
B.
CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per
year after the first Policy Year by sending ANLIC a written request. The
effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by ANLIC. A change may have federal
tax consequences.
If the Death Benefit option is changed from Option A to Option B, the Specified
Amount after the change will equal the Specified Amount before the change less
the Accumulation Value as of the date of the change. If the Death Benefit option
is changed from Option B to Option A, the Specified Amount under Option A after
the change will equal the Death Benefit under Option B on the effective date of
change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Accumulation Value. However, a change in the Death Benefit option may
affect the Cost of Insurance because this charge varies depending on the Net
Amount at Risk. Changing from Option B to Option A generally will decrease the
Net Amount at Risk in the future, and will therefore decrease the Cost of
Insurance. Changing from Option A to Option B generally will result in an
increase in the Cost of Insurance over time because the Cost of Insurance rate
will increase with the ages of the Insureds, even though the Net Amount at Risk
will generally remain level. (See the sections on Charges and Deductions and
Federal Tax Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, a Policy owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount affects the Net Amount at Risk, which
affects the Cost of Insurance and may have federal tax consequences. (See the
sections on Charges and Deductions and Federal Tax Matters.)
Any increase or decrease in the Specified Amount will become effective on the
Monthly Activity Date on or following the date a written request is approved by
ANLIC. The Specified Amount of a Policy may be changed only once per year and
ANLIC may limit the size of a change in a Policy Year. The Specified Amount
remaining in force after any requested decrease may not be less than $100,000.
In addition, if a decrease in the Specified Amount makes the Policy not comply
with the maximum premium limits required by federal tax law, the decrease may be
limited or the Accumulation Value may be returned to you, at your election, to
the extent necessary to meet the requirements. (See the section on Premiums.)
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Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. 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. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $50,000, and an
increase cannot be made if either Insured was over age 85 on the previous Policy
Anniversary Date. An increase in the Specified Amount will also increase
Surrender Charges. An increase in the Specified Amount during the time either
the Minimum Benefit or the Guaranteed Death Benefit provision is in effect will
increase the respective premium requirements.
(See the section on Charges and Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by a Policy
- - the difference between the Death Benefit and the Accumulation Value - in
several ways as your insurance needs change. These ways include increasing or
decreasing the Specified Amount of insurance, changing the level of premium
payments, and making a partial withdrawal of the Policy's Accumulation Value.
Certain of these changes may have federal tax consequences. The consequences of
each of these methods will depend upon the individual circumstances.
DURATION OF THE POLICY
The duration of the Policy generally depends upon the Accumulation Value. The
Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Minimum Benefit or Guaranteed
Death Benefit provision is in effect. (See the section on Charges from
Accumulation Value.) However, when the Net Cash Surrender Value is insufficient
to pay the Monthly Deduction and the Grace Period expires without an adequate
payment by the Policy owner, the Policy will lapse and terminate without value.
(See the section on Policy Lapse and Reinstatement.)
ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. A Policy owner may Surrender the
Policy at any time and receive the Policy's Net Cash Surrender Value. (See the
section on Surrenders.) There is no guaranteed minimum Accumulation Value.
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of Premiums
and Accumulation Value.) Thereafter, on each Valuation Date, the Accumulation
Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the
Subaccounts on the Valuation Date, determined by multiplying each
Subaccount's unit value by the number of Subaccount units you have
allocated to the Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in the
General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation Date;
less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Accumulation
Value.
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on a number of variables, a
Policy's Accumulation Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount is calculated
by:
(1) multiplying the net asset value per share of each Fund portfolio on
the Valuation Date times the number of shares held by that Subaccount,
before the purchase or redemption of any shares on that Valuation
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Date; minus
(2) a charge for mortality and expense risk at an annual rate of .75% in
Policy Years 1-15, decreasing to .30% thereafter; minus
(3) a charge for administrative service expenses at an annual rate of
.15%; and
(4) dividing the result by the total number of units held in the
Subaccount on the Valuation Date, before the purchase or redemption of
any units on that Valuation Date.
(See the section on Daily Charges Against the Separate Account I.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The Net Asset Value for
each Fund Portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of the NYSE on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after ANLIC receives Satisfactory Proof of Death. Payments may be postponed in
certain circumstances. (See the section on Postponement of Payments.) The Policy
owner may decide the form in which Death Benefit Proceeds will be paid. While at
least one Insured is alive, the Policy owner may arrange for the Death Benefit
Proceeds to be paid in a lump sum or under one or more of the optional methods
of payment described below. Changes must be in writing and will revoke all prior
elections. If no election is made, ANLIC will pay Death Benefit Proceeds or
Accumulation Value Benefits in a lump sum. When Death Benefit Proceeds are
payable in a lump sum and no election for an optional method of payment is in
force at the Second Death the Beneficiary may select one or more of the optional
methods of payment. Further, if the Policy is assigned, any amounts due to the
assignee will first be paid in one sum. The balance, if any, may be applied
under any payment option. Once payments have begun, the payment option may not
be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS. The minimum amount of each payment
is $100. If a payment would be less than $100, ANLIC has the right to make
payments less often so that the amount of each payment is at least $100. Once a
payment option is in effect, Death Benefit Proceeds will be transferred to
ANLIC's General Account. ANLIC may make other payment options available in the
future. For additional information concerning these options, see the Policy
itself. The following payment options are currently available:
Interest Payment Option. ANLIC will hold any amount applied under this
option. Interest on the unpaid balance will be paid or credited each month
at a rate determined by ANLIC.
Fixed Amount Payable Option. Each payment will be for an agreed fixed
amount.continuets until the amount ANLIC holds runs out.
Fixed Period Payment Option. Equal payments will be made for any period
selected up to 20 years.
Lifetime Payment Option. Equal monthly payments are based on the life of a
named person. Payments will continue for the lifetime of that person.
Variations provide for guaranteed payments for a period of time.
Joint Lifetime Payment Option. Equal monthly payments are based on the
lives of two named persons. While both are living, one payment will be made
each month. When one dies, the same payment will continue for the lifetime
of the other.
As an alternative to the above payment options, Death Benefits Proceeds may be
paid in any other manner approved by ANLIC. Further, one of ANLIC's affiliates
may make payments under the above payment options. If an affiliate makes the
payment, it will do so according to the request of the Policy owner, using the
rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. The Policy owner may borrow an amount up to the current Net
Cash Surrender Value less twelve times the most recent Monthly Deduction, at
regular or reduced loan rates (described below). Loans usually are
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funded within seven days after receipt of a written request. The loan may be
repaid at any time while at least one Insured is living. Policy owners in
certain states may borrow 100% of the Net Cash Surrender Value after deducting
Monthly Deductions and any interest on Policy loans that will be due for the
remainder of the Policy Year. Loans may have tax consequences. (See the section
on Federal Tax Matters).
LOAN INTEREST. ANLIC charges interest to Policy owners at regular and reduced
rates. Regular loans will accrue interest on a daily basis at a rate of up to 6%
per year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policy owner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is (1) the Accumulation Value, minus (2) total premiums paid minus any partial
withdrawals previously taken , and minus (3) the portion of any Outstanding
Policy Debt held at a reduced loan rate. However, this amount may not exceed the
maximum loan amount described above. (See the section on Loan Privileges.) If
unpaid when due, interest will be added to the amount of the loan and bear
interest at the same rate. The Policy owner earns 3.5% interest on the
Accumulation Values held in the General Account securing the loans.
EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the
amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. The minimum amount which can remain in a
Subaccount or the Fixed Account as a result of a loan is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options. In any Policy Year that
loan interest is not paid when due, ANLIC will add the interest due to the
principal amount of the Policy loan on the next Policy Anniversary. This loan
interest due will be transferred from the Investment Options as set out above.
No charge will be made for these transfers. A Policy loan will permanently
affect the Accumulation Value and may permanently affect the amount of the Death
Benefits, even if the loan is repaid. Policy loans will also affect Net Policy
Funding for determining whether the Minimum Benefit and Guaranteed Death Benefit
provisions are met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Surrender Charge and any Accrued
Expense Charges, the Policy owner must pay the excess. ANLIC will send a notice
of the amount which must be paid. If you do not make the required payment within
the 61 days after ANLIC sends the notice, the Policy will terminate without
value ("lapse".) Should the Policy lapse while Policy loans are outstanding, the
portion of the loans attributable to earnings will become taxable. You may lower
the risk of a Policy lapsing while loans are outstanding as a result of a
reduction in the market value of investments in the Subaccounts by investing in
a diversified group of lower risk investment portfolios and/or transferring the
funds to the Fixed Account and receiving a guaranteed rate of return. Should you
experience a substantial reduction, you may need to lower anticipated
withdrawals and loans, repay loans, make additional premium payments, or take
other action to avoid Policy lapse. A lapsed Policy may later be reinstated.
(See the section on Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policy owner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan will be allocated among the Subaccounts and the Fixed Account in the
same proportion that Net Premiums are being allocated at the time of repayment.
SURRENDERS
At any time while at least one Insured is alive, the Policy owner may withdraw a
portion of the Accumulation Value or Surrender the Policy by sending a written
request to ANLIC. The amount available for Surrender is the Net Cash Surrender
Value at the end of the Valuation Period when the Surrender request is received
at ANLIC's Home Office. Surrenders will generally be paid within seven days of
receipt of the written request. (See the section on Postponement of Payments.)
SURRENDERS MAY HAVE TAX CONSEQUENCES. Surrenders may be subject to Surrender
Charges. (See the section on Surrender Charge.) Once a Policy is Surrendered, it
may not be reinstated. (See the section on Tax Treatment of Policy Proceeds.)
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If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to ANLIC along with the request. ANLIC will pay the Net Cash Surrender
Value. Coverage under the Policy will terminate as of the date of a total
Surrender. A Policy owner may elect to have the amount paid in a lump sum or
under a payment option. (See the section on Payment Options.)
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be the greater of $1,000 or an amount sufficient to maintain the Policy in force
for the remainder of the Policy Year.
The amount paid will be deducted from the Investment Options according to your
instructions when you request the withdrawal. However, the minimum amount
remaining in a Subaccount as a result of the allocation is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance is calculated and the amount of pure
insurance protection under the Policy. (See the sections on Monthly Deduction -
Cost of Insurance and Death Benefit Options--Methods of Affecting Insurance
Protection.) If Death Benefit option B is in effect, the Specified Amount will
not change, but the Accumulation Value will be reduced.
A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from the Accumulation Value. Currently, the charge is the lesser of $25
or 2% of the amount withdrawn. (See the section on Partial Withdrawal Charge.)
Partial withdrawals will also affect Net Policy Funding for determining whether
the Minimum Benefit and Guaranteed Death Benefit provisions are met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of Separate Account
I and to the Fixed Account as often as desired. However, you may make only one
transfer out of the Fixed Account per Policy Year. We may limit the transfer
period to the 30 days following the Policy Anniversary Date. The transfers may
be ordered in person, by mail or by telephone. The total amount transferred each
time must be at least $250, or the balance of the Subaccount, if less. The
minimum amount that may remain in a Subaccount or the Fixed Account after a
transfer is $100. The first 15 transfers per Policy Year will be permitted free
of charge. After that, a transfer charge of $10 may be imposed each additional
time amounts are transferred. Currently, no charge is imposed for additional
transfers. This charge will be deducted pro rata from each Subaccount (and, if
applicable, the Fixed Account) in which the Policy Owner is invested. (See the
section on Transfer Charge.) Additional restrictions on transfers may be imposed
at the Fund level. Specifically, Fund managers may have the right to refuse
sales, or suspend or terminate the offering of portfolio shares, if they
determine that such action is necessary in the best interests of the portfolio's
shareholders. If a Fund manager refuses a transfer for any reason, the transfer
will not be allowed. ANLIC will not be able to process the transfer if the Fund
manager refuses. Transfers resulting from Policy loans will not be subject to a
transfer charge and will not be counted towards the guaranteed 15 free transfers
per Policy Year. ANLIC may at any time revoke or modify the transfer privilege,
including the minimum amount transferable.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, are limited to one per Policy Year. We may
limit the transfer period to the 30 days following the Policy Anniversary Date,
as noted below. Transfers out of the Fixed Account are limited to the greater of
(1) 25% of the Fixed Account attributable to the Policy; (2) the largest
transfer made by the Policy owner out of the Fixed Account during the last 13
months; or (3) $1,000. This provision is not available while dollar cost
averaging from the Fixed Account.
The privilege to initiate transactions by telephone will be made available to
Policy owners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers. Policy
owners who do not wish to authorize ANLIC to accept telephone transactions from
their registered representative must so specify on the application. ANLIC will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if it does not, ANLIC may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures ANLIC follows for
transactions initiated by telephone include, but are not limited to, requiring
the Policy owner to provide the Policy number at the time of giving transfer
instructions; ANLIC's tape recording of all telephone transfer instructions; and
ANLIC providing written confirmation of telephone transactions.
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SYSTEMATIC PROGRAMS
ANLIC may offer systematic programs as discussed below. These programs will be
subject to administrative guidelines ANLIC may establish from time to time.
Transfers of Accumulation Value made pursuant to these programs will be counted
in determining whether any transfer fee may apply. Lower minimum amounts may be
allowed to transfer as part of a systematic program. No other separate fee is
assessed when one of these options is chosen. All other normal transfer
restrictions, as described above, also apply.
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. ANLIC reserves the right to
modify, suspend or terminate such programs at any time. Use of systematic
programs may be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
ANLIC to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis according to Your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
ANLIC to automatically transfer, on a systematic basis, a predetermined amount
or specified percentage from the Fixed Account or the Money Market Subaccount to
any other Subaccount(s). Dollar cost averaging is permitted from the Fixed
Account if each monthly transfer is no more than 1/36th of the value of the
Fixed Account at the time dollar cost averaging is established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after ANLIC delivers a notice of your right of cancellation, or within 45 days
of completing Part I of the application, whichever is later. When allowed by
state law, the amount of the refund is the net premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from premiums paid. Otherwise, the amount of the refund will
equal the gross premiums paid. To cancel the Policy, you should mail or deliver
it to the selling agent, or to ANLIC at its Administrative Office. A refund of
premiums paid by check may be delayed until the check has cleared your bank.
(See the section on Postponement of Payments.)
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to ANLIC's Administrative Office ( 5900 "O" Street, P.O. Box 82550, Lincoln,
Nebraska 68501). A Policy will generally be issued only to individuals between
the ages of 20 and 90 at the time of purchase, although at least one of the
individuals must be no older than 85, and both of whom supply satisfactory
evidence of insurability to ANLIC. 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 effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
When all required premiums and application amendments have been received by
ANLIC in its administrative Office, the Issue Date will be the date the Policy
is mailed to you or sent to the agent for delivery to you. When application
amendments or additional premiums need to be obtained upon delivery of the
Policy, the Issue Date will be when the Policy receipt and federal funds (monies
of member banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received and available to ANLIC, and the application
amendments are received and reviewed in ANLIC's Administrative Office. Your
initial Net Premium will be allocated on the Issue Date to the Subaccounts
and/or the Fixed Account according to the selections you made in your
application. When state or other applicable law or regulation requires return of
at least your premium payments if you return the Policy under the free-look
privilege, your initial Net Premium will be allocated to the
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Money Market Subaccount. Then, thirteen days after the Issue Date, the
Accumulation Value of the Policy will be allocated among the Subaccounts and/or
Fixed Account according to the instructions in your application.
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if a lower Issue Age for either Insured results in lower Cost of
Insurance Rates. If a Policy is backdated, the minimum initial premium required
will include sufficient premium to cover the backdating period. Monthly
deductions will be made for the period the Policy Date is backdated.
Interim conditional insurance coverage may be issued prior to the Policy Date,
provided that certain conditions are met, upon the completion of an application
and the payment of the required premium at the time of the application. The
amount of the interim coverage is limited to the smaller of (1) the amount of
insurance applied for, or (2) $250,000. Premium will not be accepted with
applications for coverage in amounts of $1,000,000 or more.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
ANLIC in federal funds. The initial premium payment must be at least equal to
the monthly Minimum Premium times one more than the number of months between the
Policy Date and the Issue Date. Subsequent premiums are payable at ANLIC's Home
Office. A Policy owner has flexibility in determining the frequency and amount
of premiums. However, unless you have paid sufficient premiums to pay the
Monthly Deduction and Percent of Premium Charge for Taxes, the Policy may have a
zero Net Cash Surrender Value and lapse. Net Policy Funding, if adequate, may
satisfy Minimum Premium and/or Guaranteed Death Benefit Premium requirements.
(See the section on Policy Benefits, Purposes of the Policy.)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. You may want to consider setting the Planned
Periodic Premium no lower than the Guaranteed Death Benefit Premium to assure
proper funding of the Guaranteed Death Benefit. You are not required to pay
premiums according to this schedule. You have considerable flexibility to alter
the amount and frequency of premiums paid. ANLIC reserves the right to limit the
number and amount of additional or unscheduled premium payments.
You may also change the frequency and amount of Planned Periodic Premiums by
sending a written request to the Home Office, although ANLIC reserves the right
to limit any increase. Premium payment notices will be sent annually,
semi-annually or quarterly, depending upon the frequency of the Planned Periodic
Premiums. Payment of the Planned Periodic Premiums does not guarantee that the
Policy remains in force unless the Minimum Benefit or Guaranteed Death Benefit
provision is in effect. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. (See the section on Duration of the Policy.)
Unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect,
even if Planned Periodic Premiums are paid, the Policy will lapse any time the
Net Cash Surrender Value is insufficient to pay the Monthly Deduction, and the
Grace Period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITS. ANLIC's current minimum premium limit is $45, $15 if paid by
automatic bank draft. ANLIC currently has no maximum premium limit, other than
the current maximum premium limits established by federal tax laws. ANLIC
reserves the right to change any premium limit. In no event may the total of all
premiums paid, both planned and unscheduled, exceed the current maximum premium
limits established by federal tax laws. (See the section on Tax Status of the
Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, ANLIC will only accept that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limits allowed by law. ANLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
Net Amount at Risk on the date the premium is received.
PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation
Value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policy owner, an
additional premium payment may be required. ANLIC will notify you of any premium
required to fund
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the increase, which premium must be made in a single payment. The Accumulation
Value of the Policy will be immediately increased by the amount of the payment,
less the applicable Percent of Premium Charge for Taxes.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy owner
allocates Net Premiums to one or more Subaccounts and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of future Net Premiums may be changed without charge by providing proper
notification to the Home Office in writing or by telephone. If there is any
Outstanding Policy Debt at the time of a payment, ANLIC will treat the payment
as a premium payment unless you instruct otherwise by proper written notice.
On the Issue Date, the initial Net Premium will be allocated to the Investment
Options you selected. When state or other applicable law or regulation requires
return of at least your premium payments if you return the Policy under the
free-look privilege, the initial Net Premium will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. Premium payments received by
ANLIC prior to the Issue Date are held in the General Account until the Issue
Date and are credited with interest at a rate determined by ANLIC for the period
from the date the payment has been converted into federal funds and is available
to ANLIC. In no event will interest be credited prior to the Policy Date.
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policy owner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect.
The Grace Period is 61 days from the date ANLIC mails 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 Percent of
Premium Charge for Taxes for the three Policy Months after commencement of the
Grace Period, plus projected loan interest that would accrue over that period,
or (2) the premium required under the Minimum Benefit or Guaranteed Death
Benefit provisions, if applicable, to keep the Policy in effect for three months
from the commencement of the Grace Period. Failure to pay the required premium
within the Grace Period will result in lapse of the Policy. If the Second Death
occurs during the Grace Period, any overdue Monthly Deductions and Outstanding
Policy Debt will be deducted from the Death Benefit Proceeds. (See the section
on Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period, provided both
Insureds are living. We will reinstate your Policy based on the rating classes
of the Insureds at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of both Insureds satisfactory to ANLIC
(including evidence of insurability of any person covered by a rider
to reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated
with interest due and accrued;
(3) The Policy cannot be reinstated if it has been Surrendered for its
full Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as of
the date of reinstatement to equal to or greater than zero; or
(b) three times the current Monthly Deduction.
The amount of Accumulation Value on the date of reinstatement will equal:
(1) the amount of the Net Cash Surrender Value on the date of lapse,
increased by
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(2) the premium paid at reinstatement, less
(3) the Percent of Premium Charge for Taxes , plus
(4) that part of the Surrender Charge that would apply if the Policy were
Surrendered on the date of reinstatement.
The last addition to the Accumulation Value is designed to avoid duplicate
Surrender Charges. The original Policy Date, and the dates of increases in the
Specified Amount (if applicable), will be used for purposes of calculating the
Surrender Charge. If any Outstanding Policy Debt is reinstated, that debt will
be held in ANLIC's General Account. Accumulation Value calculations will then
proceed as described under the section on Accumulation Value.
The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by ANLIC of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate ANLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy and payment of
applicable taxes; (3) assuming certain risks in connection with the Policy; and
(4) incurring expenses in distributing the Policy. The nature and amount of
these charges are described more fully below.
DEDUCTIONS FROM PREMIUM PAYMENTS
PERCENT OF PREMIUM CHARGE FOR TAXES. A deduction of up to 3% of the premium is
made from each premium payment; currently the charge is 2.25%. The deduction is
intended to partially offset the premium taxes imposed by the states and their
subdivisions, and to help defray the tax cost due to capitalizing certain policy
acquisition expenses as required under applicable federal tax laws. (See the
section on Federal Tax Matters.) ANLIC does not expect to derive a profit from
the Percent of Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTION. Charges will be deducted as of the Policy Date and on each
Monthly Activity Date thereafter from the Accumulation Value of the Policy to
compensate ANLIC for administrative expenses and insurance provided. These
charges will be allocated from the Investment Options in accordance with your
instructions. If no instructions are given the charges will be allocated prorata
among the Investment Options. Each of these charges is described in more detail
below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate ANLIC for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction includes a level per policy charge plus a charge per $1000 of
Specified Amount. For Specified Amounts between $100,000 and $999,999, the
charge is currently $16 per month in Policy Years 1-5 and $8 per month
thereafter; for Specified Amounts between $1,000,000 and $4,999,999, the charge
is currently $8 per month in Policy Years 1-5 and $4 per month thereafter;
currently there is no charge for Specified Amounts $5,000,000 or greater. In
addition, for all Specified Amounts there currently is a charge of up to $.10
per month per $1000 of Specified Amount, depending on the younger Insured's
Issue Age. For Issue Ages 20-44, the rate is $.10, for Issue Ages 45-64, the
rate $.08, and for Issue Ages 65 and over, the rate is $.05. At the current time
we anticipate that the charge per $1,000 of Specified Amount will reduce to $0
in year 6. The Administrative Expense Charge is levied throughout the life of
the Policy and is guaranteed not to increase above $16 per month plus $.10 per
month per $1000 of Specified Amount. ANLIC does not expect to make any profit
from the Administrative Expense Charge.
COST OF INSURANCE. Because the Cost of Insurance depends upon several variables,
the cost for each Policy Month can vary from month to month. ANLIC will
determine the monthly Cost of Insurance by multiplying the applicable Cost of
Insurance Rate by the Net Amount at Risk for each Policy Month.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rates are based on the
Issue Age, sex and risk class of each Insured and the Policy duration. The rates
will vary depending upon tobacco use and other risk factors. The rates will be
based on 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. The guaranteed
rates for standard rating classes are calculated from the 1980 Commissioners
Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. The
guaranteed rates for the table-rated substandard Insureds are based on a
multiple (shown in the schedule pages of the Policy) of the above rates. We may
add flat extra ratings to one or both Insureds to reflect higher mortality risk.
Because the Death Benefit is payable at the Second Death only, one-half of each
applicable flat extra rating will be added to adjust the Cost of Insurance
Rate.Any change in the Cost of Insurance Rates will apply to all Insureds of the
same age, sex, risk class and whose Policies
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have been in effect for the same length of time The Cost of Insurance Rates,
Surrender Charges, and payment options for Policies issued in Montana, and
perhaps other states or in connection with certain employee benefit
arrangements, are issued on a sex-neutral (unisex) basis. The unisex rates will
be higher than those applicable to females and lower than those applicable to
males.
The actual charges made during the Policy year will be shown in the annual
report delivered to Policy owners.
RATING CLASS. The rating class of each Insured will affect the Cost of Insurance
Rate. ANLIC currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, Insureds in the standard rating class will have a lower Cost
of Insurance Rate than when either or both Insureds are in a rating class with
higher mortality risks.
SURRENDER CHARGE
If a Policy is Surrendered on or before the 14th Policy Anniversary Date, ANLIC
will assess a Surrender Charge as shown in the schedule pages of the Policy. The
initial Surrender Charge is calculated based on the Issue Age, sex and risk
class of each Insured, and the Specified Amount of the Policy. The Surrender
Charge, if applicable, will be applied according to the following schedule.
Because the Surrender Charge may be significant upon early Surrender,
prospective Policy owners should purchase a Policy only if they do not intend to
Surrender the Policy for a substantial period.
The maximum Surrender Charge on a Policy we issue is $60 per $1,000 of Specified
Amount.
Policy Year Percent of Initial Policy Year Percent of Initial
Surrender Charge that Surrender Charge that will
will apply during Policy apply during Policy Year
Year
- ------------ ------------------------ ------------ --------------------------
1-5 100% 11 40%
6 90% 12 30%
7 80% 13 20%
8 70% 14 10%
9 60% 15+ 0%
10 50%
No Surrender Charge will be assessed on decreases in the Specified Amount of the
Policy or partial withdrawals of Accumulation Value. ANLIC will, however,
require additional Surrender Charges due to increases in Specified Amount. The
initial Surrender Charge applicable to the increase in the Specified Amount will
equal the initial Surrender Charge for the original Specified Amount, multiplied
by the ratio of the increase in Specified Amount to the original Specified
Amount. Surrender Charges on increases in Specified Amount will be applied with
respect to Surrenders within 14 years of the date of the increase according to
the same grading schedule as for the original Specified Amount.
TRANSFER CHARGE. Currently there is no charge for transfers among the investment
options in excess of fifteen per Policy Year. A charge of $10 (guaranteed not to
increase) for each transfer in excess of 15 may be imposed to compensate ANLIC
for the costs of processing the transfer. Since the charge reimburses ANLIC only
for the cost of processing the transfer, ANLIC does not expect to make any
profit from the transfer charge. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Policy owner is
invested. The transfer charge will not be imposed on transfers that occur as a
result of Policy loans or the exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal.
This charge will compensate ANLIC for the administrative costs of processing the
requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is
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currently the lesser of $25 or 2% of the amount withdrawn (guaranteed not to be
greater than the lesser of $50 or 2% of the amount withdrawn). No Surrender
Charge is assessed on a partial withdrawal and a partial withdrawal charge is
not assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account I to compensate ANLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from Separate
Account I is at the rate of 0.002050% (equivalent to an annual rate of .75%) for
Policy Years 1-15 and .000820% (equivalent to an annual rate of .30%)
thereafter. The daily charge will be deducted from the net asset value of
Separate Account I, and therefore the Subaccounts, on each Valuation Date. Where
the previous day or days was not a Valuation Date, the deduction on the
Valuation Date will be the applicable daily rate multiplied by the number of
days since the last Valuation Date. No Mortality and Expense Risk Charges will
be deducted from the amounts in the Fixed Account.
ANLIC believes that this level of charge is within the range of industry
practice for comparable survivorship flexible premium variable universal life
policies. The mortality risk assumed by ANLIC is that Insureds may live for a
shorter time than calculated, and that the aggregate amount of Death Benefits
paid will be greater than initially estimated. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
administrative charges provided in the Policies.
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of Separate Account I on a daily basis. This charge is
applied at a rate of 0.000409% (equivalent to .15% annually). No Asset- Based
Administrative Expense Charge will be deducted from the amounts in the Fixed
Account.
FUND EXPENSE SUMMARY
In addition to the charges against Separate Account I described just above,
management fees and expenses will be assessed by Alger, Calvert, Bankers Trust,
Fidelity, Templeton, NB Management, Oppenheimer, and Van Eck against the amounts
invested in the various portfolios. No portfolio fees will be assessed against
amounts placed in the Fixed Account.
The information shown below relating to the Funds was provided to ANLIC by the
Funds and ANLIC has not independently verified such information. Each of the
Funds is managed by an investment advisory organization that is not affiliated
with ANLIC. Each such organization is entitled to receive a fee for its services
based on the value of the relevant portfolio's net assets. The amount of
expenses, including the asset based advisory fee referred to above, borne by
each portfolio for the fiscal year ended December 31, 1998, was as follows:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL EXPENSES
(EXPRESSED AS A PERCENTAGE OF NET ASSETS OF EACH PORTFOLIO)
TOTAL
(REFLECTING
PORTFOLIO OTHER TOTAL WAIVED, WAIVERS,
MANAGEMENT EXPENSES PORTFOLIO REIMBURSED REIMBURSEMENTS,
FEES ANNUAL AND/OR AND/OR
EXPENSES PAID INDIRECT
INDIRECTLY PAYMENTS,
IF ANY)
- ---------------------------- ------------ ----------- ------------ --------------- -----------------
<S> <C> <C> <C> <C> <C>
Alger American Growth Portfolio 0.75% 0.04% 0.79% -- 0.79%
Alger American MidCap Growth 0.80% 0.04% 0.84% -- 0.84%
Portfolio
Alger American Small Capitalization 0.85% 0.04% 0.89% -- 0.89%
Portfolio
Calvert Social Money Market Portfolio 0.50% 0.16% 0.66% 0.03% 0.63%
Calvert Social Small Cap Growth 1.00% 0.33% 1.33% 0.21% 1.12%
Portfolio
Calvert Social Mid Cap Growth 0.90% 0.16% 1.06% 0.05% 1.01%/1
Portfolio
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Calvert Social International Equity 1.10% 0.70% 1.80% 0.24% 1.56%/2
Portfolio
Calvert Social Balanced Portfolio 0.70% 0.18% 0.88% 0.02% 0.86%/1
Bankers Trust, VIP, VIP II, FTVIP to
be provided
Neuberger Berman Advisers -- 0.76%
Management Trust Limited Maturity 0.65% 0.11% 0.76%
Bond Portfolio
Neuberger Berman Advisers 0.83% 0.09% 0.92% -- 0.92%
Management Trust Growth Portfolio
Oppenheimer Aggressive Growth 0.69% 0.02% 0.71% -- 0.71%
Fund/VA
Oppenheimer Capital Appreciation 0.72% 0.03% 0.75% -- 0.75%
Fund/VA
Oppenheimer Main Street Growth & 0.74% 0.05% 0.79% -- 0.79%
Income Fund/VA
Oppenheimer High Income Fund/VA 0.74% 0.04% 0.78% -- 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.06% 0.80% -- 0.80%
Van Eck Worldwide Hard Assets Fund 1.00% 0.20% 1.20% 0.04%/3 1.16%
/1 Expenses have been restated to reflect expenses expected to be incurred in
1999.
/2 Net expenses include a voluntary reimbursement made by the Advisor of 0.15%
for administrative service fees.
/3 Expense is reduced to 1.16% by the directed brokerage and custodian fee
arrangement.
</TABLE>
ANLIC may receive administrative fees from the investment advisers of certain
Funds. ANLIC currently does not assess a separate charge against the Separate
Account I or the Fixed Account for any federal, state or local income taxes.
ANLIC may, however, make such a charge in the future if income or gains within
the Separate Account I will incur any federal, or any significant state or local
income tax liability, or if the federal, state or local tax treatment of ANLIC
changes.
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by ANLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions. The rights and benefits under the
Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from ANLIC.
CONTROL OF POLICY. The Policy owner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record, all rights, options, and privileges belong to the Policy
owner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last Policy owner to die.
BENEFICIARY. Policy owners may name both primary and contingent Beneficiaries in
the application. Payments will be shared equally among Beneficiaries of the same
class unless otherwise stated. If a Beneficiary dies before the Second Death,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiaries of the next class; otherwise to the Policy owner;
otherwise to the estate of the Policy owner.
CHANGE OF BENEFICIARY The Policy owner may change the Beneficiary by written
request at any time while at least one Insured is alive unless otherwise
provided in the previous designation of Beneficiary. The change will take effect
as of the date the change is recorded at the Home Office. ANLIC will not be
liable for any payment made or action taken before the change is recorded.
CHANGE OF POLICY OWNER OR ASSIGNMENT. In order to change the Policy owner of the
Policy or assign Policy rights, an
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assignment of the Policy must be made in writing and filed with ANLIC at its
Home Office. Any such assignment is subject to Outstanding Policy Debt. The
change will take effect as of the date the change is recorded at the Home
Office, and ANLIC will not be liable for any payment made or action taken before
the change is recorded. Payment of Death Benefit Proceeds is subject to the
rights of any assignee of record. A collateral assignment is not a change of
ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt to
ANLIC and then to the interest of any assignee of record. The balance of any
Death Benefit Proceeds shall be paid in one sum to the designated beneficiary
unless an Optional Method of Payment is selected. If no Beneficiary survives the
Second Death, the Death Benefit Proceeds shall be paid in one sum to the Policy
owner, if living; otherwise to any successor-owner, if living; otherwise to the
Policy owner's estate. Any proceeds payable upon Surrender shall be paid in one
sum unless an Optional Method of Payment is elected.
INCONTESTABILITY. ANLIC cannot contest the Policy or reinstated Policy while at
least one Insured is alive after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, ANLIC
cannot contest an increase in the Specified Amount or addition of a rider while
at least one Insured is alive, after such increase or addition has been in force
for two years from its effective date. However, this two year provision shall
not apply to riders with their own contestability provision. We may require
proof prior to the end of the appropriate contestability period that both
Insureds are living.
MISSTATEMENT OF AGE AND SEX. If the age or sex of either Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
correct age and sex of the Insureds. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If either Insured, while
sane or insane, commits suicide within two years after the Policy Date, ANLIC
will pay only the premiums received less any partial withdrawals, the cost for
riders and any outstanding Policy debt. If either Insured, while sane or insane,
commits suicide within two years after the effective date of any increase in the
Specified Amount, ANLIC's liability with respect to such increase will only be
its total cost of insurance applicable to the increase. The laws of Missouri
provide that death by suicide at any time is covered by the Policy, and further
that suicide by an insane person may be considered an accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at the Second Death, and transfers
may be postponed whenever: (1) the New York Stock Exchange ("NYSE") is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policy owners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account I's net assets; or (4) Surrenders, loans or partial withdrawals
from the Fixed Account may be deferred for up to 6 months from the date of
written request. Payments under the Policy of any amounts derived from premiums
paid by check may be delayed until such time as the check has cleared the Policy
owner's bank.
REPORTS AND RECORDS. ANLIC will maintain all records relating to the Separate
Account I and will mail to the Policy owner, at the last known address of
record, within 30 days after each Policy Anniversary, an annual report which
shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit,
premiums paid, Outstanding Policy Debt and other information. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Policy owner may receive confirmation of such transactions in
their quarterly statements. The Policy owner should review the information in
these statements carefully. All errors or corrections must be reported to ANLIC
immediately to assure proper crediting to the Policy. ANLIC will assume all
transactions are accurately reported on quarterly statements unless ANLIC is
notified otherwise within 30 days after receipt of the statement. The Policy
owner will also be sent a periodic report for the Funds and a list of the
portfolio securities held in each portfolio of the Funds.
ADDITIONAL INSURANCE BENEFITS (RIDERS.) Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the Monthly Deduction.
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER.) Upon
satisfactory Proof of Death of one Insured, and satisfactory proof of
terminal illness of the last surviving Insured after the two-year
contestable period,
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(no waiting period in certain states) ANLIC will accelerate the payment of
up to 50% of the lowest scheduled Death Benefit as provided by eligible
coverages, less an amount up to two guideline level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts less
than $4,000 or more than $250,000 on all policies issued by ANLIC or its
affiliates that provide coverage on the surviving Insured. ANLIC may charge
the lesser of 2% of the benefit or $50 as an expense charge to cover the
costs of administration.
Satisfactory proof of terminal illness of the last surviving Insured must
include a written statement from a licensed physician who is not related to
the Insured or the Policy owner stating that the Insured has a
non-correctable medical condition that, with a reasonable degree of medical
certainty, will result in the death of the Insured in less than 12 months
(6 months in certain states) from the date of the physician's statement.
Further, the condition must first be diagnosed while the Policy is in
force.
The accelerated benefit first will be used to repay any Outstanding Policy
Debt, and will also affect future loans, partial withdrawals, and
Surrenders. The accelerated benefit will be treated as a lien against the
Policy Death Benefit and will thus reduce the Death Benefit Proceeds.
Interest on the lien will be charged at the Policy loan interest rate.
There is no extra premium for this rider.
ESTATE PROTECTION RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
both Insureds during the first four Policy Years.
FIRST-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
either of the two Insureds.
SECOND-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
both Insureds.
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
the rider Insured, as identified. The rider may be purchased on either
Insured or an individual other than the Insureds.
TOTAL DISABILITY RIDER. This rider provides for the payment by ANLIC of a
disability benefit in the form of premiums while the Insured is disabled.
The benefit amount may be chosen by the Policy owner at the issue of the
rider. In addition, while the Insured is totally disabled, the Cost of
Insurance for the rider will not be deducted from Accumulation Value. The
rider may be purchased on either or both Insureds.
POLICY SPLIT OPTION. This rider allows the Policy to be split into two
individual policies, subject to evidence of insurability on both Insureds.
DISTRIBUTION OF THE POLICIES
The principal underwriter for the Policies is The Advisors Group, Inc ("TAG"). a
second tier wholly owned subsidiary of Acacia Life Insurance Company and an
affiliate of ANLIC. TAG is registered as a broker-dealer with the SEC and is a
member of the National Association of Securities Dealers ("NASD"). ANLIC pays
TAG for acting as the principal underwriter under an Underwriting Agreement.
TAG offers its clients a wide variety of financial products and services and has
the ability to execute stock and bond transactions on a number of national
exchanges. TAG also serves as principal underwriter for ANLIC's variable
annuities and variable life contracts. It also has executed selling agreements
with a variety of mutual funds, issuers of unit investment trusts, and direct
participation programs.
The Policies are sold through Registered Representatives of TAG or other
broker-dealers which have entered into selling agreements with ANLIC or TAG.
These Registered Representatives are also licensed by state insurance officials
to sell ANLIC's variable life policies. Each of the broker-dealers with a
selling agreement is registered with the SEC and is a member of the NASD. In
1999, TAG received gross variable universal life compensation of $_____ and
retained $_____ in underwriting fees, and $_____ in brokerage commissions on
ANLIC's variable universal life policies.
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Under these selling agreements, ANLIC pays commission to the broker-dealers,
which in turn pay commissions to the Registered Representative who sells this
Policy. During the first Policy Year, the commission may equal an amount up to
95% of the first year target premium paid plus the first year cost of any riders
and 2% for premiums paid in excess of the first year target premium. For Policy
Years two through four, the commission may equal an amount up to 2% of premiums
paid. Broker-dealers may also receive a service fee up to an annualized rate of
.25% of the Accumulation Value beginning in the fifth Policy Year. Compensation
arrangements may vary among broker-dealers. In addition, ANLIC may also pay
override payments, expense allowances, bonuses, wholesaler fees, and training
allowances. Registered Representatives who meet certain production standards may
receive additional compensation. ANLIC may reduce or waive the sales charge
and/or other charges on any Policy sold to directors, officers or employees of
ANLIC or any of its affiliates, employees and registered representatives of any
broker dealer that has entered into a sales agreement with ANLIC or TAG and the
spouses or children of the above persons. In no event will any such reduction or
waiver be permitted where it would be unfairly discriminatory to any person.
ADMINISTRATION
ANLIC has contracted with Ameritas Life Insurance Corp. ("Ameritas"), having its
principal place of business at 5900 "O" Street, Lincoln, Nebraska 68501 for it
to provide ANLIC with certain administrative services for the Survivorship
flexible premium variable life policies. Ameritas is an affiliate of ANLIC and a
Member of the Ameritas Acacia Family of Companies. Pursuant to the terms of a
Service Agreement, Ameritas will act as record keeping Service Agent for the
policies and riders for an initial term of three years and any subsequent
renewals thereof. Ameritas under the direction of ANLIC will perform
Administrative 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.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws except premium taxes. (See discussion in the section on Deductions From
Premium Payments - Percent of Premium Charge for Taxes.) This discussion is
based upon ANLIC's understanding of the relevant laws at the time of filing.
Counsel and other competent tax advisors should be consulted for more complete
information before a Policy is purchased. 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 Insureds, 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 the 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.
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<PAGE>
(2) TAX STATUS OF THE POLICY. The Code (Section 7702) includes a definition of a
life insurance contract for federal tax purposes which places limitations on
the amount of premiums that may be paid for the Policy and the relationship
of the Accumulation Value to the Death Benefit. While ANLIC believes that
the Policy meets the statutory definition of a life insurance contract under
Internal Revenue Code Section 7702 and should receive federal income tax
treatment consistent with that of a fixed-benefit life insurance policy, the
area of tax law relating to the definition of life insurance does not
explicitly address all relevant issues (including, for example, certain tax
requirements relating to survivorship variable universal life policies).
ANLIC reserves the right to make changes to the Policy if deemed appropriate
by ANLIC to attempt to assure qualification of the Policy as a life
insurance contract. If the Policy were determined not to qualify as life
insurance under Code Section 7702, the Policy would not provide the tax
advantages normally provided by life insurance. If the Death Benefit of a
Policy is changed, the applicable defined limits may change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a modified
endowment contract, distributions from it (including loans) are taxed as
ordinary income to the extent of any gain. This Policy will become a
"modified endowment contract" if the premiums paid into the Policy fail to
meet a 7-pay premium test as outlined in Section 7702A of the Code.
Certain benefits the Policy Owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are
not limited to, changes in Death Benefits and changes in the Specified
Amount. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits.
Should you deposit excessive premiums during a Policy Year, that portion
that is returned by ANLIC within 60 days after the Policy Anniversary Date
will reduce the premiums paid to prevent the Policy from becoming a modified
endowment contract. All modified endowment policies issued by ANLIC to the
same Policyholder 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.
ANLIC does not have control over 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 I.
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 the 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
will generally be excludable from the gross income of the Beneficiary under
Section 101(a)(1) of the Code and the Policy owner will not be deemed to be
in constructive receipt of the Accumulation Value under the Policy until its
actual Surrender. However, there are certain exceptions to the general rule
that death benefit proceeds are non-
REGENT 2000
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<PAGE>
taxable. Federal, state and local tax consequences of ownership of 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 one or both Insureds are still alive) from a Policy
that is not a modified endowment contract are generally treated as first a
recovery of the investment in the Policy and then only after the return of
all such investment, as disbursing taxable `income. However, in the case of
a decrease in the Death Benefit, a partial withdrawal, a change in Death
Benefit option, or any other such change that reduces future benefits under
the Policy during the first 15 years after a Policy is issued and that
results in a cash distribution to the Policy owner in order for the Policy
to continue complying with the Section 7702 defined limits on premiums and
Accumulation Values, such distributions 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 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 that is not a
"modified endowment contract" will be treated as debt of the Policy owner
and that no part of any loan under a Policy will constitute income to the
Policy owner so long as the Policy remains in force. Should the Policy lapse
while Policy loans are outstanding the portion of the loans attributable to
earnings will become taxable. Generally, interest paid on any loan under a
Policy owned by an individual will not be tax-deductible.
Except for Policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps, the Health Insurance Portability and
Accountability Act of 1996 (the "Health Insurance Act") generally repealed
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 existing debt are included in the
Health Insurance Act. The transitional rules included 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 occurred 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 the 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.
DISTRIBUTION FROM POLICIES THAT ARE "MODIFIED ENDOWMENT CONTRACTS". Should
the Policy become a "modified endowment contract", partial withdrawals, full
surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of the gain under
the Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer's age 59 1/2. The 10% penalty tax
does not apply if the distribution is made because the taxpayer is disabled
as defined under the Code or if the distribution is paid out in the form of
a life annuity on the life of the taxpayer or the joint lives of the
taxpayer and Beneficiary.
The right to exchange the Policy for a survivorship flexible premium
adjustable life insurance policy (See the section on Exchange Privilege.),
the right to change Policy owners (See the section on General Provisions.),
and the provision for partial withdrawals (See the section on Surrenders.)
may have tax consequences depending on the circumstances of such exchange,
change, or withdrawal. Upon complete Surrender, if the amount received plus
any Outstanding Policy Debt exceeds the total premiums paid (the "basis"),
that are not treated as previously withdrawn by the Policy owner, the excess
generally will be taxed as ordinary income.
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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 ON FEDERAL, STATE AND LOCAL TAX CONSIDERATIONS APPLICABLE TO YOUR
PARTICULAR SITUATION.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
ANLIC holds the assets of Separate Account I. The assets are kept physically
segregated and held separately and apart from the General Account assets, except
for the Fixed Account. ANLIC maintains records of all purchases and redemptions
of Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
ANLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. ANLIC does not engage any such third parties to offer such services of
any type. In certain cases, ANLIC has agreed to honor transfer instructions from
such services where it has received powers of attorney, in a form acceptable to
it, from the Policy owners participating in the service. Firms or persons
offering such services do so independently from any agency relationship they may
have with ANLIC for the sale of Policies. ANLIC takes no responsibility for the
investment allocations and transfers transacted on a Policy owner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policy owners should be aware that fees paid for such services are
separate and in addition to fees paid under the Policies.
VOTING RIGHTS
ANLIC is the legal holder of the shares held in the Subaccounts of Separate
Account I and as such has the right to vote the shares, to elect Directors of
the Funds, and to vote on matters that are required by the Investment Company
Act of 1940 and upon any other matter that may be voted upon at a shareholder
meeting. To the extent required by law, ANLIC will vote all shares of each of
the Funds held in Separate Account I at regular and special shareholder meetings
of the Funds according to instructions received from Policy owners based on the
number of shares held as of the record date for such meeting.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy owner is determined by dividing the Accumulation Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy owners are received and Fund shares
held in each Subaccount which do not support Policy owner interests will be
voted by ANLIC in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, ANLIC may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. ANLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, ANLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Funds, if ANLIC reasonably
disapproves those changes in accordance with applicable federal regulations. If
ANLIC does disregard voting instructions, it will advise Policy owners of that
action and its reasons for the action in the next annual report or proxy
statement to Policy owners.
STATE REGULATION OF ANLIC
ANLIC, a stock life insurance company organized under the laws of Virginia, is
subject to regulation by the Virginia Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of ANLIC and Separate Account I as of
December 31 of the preceding year must be filed with the Virginia Department of
Insurance. Periodically, the Virginia Department of Insurance examines the
liabilities and reserves of ANLIC and Separate Account I.
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In addition, ANLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
Policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS OF 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
Company Vice 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
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
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<PAGE>
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.
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 the 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.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account I is a party or to
which the assets of the Separate Account I are subject. ANLIC is not involved in
any litigation that is of material importance in relation to its total assets or
that relates to Separate Account I.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning Separate Account I, 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.
FINANCIAL STATEMENTS
The financial statements of ANLIC which are included in this Prospectus should
be considered only as bearing on the ability of ANLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in Separate Account I.
REGENT 2000
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Appendix A
Illustrations of Death Benefits and Accumulation Values
The following tables illustrate how the Accumulation Values and Death Benefits
of a Policy may change with the investment experience of the Fund. The tables
show how the Accumulation Values and Death Benefits of a Policy issued at a
given premium on Insureds of given ages and specified underwriting risk
classifications would vary over time if the investment return on the assets held
in each portfolio of the Funds were a uniform, gross, after-tax annual rate of
12%, 6%, or 0%. The tables on pages A-2 through A-7 illustrate a Policy issued
to a male, age 65 under a Preferred rate non-tobacco underwriting risk
classification and a female age 65, also under a Preferred rate non-tobacco
underwriting risk classification. This Policy provides for standard tobacco use
and non-tobacco use, and preferred non-tobacco classifications. The Accumulation
Values and Death Benefits would be different from those shown if the gross
annual investment rates of return averaged 12%, 6%, and 0% over a period of
years, but fluctuated above and below those averages for individual Policy
Years, or if the Insureds were assigned to different underwriting risk
classifications.
The first two columns of the tables show the Policy Years and End of Year Age.
The next two columns show Annual Premium Outlay and the Net Annual Rate of
Return (ROR). The following columns show the Total Accumulated Value, Total
Surrender Value and Total Death Benefit. 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 Rates and that current expense deductions
and the current percent of premium load are applied. This reflects the basis on
which ANLIC currently sells its Policies. The columns headed Guaranteed Charges
assume that, throughout the life of the Policy, the monthly Cost of Insurance is
based on the maximum Cost of Insurance Rate permitted under the Policy and that
the maximum allowable expense deductions and percent of premium loads are
applied. The maximum allowable Cost of Insurance Rates under the Policy are
based upon the 1980 Commissioner's Standard Ordinary Smoker and Non-Smoker, Male
and Female Mortality Tables (Smoker is referenced for tobacco use rates;
Non-Smoker is referenced for non-tobacco use rates). Since these are recent
tables and are split to reflect tobacco use and sex, the current Cost of
Insurance Rates used by ANLIC are at this time equal to the maximum Cost of
Insurance Rates for many ages. ANLIC anticipates reflecting future improvements
in actual mortality experience through adjustments in the current cost of
insurance rates actually applied. ANLIC also anticipates reflecting any future
improvements in expenses incurred by applying lower percent of premiums of loads
and other expense deductions. The tables on pages A-2 through A-4 are based on a
level Death Benefit Option (Option A) and the tables on pages A-5 through A-7
are based on an increasing Death Benefit Option (Option B).
The amounts shown for the Accumulation Values, Surrender values and Death
Benefits reflect the fact that the net investment return of the Subaccounts is
lower than the gross, after-tax return of the assets held in the Funds as a
result of expenses paid by the Fund and charges levied against the Subaccounts.
The values shown take into account an average of the expenses paid by each
portfolio available for investment at an equivalent annual rate of .95% (which
is in excess of the current equivalent annual rate of .92% of the aggregate
average daily net assets of the Funds). Certain of the Funds entered into
arrangements for reimbursements and waivers for portions of expenses. Without
these arrangements, expenses would have been higher, as follows: 0.88% for CVS
Balanced, 1.06% for CVS Mid Cap, 0.66% for CVS Money Market, 1.80% for CVS
International Equity, 1.33% for CVS Small Cap, and 1.20% for Van Eck Worldwide
Hard Assets Fund. These agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return. The illustrated gross
annual investment rates of return of 12%, 6%, and 0% were computed after
deducting Fund expenses and correspond to approximate net annual rates of
10.15%, 4.15%, and -1.85%, respectively, for years 1-15 and 10.60%, 4.60%, and
- -1.40%, respectively, for the years thereafter.
The hypothetical values shown in the tables do not reflect any charges for
federal income tax burden attributable to Separate Account I, 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 12 percent, 6 percent, or 0 percent by an amount sufficient to cover the
tax charges in order to produce the death benefits and values illustrated. (See
the section on Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all net premiums are allocated to Separate Account I, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner has not requested an increase or decrease in the initial Specified Amount,
that no partial withdrawals have been made, and that no more than fifteen
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insureds
were both male or both female, tobacco users, in substandard risk
classifications, or were other ages, or if a higher or lower premium was
illustrated.
Upon request, ANLIC will provide comparable illustrations based upon the
proposed Insureds' ages, sexes and underwriting classifications, the Specified
Amount, the Death Benefit option, and planned periodic premium schedule
requested, and any available riders requested. In addition, upon client request,
illustrations may be furnished reflecting allocation of premiums to specified
Subaccounts. Such illustrations will reflect the expenses of the portfolio in
which the Subaccount invests.
REGENT 2000
A-1
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- --------------------------------------------------------------- -----------------------------------
12% Hypothetical Gross Annual Rate of Return (ROR)
-------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 10.15% 20,274 614 1,000,000 513 1,000,000
2 67 / 67 19,660 10.15% 42,252 22,592 1,000,000 21,864 1,000,000
3 68 / 68 19,660 10.15% 66,057 46,397 1,000,000 44,507 1,000,000
4 69 / 69 19,660 10.15% 91,842 72,182 1,000,000 68,440 1,000,000
5 70 / 70 19,660 10.15% 119,792 100,132 1,000,000 93,644 1,000,000
----------
Total 98,300
6 71 / 71 19,660 10.15% 150,780 133,090 1,000,000 122,040 1,000,000
7 72 / 72 19,660 10.15% 184,447 168,727 1,000,000 151,563 1,000,000
8 73 / 73 19,660 10.15% 221,047 207,287 1,000,000 182,042 1,000,000
9 74 / 74 19,660 10.15% 260,927 249,137 1,000,000 213,289 1,000,000
10 75 / 75 19,660 10.15% 304,421 294,591 1,000,000 245,064 1,000,000
----------
Total 196,600
11 76 / 76 19,660 10.15% 351,992 344,132 1,000,000 277,180 1,000,000
12 77 / 77 19,660 10.15% 404,065 398,175 1,000,000 309,464 1,000,000
13 78 / 78 19,660 10.15% 461,232 457,302 1,000,000 341,789 1,000,000
14 79 / 79 19,660 10.15% 524,079 522,119 1,000,000 374,082 1,000,000
15 80 / 80 19,660 10.15% 593,333 593,333 1,000,000 406,203 1,000,000
----------
Total 294,900
16 81 / 81 19,660 10.60% 672,239 672,239 1,000,000 437,910 1,000,000
17 82 / 82 19,660 10.60% 759,506 759,506 1,000,000 469,512 1,000,000
18 83 / 83 19,660 10.60% 856,759 856,759 1,000,000 500,861 1,000,000
19 84 / 84 19,660 10.60% 966,246 966,246 1,014,558 531,908 1,000,000
20 85 / 85 19,660 10.60% 1,087,990 1,087,990 1,142,390 562,783 1,000,000
----------
Total 393,200
25 90 / 90 19,660 10.60% 1,903,794 1,903,794 1,998,983 739,686 1,000,000
30 95 / 95 19,660 10.60% 3,233,630 3,233,630 3,265,966 1,190,578 1,202,484
35 100 / 100 19,660 10.60% 5,446,983 5,446,983 5,501,453 2,052,835 2,073,363
----------
Total 688,100
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
- --------------------------------------------------------------------------------
REGENT 2000
A-2
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
Insured Name Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- ---------------------------------------------------------------------------------------------------
6% Hypothetical Gross Annual Rate of Return (ROR)
--------------------------------------------------
Current Charges Guaranteed Charges
--------------- -------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 4.15% 19,148 0 1,000,000 0 1,000,000
2 67 / 67 19,660 4.15% 38,746 19,086 1,000,000 18,389 1,000,000
3 68 / 68 19,660 4.15% 58,763 39,103 1,000,000 37,321 1,000,000
4 69 / 69 19,660 4.15% 79,177 59,517 1,000,000 56,042 1,000,000
5 70 / 70 19,660 4.15% 99,984 80,324 1,000,000 74,378 1,000,000
----------
Total 98,300
6 71 / 71 19,660 4.15% 121,817 104,127 1,000,000 94,080 1,000,000
7 72 / 72 19,660 4.15% 144,057 128,337 1,000,000 112,886 1,000,000
8 73 / 73 19,660 4.15% 166,674 152,914 1,000,000 130,404 1,000,000
9 74 / 74 19,660 4.15% 189,700 177,910 1,000,000 146,180 1,000,000
10 75 / 75 19,660 4.15% 213,102 203,272 1,000,000 159,657 1,000,000
----------
Total 196,600
11 76 / 76 19,660 4.15% 236,938 229,078 1,000,000 170,258 1,000,000
12 77 / 77 19,660 4.15% 261,146 255,256 1,000,000 177,322 1,000,000
13 78 / 78 19,660 4.15% 285,777 281,847 1,000,000 180,109 1,000,000
14 79 / 79 19,660 4.15% 310,766 308,806 1,000,000 177,756 1,000,000
15 80 / 80 19,660 4.15% 336,080 336,080 1,000,000 169,084 1,000,000
----------
Total 294,900
16 81 / 81 19,660 4.60% 362,619 362,619 1,000,000 151,320 1,000,000
17 82 / 82 19,660 4.60% 388,161 388,161 1,000,000 123,493 1,000,000
18 83 / 83 19,660 4.60% 412,267 412,267 1,000,000 82,623 1,000,000
19 84 / 84 19,660 4.60% 434,373 434,373 1,000,000 24,764 1,000,000
20 85 / 85 19,660 4.60% 453,933 453,933 1,000,000 0 1,000,000
----------
Total 393,200
25 90 / 90 19,660 4.60% 505,184 505,184 1,000,000 0 0
30 95 / 95 19,660 4.60% 397,587 397,587 1,000,000 0 0
35 100 / 100 19,660 4.60% 0 0 0 0 0
----------
Total 688,100
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
REGENT 2000
A-3
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
InsuredName Client / Client Spouse Annual Premium 19,660
Sex Male / Female Specified Amount 1,000,000
Age 65 / 65 Death Benefit Option Level
Insured Class Preferred / Preferred Riders None
- ------------------------------------------------------------- -------------------------------------
0% Hypothetical Gross Annual Rate of Return (ROR)
-------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 19,660 -1.85% 18,022 0 1,000,000 0 1,000,000
2 67 / 67 19,660 -1.85% 35,377 15,717 1,000,000 15,050 1,000,000
3 68 / 68 19,660 -1.85% 52,024 32,364 1,000,000 30,688 1,000,000
4 69 / 69 19,660 -1.85% 67,937 48,277 1,000,000 45,055 1,000,000
5 70 / 70 19,660 -1.85% 83,100 63,440 1,000,000 58,001 1,000,000
----------
Total 98,300
6 71 / 71 19,660 -1.85% 98,117 80,427 1,000,000 71,300 1,000,000
7 72 / 72 19,660 -1.85% 112,336 96,616 1,000,000 82,719 1,000,000
8 73 / 73 19,660 -1.85% 125,712 111,952 1,000,000 91,897 1,000,000
9 74 / 74 19,660 -1.85% 138,254 126,464 1,000,000 98,417 1,000,000
10 75 / 75 19,660 -1.85% 149,906 140,076 1,000,000 101,757 1,000,000
----------
Total 196,600
11 76 / 76 19,660 -1.85% 160,693 152,833 1,000,000 101,385 1,000,000
12 77 / 77 19,660 -1.85% 170,514 164,624 1,000,000 96,686 1,000,000
13 78 / 78 19,660 -1.85% 179,379 175,449 1,000,000 86,976 1,000,000
14 79 / 79 19,660 -1.85% 187,158 185,198 1,000,000 71,457 1,000,000
15 80 / 80 19,660 -1.85% 193,746 193,746 1,000,000 49,025 1,000,000
----------
Total 294,900
16 81 / 81 19,660 -1.40% 199,177 199,177 1,000,000 16,422 1,000,000
17 82 / 82 19,660 -1.40% 201,370 201,370 1,000,000 0 1,000,000
18 83 / 83 19,660 -1.40% 199,568 199,568 1,000,000 0 1,000,000
19 84 / 84 19,660 -1.40% 192,741 192,741 1,000,000 0 1,000,000
20 85 / 85 19,660 -1.40% 179,756 179,756 1,000,000 0 1,000,000
----------
Total 393,200
25 90 / 90 19,660 -1.40% 0 0 0 0 0
30 95 / 95 19,660 -1.40% 0 0 0 0 0
35 100 / 100 19,660 -1.40% 0 0 0 0 0
----------
Total 688,100
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
REGENT 2000
A-4
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
InsuredNameClient / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- ------- -------------------------------------------------------------------------------------------
12% Hypothetical Gross Annual Rate of Return (ROR)
--------------------------------------------------
Current Charges Guaranteed Charges
--------------- ------------------
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 10.15% 606,298 508,298 5,606,298 508,096 5,606,096
2 67 / 67 566,796 10.15% 1,272,273 1,174,273 6,272,273 1,167,327 6,265,327
3 68 / 68 566,796 10.15% 2,003,629 1,905,629 7,003,629 1,888,710 6,986,710
4 69 / 69 566,796 10.15% 2,806,694 2,708,694 7,806,694 2,677,572 7,775,572
5 70 / 70 566,796 10.15% 3,688,503 3,590,503 8,688,503 3,539,601 8,637,601
---------
Total 2,833,980
6 71 / 71 566,796 10.15% 4,659,818 4,571,618 9,659,818 4,490,576 9,578,776
7 72 / 72 566,796 10.15% 5,726,386 5,647,986 10,726,386 5,526,852 10,605,252
8 73 / 73 566,796 10.15% 6,897,418 6,828,818 11,897,418 6,654,666 11,723,266
9 74 / 74 566,796 10.15% 8,183,398 8,124,598 13,183,398 7,880,391 12,939,191
10 75 / 75 566,796 10.15% 9,595,443 9,546,443 14,595,443 9,210,737 14,259,737
---------
Total 5,667,960
11 76 / 76 566,796 10.15% 11,146,334 11,107,134 16,146,334 10,652,951 15,692,151
12 77 / 77 566,796 10.15% 12,849,329 12,819,929 17,849,329 12,215,024 17,244,424
13 78 / 78 566,796 10.15% 14,719,751 14,700,151 19,719,751 13,905,790 18,925,390
14 79 / 79 566,796 10.15% 16,773,579 16,763,779 21,773,579 15,734,805 20,744,605
15 80 / 80 566,796 10.15% 19,028,568 19,028,568 24,028,568 17,711,963 22,711,963
---------
Total 8,501,940
16 81 / 81 566,796 10.60% 21,586,986 21,586,986 26,586,986 19,918,959 24,918,959
17 82 / 82 566,796 10.60% 24,395,296 24,395,296 29,395,296 22,312,084 27,312,084
18 83 / 83 566,796 10.60% 27,475,033 27,475,033 32,475,033 24,903,96529,903,965
19 84 / 84 566,796 10.60% 30,848,714 30,848,714 35,848,714 27,708,523 32,708,523
20 85 / 85 566,796 10.60% 34,541,422 34,541,422 39,541,422 30,741,810 35,741,810
---------
11,335,920
Total
25 90 / 90 566,796 10.60% 59,020,801 59,020,801 64,020,801 50,103,315 55,103,315
30 95 / 95 566,796 10.60% 97,804,706 97,804,706 102,804,706 79,197,778 84,197,778
35 100 / 100 566,796 10.60% 160,175,829 160,175,829 165,175,829 117,674,237 122,674,237
---------
Total 19,837,860
---------
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
REGENT 2000
A-5
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
InsuredNameClient / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- ---------------------------------------------------------------------------------------------------
6% HYPOTHETICAL GROSS ANNUAL RATE OF RETURN (ROR)
CURRENT CHARGES GUARANTEED CHARGES
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 4.15% 573,176 475,176 5,573,176 474,979 5,572,979
2 67 / 67 566,796 4.15% 1,168,332 1,070,332 6,168,332 1,063,721 6,161,721
3 68 / 68 566,796 4.15% 1,786,038 1,688,038 6,786,0381,672,278 6,770,278
4 69 / 69 566,796 4.15% 2,426,932 2,328,932 7,426,932 2,300,520 7,398,520
5 70 / 70 566,796 4.15% 3,091,737 2,993,737 8,091,737 2,948,139 8,046,139
---------
Total 2,833,980
6 71 / 71 566,796 4.15% 3,784,130 3,695,930 8,784,130 3,624,327 8,712,527
7 72 / 72 566,796 4.15% 4,502,019 4,423,619 9,502,019 4,318,242 9,396,642
8 73 / 73 566,796 4.15% 5,246,017 5,177,417 10,246,017 5,028,260 10,096,860
9 74 / 74 566,796 4.15% 6,017,086 5,958,286 11,017,086 5,752,211 10,811,011
10 75 / 75 566,796 4.15% 6,815,815 6,766,815 11,815,815 6,487,526 11,536,526
---------
Total 5,667,960
11 76 / 76 566,796 4.15% 7,643,331 7,604,131 12,643,331 7,231,382 12,270,582
12 77 / 77 566,796 4.15% 8,500,011 8,470,611 13,500,011 7,980,841 13,010,241
13 78 / 78 566,796 4.15% 9,386,946 9,367,346 14,386,946 8,732,863 13,752,463
14 79 / 79 566,796 4.15% 10,304,394 10,294,594 15,304,394 9,484,099 14,493,899
15 80 / 80 566,796 4.15% 11,252,771 11,252,771 16,252,771 10,230,435 15,230,435
---------
Total 8,501,940
16 81 / 81 566,796 4.60% 12,280,353 12,280,353 17,280,353 11,004,698 16,004,698
17 82 / 82 566,796 4.60% 13,334,358 13,334,358 18,334,358 11,767,707 16,767,707
18 83 / 83 566,796 4.60% 14,411,107 14,411,107 19,411,107 12,511,882 17,511,882
19 84 / 84 566,796 4.60% 15,505,452 15,505,452 20,505,452 13,229,205 18,229,205
20 85 / 85 566,796 4.60% 16,612,145 16,612,145 21,612,145 13,911,876 18,911,876
---------
Total 11,335,920
25 90 / 90 566,796 4.60% 22,262,254 22,262,254 27,262,254 16,568,989 21,568,989
30 95 / 95 566,796 4.60% 27,772,571 27,772,571 32,772,571 17,215,411 22,215,411
35 100 / 100 566,796 4.60% 32,930,077 32,930,077 37,930,077 8,739,217 13,739,217
---------
Total 19,837,860
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
REGENT 2000
A-6
<PAGE>
<TABLE>
<CAPTION>
Acacia National Life Insurance Company
Regent 2000 Survivorship Flexible Premium Variable Life Insurance Illustration (Form 8065)
- ---------------------------------------------------------------------------------------------------
InsuredNameClient / Client Spouse Annual Premium 566,796
Sex Male / Female Specified Amount 5,000,000
Age 65 / 65 Death Benefit Option Increasing
Insured Class Preferred / Preferred Riders None
- ---------------------------------------------------------------------------------------------------
0% HYPOTHETICAL GROSS ANNUAL RATE OF RETURN (ROR)
CURRENT CHARGES GUARANTEED CHARGES
End of End of Annual Net Total Total Total Total Total
Policy Year Premium Annual Accumulation Surrender Death Surrender Death
Year Age Outlay ROR Value Value Benefit Value Benefit
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 66 / 66 566,796 -1.85% 540,055 442,055 5,540,055 441,865 5,539,865
2 67 / 67 566,796 -1.85% 1,068,370 970,370 6,068,370 964,095 6,062,095
3 68 / 68 566,796 -1.85% 1,584,831 1,486,831 6,584,831 1,472,193 6,570,193
4 69 / 69 566,796 -1.85% 2,089,366 1,991,366 7,089,366 1,965,495 7,063,495
5 70 / 70 566,796 -1.85% 2,581,965 2,483,965 7,581,965 2,443,185 7,541,185
---------
Total 2,833,980
6 71 / 71 566,796 -1.85% 3,065,449 2,977,249 8,065,449 2,913,983 8,002,183
7 72 / 72 566,796 -1.85% 3,536,849 3,458,449 8,536,849 3,366,630 8,445,030
8 73 / 73 566,796 -1.85% 3,995,956 3,927,356 8,995,956 3,799,175 8,867,775
9 74 / 74 566,796 -1.85% 4,442,879 4,384,079 9,442,879 4,209,230 9,268,030
10 75 / 75 566,796 -1.85% 4,877,323 4,828,323 9,877,323 4,594,157 9,643,157
---------
Total 5,667,960
11 76 / 76 566,796 -1.85% 5,299,497 5,260,297 10,299,497 4,951,217 9,990,417
12 77 / 77 566,796 -1.85% 5,708,832 5,679,432 10,708,832 5,277,722 10,307,122
13 78 / 78 566,796 -1.85% 6,105,446 6,085,846 11,105,446 5,571,048 10,590,648
14 79 / 79 566,796 -1.85% 6,488,603 6,478,803 11,488,603 5,828,440 10,838,240
15 80 / 80 566,796 -1.85% 6,857,721 6,857,721 11,857,721 6,046,578 11,046,578
---------
Total 8,501,940
16 81 / 81 566,796 -1.40% 7,240,438 7,240,438 12,240,438 6,240,502 11,240,502
17 82 / 82 566,796 -1.40% 7,597,520 7,597,520 12,597,520 6,386,096 11,386,096
18 83 / 83 566,796 -1.40% 7,924,552 7,924,552 12,924,552 6,477,139 11,477,139
19 84 / 84 566,796 -1.40% 8,215,905 8,215,905 13,215,905 6,507,395 11,507,395
20 85 / 85 566,796 -1.40% 8,466,154 8,466,154 13,466,154 6,471,276 11,471,276
---------
Total 11,335,920
---------
25 90 / 90 566,796 -1.40% 9,035,214 9,035,214 14,035,214 5,162,127 10,162,127
30 95 / 95 566,796 -1.40% 8,197,627 8,197,627 13,197,627 1,591,083 6,591,083
35 100 / 100 566,796 -1.40% 5,885,467 5,885,467 10,885,467 0 0
---------
Total 19,837,860
---------
</TABLE>
This illustration is not authorized for use unless preceded or accompanied by a
prospectus, and presented by a registered representative. This illustration is
intended to show policy values and benefits based on the hypothetical
performance of the underlying investment accounts and may not be used to predict
investment results.
- --------------------------------------------------------------------------------
REGENT 2000
A-7
<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>
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. 1 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>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 45 pages
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a) Russell J. Wiltgen
(b) Robert-John H. Sands
(c)
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/1
(A)(2) Not applicable
(A)(3)(a) Underwriting Agreement between The Advisors Group, Inc. and Acacia
National Life Insurance Company/2
(A)(3)(b) Proposed Form of Selling Agreement/5
(A)(3)(c) Form of Commission Schedule/5
(A)(4) Not Applicable
(A)(5)(a) Form of Policy/4
(A)(5)(b) Form of Policy Riders/4
(A)(6) Certificate of Organization of Acacia National Life
Insurance Company/3
(A)(6) Bylaws of Acacia National Life Insurance Company/3
(A)(7) Not applicable
(A)(8)(a) Participation Agreement - The Alger American Fund/1
(A)(8)(b) Participation Agreement - Calvert Variable Series, Inc./1
(A)(8)(d) Participation Agreement - Neuberger Berman Advisers Management Trust/1
(A)(8)(e) Participation Agreement - Oppenheimer Variable Account Funds/3
(A)(8)(g) Participation Agreement - Van Eck Worldwide Hard Assets Fund/1
(A)(8)(h) Participation Agreement - BT Insurance Funds Trust
(A)(8)(i) Participation Agreement - Variable Insurance Products Fund - To
be provided.
(A)(8)(j) Participation Agreement - Variable Insurance Products Fund II - To
be provided.
(A)(8)(k) Participation Agreement - Franklin Templeton Variable Insurance
Products Trust
(A)(9) Not Applicable
(A)(10) Form of Application for Policy/5
2. (a)(b) Opinion and Consent of Robert-John H. Sands Senior Vice President and
General Counsel.
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.
7. (a)(b) Opinion and Consent of Russell J. Wiltgen.
8. Consent of Independent Auditors - To be provided.
9. Not applicable.
/1 Incorporated by reference to the Pre-Effective Amendment No. 3 to the
Registration Statement on Form S-6 for Acacia National Life Insurance Company
Separate Account (File No. 33-90208), filed on October 11, 1995.
/2 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. 3 Incorporated by Reference to the
Post-Effective Amendment No.
/3 to the Registration Statement on Form S-6 for Acacia National Life Insurance
Company Separate Account ( File No. 33 -90208), filed on May 1, 1997.
/4 Incorporated by reference to the initial Registration Statement for Acacia
National Life Insurance Company Separate Account I on Form S-6 ( File No 333
- -81057), filed June 18, 1999.
/5 Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Acacia National Life Insurance Company Separate
Account I on Form S-6 ( File No 333 -81057), filed July 30, 1999.
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
(A)(8)(h) Participation Agreement - BT Insurance Funds Trust
(A)(8)(k) Participation Agreement - Franklin Templeton Variable
Insurance Products Trust
2. (a)(b) Opinion and Consent of Robert-John H. Sands
7. (a)(b) Opinion and Consent of Russell J. Wiltgen
EXHIBIT (A)(8)(H)
Participation Agreement - BT Insurance Funds Trust
<PAGE>
PARTICIPATION AGREEMENT
AMONG BT INSURANCE FUNDS TRUST AND ACACIA NATIONAL LIFE
INSURANCE COMPANY
THIS AGREEMENT made as of the 1st day of May, 2000 by and among BT
Insurance Funds Trust ("TRUST"), a Massachusetts business trust, Bankers Trust
Company ("ADVISER"), a New York banking corporation, and ACACIA NATIONAL LIFE
INSURANCE COMPANY ("ACACIA NATIONAL"), a life insurance company organized under
the laws of the Commonwealth of Virginia.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, TRUST is comprised of several series funds (each a "Portfolio"),
with those Portfolios currently available being listed on Appendix A hereto; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, TRUST may also offer its shares to certain qualified pension and
retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC, granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the TRUST to be sold to and held by Variable Contract Separate
Accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans ("Exemptive Order"); and
WHEREAS, ACACIA NATIONAL has established or will establish one or more
Separate Accounts to offer Variable Contracts and is desirous of having TRUST as
one of the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act of
1940, as amended (the "Advisers Act") and as such is excluded from the
Page 1 of 23
<PAGE>
definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
WHEREAS, ADVISER serves as the TRUST's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, ACACIA NATIONAL intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
ACACIA NATIONAL at such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, ACACIA NATIONAL,
TRUST, and ADVISER agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of ACACIA
NATIONAL shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in TRUST's Registration Statement.
1.2 TRUST agrees to sell to ACACIA NATIONAL those shares of the selected
Portfolios of TRUST which ACACIA NATIONAL orders, executing such orders on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
ACACIA NATIONAL shall be the designee of TRUST for receipt of such orders from
the designated Separate Account and receipt by such designee shall constitute
receipt by TRUST; provided that ACACIA NATIONAL receives the order by 4:00 p.m.
New York time and TRUST receives notice from ACACIA NATIONAL by telephone or
facsimile (or by such other means as TRUST and ACACIA NATIONAL may agree in
writing) of such order by 8:00 a.m. New York time on the next Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which TRUST calculates its net asset value pursuant to the
rules of the SEC.
1.3 TRUST agrees to redeem on ACACIA NATIONAL's request, any full or
fractional shares of TRUST held by ACACIA NATIONAL, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption, in accordance with the provisions of
this Agreement and TRUST's Registration Statement. (In the event of a conflict
between the provisions of this Agreement and the Trust's Registration Statement,
the provisions of the Registration Statement shall govern.) For purposes of this
Section 1.3, ACACIA NATIONAL shall be the designee of TRUST for receipt of
requests for redemption from the designated Separate Account and receipt by such
designee shall
Page 2 of 23
<PAGE>
constitute receipt by TRUST; provided that ACACIA NATIONAL receives the request
for redemption by 4:00 p.m. New York time and TRUST receives notice from ACACIA
NATIONAL by telephone or facsimile (or by such other means as TRUST and ACACIA
NATIONAL may agree in writing) of such request for redemption by 9:00 a.m. New
York time on the next Business Day.
1.4 TRUST shall furnish, as soon as it is announced by the applicable Fund,
and no later than each ex-dividend date, notice to ACACIA NATIONAL of any income
dividends or capital gain distributions payable on the shares of any Portfolio
of TRUST. ACACIA NATIONAL hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Portfolio's shares in additional
shares of the Portfolio. TRUST shall notify ACACIA NATIONAL or its designee of
the number of shares so issued as payment of such dividends and distributions,
and, as applicable, ex-date, record date, payable date, distribution rate per
share, record date share balances, cash and invested payment amounts, and all
other information reasonably requested by ACACIA NATIONAL.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to ACACIA NATIONAL on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
In the event that adjustments are required to correct any error in the
computation of the net asset value of Portfolio shares, TRUST shall promptly
notify ACACIA NATIONAL after discovering the need for any adjustments which
result in a reimbursement of $150 or more to the Account for a Portfolio.
Notification may be made orally or via direct or indirect systems access. The
letter shall be written on TRUST letterhead, or the letterhead of TRUST'S
administrator, and must state for each day for which an error occurred the
incorrect price, the correct price, and to the extent communicated to the
Portfolio's shareholder, the reason for the price change. TRUST agrees that
ACACIA NATIONAL may send this in writing, or a derivation thereof (so long as
the deviation is approved in advance by TRUST, which approval shall not
unreasonable be withheld) to Contract owners who are affected by the price
change.
1.6 If the Account received amounts in excess of the amounts to which it
would otherwise have been entitled prior to an adjustment for an error, ACACIA
NATIONAL, upon request by TRUST, will make a good faith attempt to collect such
excess amounts from the accounts of the Contract owners. In no event, however,
shall ACACIA NATIONAL be liable to TRUST for any such amounts.
Page 3 of 23
<PAGE>
1.7 If an adjustment is to be made in accordance with subsection 1.5 above
to correct an error which has caused the Account to receive an amount less that
that to which it is entitled, TRUST shall make all necessary adjustments (within
the parameters specified in section 1.9) to the shares owned in the Account and,
to the extent of any underpayment, distribute to ACACIA NATIONAL the amount of
such underpayment for credit to the accounts of the Contract owners.
1.8 At the end of each Business Day, ACACIA NATIONAL shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, ACACIA NATIONAL shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by ACACIA NATIONAL by 8:00 a.m. New York Time on the
Business Day next following ACACIA NATIONAL's receipt of such requests and
premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.9 If ACACIA NATIONAL's order requests the purchase of TRUST shares,
ACACIA NATIONAL shall pay for such purchase by wiring federal funds to TRUST or
its designated custodial account on the day the order is transmitted by ACACIA
NATIONAL. If ACACIA NATIONAL's order requests a net redemption resulting in a
payment of redemption proceeds to ACACIA NATIONAL, TRUST shall use its best
efforts to wire the redemption proceeds to ACACIA NATIONAL by the next Business
Day, unless doing so would require TRUST to dispose of Portfolio securities or
otherwise incur additional costs. In any event, proceeds shall be wired to
ACACIA NATIONAL within the time period permitted by the '40 Act or the rules,
orders or regulations thereunder, and TRUST shall notify the person designated
in writing by ACACIA NATIONAL as the recipient for such notice of such delay by
3:00 p.m. New York Time on the same Business Day that ACACIA NATIONAL transmits
the redemption order to TRUST. If ACACIA NATIONAL's order requests the
application of redemption proceeds from the redemption of shares to the purchase
of shares of another Fund advised by ADVISER, TRUST shall so apply such proceeds
on the same Business Day that ACACIA NATIONAL transmits such order to TRUST.
1.10 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation
Page 4 of 23
<PAGE>
1.817-5. Shares of the TRUST's Portfolios will not be sold directly to the
general public.
1.11 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
TRUST if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the TRUST
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1.12 Issuance and transfer of Portfolio shares will be by book entry only.
Stock certificates will not be issued to ACACIA NATIONAL or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
1.13 TRUST agrees to provide Acacia National a statement of TRUST's assets
as soon as practicable and in any event within 30 days after the end of each
calendar quarter.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 ACACIA NATIONAL represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the Commonwealth of
Virginia and that it has legally and validly established each Separate Account
as a segregated asset account under such laws, and that The Advisors Group, the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act").
2.2 ACACIA NATIONAL represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 ACACIA NATIONAL represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts, and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal
Page 5 of 23
<PAGE>
and state laws (including all applicable blue sky laws) and further that the
sale of the Variable Contracts shall comply in all material respects with
applicable state insurance law suitability requirements.
2.4 ACACIA NATIONAL represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal laws, and TRUST shall be registered under
the '40 Act prior to and at the time of any issuance or sale of such shares.
TRUST, subject to Section 1.9 above, shall amend its registration statement
under the '33 Act and the '40 Act from time to time as required in order to
effect the continuous offering of its shares. TRUST shall register and qualify
its shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Portfolio will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify ACACIA NATIONAL immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply and will
immediately take all reasonable steps to adequately diversify the Portfolio to
achieve compliance.
2.7 TRUST represents and warrants that each Portfolio invested in by the
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify ACACIA NATIONAL immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
2.8 ADVISER represents and warrants that it shall perform its obligations
hereunder in compliance in all material respects with any applicable state and
federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
Page 6 of 23
<PAGE>
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide ACACIA NATIONAL, free of charge,
with as many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports and proxy statements for
the shares of the Portfolios as ACACIA NATIONAL may reasonably request for
distribution to existing Variable Contract owners whose Variable Contracts are
funded by such shares. TRUST or its designee shall provide ACACIA NATIONAL, at
ACACIA NATIONAL's expense, with as many copies of the current prospectus (or
prospectuses) for the shares as ACACIA NATIONAL may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
ACACIA NATIONAL, TRUST or its designee shall provide such documentation
(including a "camera ready" copy of the current prospectus (or prospectuses) as
set in type or, at the request of ACACIA NATIONAL, as a diskette in the form
sent to the financial printer) and other assistance as is reasonably necessary
in order for the parties hereto once a year (or more frequently if the
prospectus (or prospectuses) for the shares is supplemented or amended) to have
the prospectus for the Variable Contracts and the prospectus (or prospectuses)
for the TRUST shares printed together in one document. The expenses of such
printing will be apportioned between ACACIA NATIONAL and TRUST in proportion to
the number of pages of the Variable Contract and TRUST prospectus, taking
account of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; TRUST shall bear the cost of printing the
TRUST prospectus portion of such document for distribution only to owners of
existing Variable Contracts funded by the TRUST shares and ACACIA NATIONAL shall
bear the expense of printing the portion of such documents relating to the
Separate Account; provided, however, ACACIA NATIONAL shall bear all printing
expenses of such combined documents where used for distribution to prospective
purchasers or to owners of existing Variable Contracts not funded by the shares.
In the event that ACACIA NATIONAL requests that TRUST or its designee provide
TRUST's prospectus in a "camera ready" or diskette format, TRUST shall be
responsible for providing the prospectus (or prospectuses) in the format in
which it is accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus (or prospectuses) in such format (e.g. typesetting
expenses), and ACACIA NATIONAL shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses.
Page 7 of 23
<PAGE>
3.3 TRUST will provide ACACIA NATIONAL with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. ACACIA
NATIONAL will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 ACACIA NATIONAL will furnish, or will cause to be furnished, to TRUST
and ADVISER, each piece of sales literature or other promotional material in
which TRUST or ADVISER is named, at least fifteen (15) Business Days prior to
its intended use. No such material will be used if TRUST or ADVISER objects to
its use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to ACACIA
NATIONAL, each piece of sales literature or other promotional material in which
ACACIA NATIONAL or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if ACACIA
NATIONAL objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of ACACIA NATIONAL or concerning ACACIA
NATIONAL, the Separate Accounts, or the Variable Contracts issued by ACACIA
NATIONAL, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by ACACIA NATIONAL or its designee, except
with the written permission of ACACIA NATIONAL.
4.4 ACACIA NATIONAL and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time
Page 8 of 23
<PAGE>
to time, or in sales literature or other promotional material approved by TRUST
or its designee, except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. ("NASD")
rules, the '40 Act, the '33 Act or rules thereunder.
Page 9 of 23
<PAGE>
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that TRUST has received an order from the SEC
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit TRUST shares to be sold to and held by
Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires TRUST and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. The
TRUST will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings as are
imposed on ACACIA NATIONAL hereby.
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts and with participants of Qualified Plans investing in TRUST.
An irreconcilable material conflict may arise for a variety of reasons, which
may include: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of TRUST are being managed; (e) a difference in voting instructions
given by Variable Contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and (g)
if applicable, a decision by a Qualified Plan to disregard the voting
instructions of plan participants.
5.3 ACACIA NATIONAL will report any potential or existing conflicts of
which it becomes aware to the Board. ACACIA NATIONAL will be responsible for
assisting the Board in carrying out its duties in this regard by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. The responsibility includes, but is not limited to, an obligation
by the ACACIA NATIONAL to inform the Board whenever it has determined to
disregard Variable Contract owner voting instructions. These responsibilities of
ACACIA NATIONAL will be carried out with a view only to the interests of the
Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting ACACIA
NATIONAL, ACACIA NATIONAL, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested Trustees),
will take any steps necessary to remedy or eliminate the
Page 10 of 23
<PAGE>
irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from TRUST or any Portfolio
thereof and reinvesting those assets in a different investment medium, which may
include another Portfolio of TRUST, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and as appropriate, segregating
the assets of any appropriate group (i.e., variable annuity or variable life
insurance Contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Variable
Contract owners the option of making such a change; and (c) establishing a new
registered management investment company (or series thereof) or managed separate
account. If a material irreconcilable conflict arises because of ACACIA
NATIONAL's decision to disregard Variable Contract owner voting instructions,
and that decision represents a minority position or would preclude a majority
vote, ACACIA NATIONAL may be required, at the election of TRUST, to withdraw the
Separate Account's investment in TRUST, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial action
shall be carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
TRUST or ADVISER (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, ACACIA
NATIONAL shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely affected
by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to
ACACIA NATIONAL.
5.6 No less than annually, ACACIA NATIONAL shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
Page 11 of 23
<PAGE>
Article VI. VOTING
6.1 ACACIA NATIONAL will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, ACACIA NATIONAL, where applicable, will vote shares of the
Portfolio held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. ACACIA NATIONAL
will be responsible for assuring that each of its Separate Accounts that
participates in TRUST calculates voting privileges in a manner consistent with
other Participating Insurance Companies. ACACIA NATIONAL will vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as its votes those shares for which it has received
voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY ACACIA NATIONAL. ACACIA NATIONAL agrees to indemnify
and hold harmless TRUST, ADVISER and each of their Trustees, directors,
principals, officers, employees and agents and each person, if any, who controls
TRUST or ADVISER within the meaning of Section 15 of the '33 Act (collectively,
the "Indemnified Parties") against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
ACACIA NATIONAL, which consent shall not be unreasonably withheld) or litigation
or threatened litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Variable Contracts or contained in the
Variable Contracts (or any amendment or supplement to any of the
Page 12 of 23
<PAGE>
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in writing to
ACACIA NATIONAL by or on behalf of TRUST for use in the registration
statement or prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or result from (i) statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of TRUST not supplied by ACACIA
NATIONAL, or persons under its control) or (ii) wrongful conduct of ACACIA
NATIONAL or persons under its control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of TRUST or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to TRUST by or on behalf of ACACIA NATIONAL; or
(d)arise as a result of any failure by ACACIA NATIONAL to provide
substantially the services and furnish the materials under the terms of
this Agreement; or
(e)arise out of or result from any material breach of any
representation and/or warranty made by ACACIA NATIONAL in this Agreement or
arise out of or result from any other material breach of this Agreement by
ACACIA NATIONAL.
7.2 ACACIA NATIONAL shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent that such
losses, claims, damages, liabilities or litigation are attributable to such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Page 13 of 23
<PAGE>
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
7.3 ACACIA NATIONAL shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified ACACIA NATIONAL in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify ACACIA NATIONAL of
any such claim shall not relieve ACACIA NATIONAL from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against an Indemnified Party, ACACIA NATIONAL shall be entitled to participate
at its own expense in the defense of such action. ACACIA NATIONAL also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from ACACIA NATIONAL to such party of ACACIA
NATIONAL's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and ACACIA
NATIONAL will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 INDEMNIFICATION BY TRUST. TRUST agrees to indemnify and hold harmless
ACACIA NATIONAL and each of its directors, officers, employees, and agents and
each person, if any, who controls ACACIA NATIONAL within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties") against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of TRUST which consent shall not be unreasonably withheld)
or litigation or threatened litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the Variable Contracts
and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of TRUST (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any
Page 14 of 23
<PAGE>
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to ADVISER or TRUST by or on behalf of ACACIA NATIONAL
for use in the registration statement or prospectus for TRUST or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or result from (i) statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
ADVISER or TRUST or persons under its control) or (ii) gross negligence or
wrongful conduct or willful misfeasance of TRUST or persons under its
control, with respect to the sale or distribution of the Variable Contracts
or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts, or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished in writing to ACACIA NATIONAL for inclusion
therein by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide substantially
the services and furnish the materials under the terms of this Agreement; or
(ii) a failure by a Portfolio(s) invested in by the Separate Account to
comply with the diversification requirements of Section 817(h) of the Code;
or (iii) a failure by a Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under Subchapter M of the Code;
or
(e) arise out of or result from any material breach of any
representation and/or warranty made by TRUST in this Agreement or arise out
of or result from any other material breach of this Agreement by TRUST.
Page 15 of 23
<PAGE>
7.5 TRUST shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party to the extent that such losses, claims,
damages, liabilities or litigation are attributable to such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
7.6 TRUST shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified TRUST in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify TRUST of any such claim shall not relieve TRUST
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, TRUST shall
be entitled to participate at its own expense in the defense thereof. TRUST also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from TRUST to such party of TRUST's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and TRUST will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of ACACIA NATIONAL or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to by the
parties;
Page 16 of 23
<PAGE>
(b) At the option of ACACIA NATIONAL, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as determined
by ACACIA NATIONAL. Prompt notice of election to terminate shall be
furnished by ACACIA NATIONAL, said termination to be effective ten days
after receipt of notice unless TRUST makes available a sufficient number of
shares to reasonably meet the requirements of the Variable Contracts within
said ten-day period;
(c) At the option of ACACIA NATIONAL, upon the institution of formal
proceedings against TRUST by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which
would, in ACACIA NATIONAL's reasonable judgment, materially impair TRUST's
ability to meet and perform TRUST's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by ACACIA NATIONAL with
said termination to be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against ACACIA NATIONAL and/or its broker-dealer affiliates by the SEC, the
NASD, or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair ACACIA NATIONAL's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by TRUST with said termination to be effective upon
receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the
use of such shares as the underlying investment medium of Variable Contracts
issued or to be issued by ACACIA NATIONAL. Termination shall be effective
upon such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the
Code, or if TRUST reasonably believes that the Variable Contracts may fail
to so qualify. Termination shall be effective upon receipt of notice by
ACACIA NATIONAL;
Page 17 of 23
<PAGE>
(g) At the option of ACACIA NATIONAL, upon TRUST's breach of any
material provision of this Agreement, which breach has not been cured to
the satisfaction of ACACIA NATIONAL within ten days after written notice of
such breach is delivered to TRUST;
(h) At the option of TRUST, upon ACACIA NATIONAL's breach of any
material provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such breach is
delivered to ACACIA NATIONAL;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice;
In the event this Agreement is assigned without the prior written consent of
ACACIA NATIONAL, TRUST, and ADVISER, termination shall be effective immediately
upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or ACACIA NATIONAL, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, TRUST and ADVISER, as promptly
as is practicable under the circumstances, shall notify ACACIA NATIONAL whether
TRUST elects to continue to make TRUST shares available after such termination.
If TRUST shares continue to be made available after such termination, the
provisions of this Agreement shall remain in effect and thereafter either TRUST
or ACACIA NATIONAL may terminate the Agreement, as so continued pursuant to this
Section 8.3, upon sixty (60) days' prior written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, ACACIA
NATIONAL shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to ACACIA NATIONAL's assets held in the
Separate Accounts), and ACACIA NATIONAL shall not
Page 18 of 23
<PAGE>
prevent Variable Contract owners from allocating payments to a Portfolio that
was otherwise available under the Variable Contracts until thirty (30) days
after ACACIA NATIONAL shall have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST:
BT Insurance Funds Trust
c/o First Data Investor Services Group, Inc.
101 Federal Street
Boston, MA 02110
Attn: Elizabeth Russell, Legal Department
AND
c/o BT Alex. Brown
One South Street, Mail Stop 1-18-6
Baltimore, MD 21202
Attn: Mutual Fund Services
If to ADVISER:
Bankers Trust Company
130 Liberty Street, Mail Stop 2355
New York, NY 10006
Attn.: Mutual Fund Marketing
If to ACACIA NATIONAL:
Robert-John H. Sands, Jr.
General Counsel
7315 Wisconsin Avenue
Bethesda, MD 20814
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Page 19 of 23
<PAGE>
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC granting exemptive relief
therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the shareholders
of shares of any Portfolio nor the Trustees or officers of TRUST or any
Portfolio shall be personally liable hereunder. No Portfolio shall be liable for
the liabilities of any other Portfolio. All persons dealing with TRUST or a
Portfolio must look solely to the property of TRUST or that Portfolio,
respectively, for enforcement of any claims against TRUST or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with ACACIA NATIONAL so that it is as if each of the
Portfolios had signed a separate Agreement with ACACIA NATIONAL and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
Page 20 of 23
<PAGE>
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by TRUST, ADVISER
and the ACACIA NATIONAL.
10.10 No failure or delay by a party in exercising any right or remedy under
this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
BT INSURANCE FUNDS TRUST
By:/s/Elizabeth Russell
-----------------------
Name: Elizabeth Russell
Title: Secretary
BANKERS TRUST COMPANY
By: /s/Lawrence Lafer
----------------------
Name: Lawrence Lafer
Title: Director
ACACIA NATIONAL LIFE INSURANCE COMPANY
By:/s/Robert W. Clyde
------------------------
Name: Robert W. Clyde
Title: President
Page 21 of 23
<PAGE>
APPENDIX A
to Participation Agreement by and among BT Insurance Funds Trust, Bankers
Trust Company, and Acacia National Life Insurance Company
LIST OF PORTFOLIOS:
- --------------------
BT Insurance Funds Trust - Small Cap Index Fund
BT Insurance Funds Trust - Equity 500 Index Fund
BT Insurance Funds Trust - EAFE Equity Index Fund
Page 22 of 23
<PAGE>
APPENDIX B
to Participation Agreement by and among BT Insurance Funds Trust, Bankers Trust
Company, and Acacia National Life Insurance Company.
LIST OF VARIABLE SEPARATE ACCOUNTS:
- -----------------------------------
Acacia National Life Insurance Company Variable Life Separate Account I
(Separate Account I")
Acacia National Life Insurance Company Variable Annuity Separate Account II
(Separate Account II")
Page 23 of 23
EXHIBIT (A)(8)(K)
Participation Agreement - Franklin Templeton Variable Insurance Products Trust
<PAGE>
DRAFT
Participation Agreement
as of May 1, 2000
Franklin Templeton Variable Insurance Products Trust
Franklin Templeton Distributors, Inc.
Acacia National Life Insurance Company
CONTENTS
Paragraph Subject Matter
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules to this Agreement
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust;
Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. Parties and Purpose
This agreement (the "Agreement") is between Franklin Templeton Variable
Insurance Products Trust, an open-end management investment company organized as
a business trust under Massachusetts law (the "Trust"), Franklin Templeton
Distributors, Inc., a California corporation which is the principal underwriter
for the Trust (the "Underwriter," and together with the Trust, "we" or "us") and
the insurance company
<PAGE>
identified on Schedule A ("you"), on your own behalf and on behalf of each
segregated asset account maintained by you that is listed on Schedule B, as that
schedule may be amended from time to time ("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the
Accounts, to purchase the shares, and classes of shares, of portfolios of the
Trust ("Portfolios") that are identified on Schedule C, solely for the purpose
of funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust.
2. Representations and Warranties
(a) Representations and Warranties by You
You represent and warrant that:
1. You are an insurance company duly organized and in good
standing under the laws of your state of incorporation.
2. All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust, in an amount not less than $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
3. Each Account is a duly organized, validly existing segregated
asset account under applicable insurance law and interests in each Account are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Internal
Revenue Code of 1986, as amended ("Code") and the regulations thereunder. You
will use your best efforts to continue to meet such definitional requirements,
and will notify us immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
4. Each Account either: (i) has been registered or, prior to any
issuance or sale of the Contracts, will be registered as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"); or (ii) has not been so
registered in proper reliance upon an exemption from registration under Section
3(c) of the 1940 Act; if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, you will make every
effort to maintain such exemption and will notify us immediately upon having a
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
Last Revised 02/23/00
<PAGE>
5. The Contracts or interests in the Accounts: (i) are or, prior
to any issuance or sale will be, registered as securities under the Securities
Act of 1933, as amended (the "1933 Act"); or (ii) are not registered because
they are properly exempt from registration under Section 3(a)(2) of the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under Section 4(2) or Regulation D of the 1933 Act, in which case
you will make every effort to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
6. The Contracts: (i) will be sold by broker-dealers, or their
registered representatives, who are registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
7. The Contracts currently are and will be treated as annuity
contracts or life insurance contracts under applicable provisions of the Code
and you will use your best efforts to maintain such treatment; you will notify
us immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
8. The fees and charges deducted under each Contract, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
9. You will use shares of the Trust only for the purpose of
funding benefits of the Contracts through the Accounts.
10. Contracts will not be sold outside of the United States.
11. With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
a. the principal underwriter for each such Account and any
subaccounts thereof is a registered broker- dealer with the
SEC under the 1934 Act;
b. the shares of the Portfolios of the Trust are and will
continue to be the only investment securities held by the
corresponding subaccounts; and
c. with regard to each Portfolio, you, on behalf of the
corresponding subaccount; will:
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(i) vote such shares held by it in the same proportion
as the vote of all other holders of such shares; and
(ii) refrain from substituting shares of another
security for such shares unless the SEC has approved
such substitution in the manner provided in Section 26
of the 1940 Act.
(b) Representations and Warranties by the Trust
The Trust represents and warrants that:
1. It is duly organized and in good standing under the laws of
the State of Massachusetts.
2. All of its directors, officers, employees and others dealing
with the money and/or securities of a Portfolio are and shall be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust in an amount not less that the minimum coverage required by Rule 17g-1 or
other regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3. It is registered as an open-end management investment company
under the 1940 Act.
4. Each class of shares of the Portfolios of the Trust is
registered under the 1933 Act.
5. It will amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares.
6. It will comply, in all material respects, with the 1933 and
1940 Acts and the rules and regulations thereunder.
7. It is currently qualified as a "regulated investment company"
under Subchapter M of the Code, it will make every effort to maintain such
qualification, and will notify you immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
8. The investments of each Portfolio will comply with the
diversification requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5. Upon
having a reasonable basis for believing any
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Portfolio has ceased to comply and will not be able to comply within the grace
period afforded by Regulation 1.817-5, the Trust will notify you immediately and
will take all reasonable steps to adequately diversify the Portfolio to achieve
compliance.
9. It currently intends for one or more classes of shares (each,
a "Class") to make payments to finance its distribution expenses, including
service fees, pursuant to a plan ("Plan") adopted under rule 12b-1 under the
1940 Act ("Rule 12b-1"), although it may determine to discontinue such practice
in the future. To the extent that any Class of the Trust finances its
distribution expenses pursuant to a Plan adopted under rule 12b-1, the Trust
undertakes to comply with any then current SEC interpretations concerning rule
12b-1 or any successor provisions.
(c) Representations and Warranties by the Underwriter
The Underwriter represents and warrants that:
1. It is registered as a broker dealer with the SEC under the
1934 Act, and is a member in good standing of the NASD.
2. Each investment adviser listed on Schedule C (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
a (d) Warranty and Agreement by Both You and Us
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations thereunder to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
and qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges.
3. Purchase and Redemption of Trust Portfolio Shares
(a) We will make shares of the Portfolios available to the Accounts for the
benefit of the Contracts. The shares will be available for purchase at the net
asset value per share next computed after we (or our agent) receive a purchase
order, as established in accordance
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with the provisions of the then current prospectus of the Trust. Notwithstanding
the foregoing, the Trust's Board of Trustees ("Trustees") may refuse to sell
shares of any Portfolio to any person, or may suspend or terminate the offering
of shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Trustees,
they deem such action to be in the best interests of the shareholders of such
Portfolio. Without limiting the foregoing, the Trustees have determined that
there is a significant risk that the Trust and its shareholders may be adversely
affected by investors whose purchase and redemption activity follows a market
timing pattern, and have authorized the Trust, the Underwriter and the Trust's
transfer agent to adopt procedures and take other action (including, without
limitation, rejecting specific purchase orders) as they deem necessary to
reduce, discourage or eliminate market timing activity. You agree to cooperate
with us to assist us in implementing the Trust's restrictions on purchase and
redemption activity that follows a market timing pattern.
(b) We agree that shares of the Trust will be sold only to life insurance
companies which have entered into fund participation agreements with the Trust
("Participating Insurance Companies") and their separate accounts or to
qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order. No shares of any Portfolio will be sold to the general
public.
(c) You agree that all net amounts available under the Contracts shall be
invested in the Trust or in your general account. Net amounts available under
the Contracts may also be invested in an investment company other than the Trust
if: (i) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of the Portfolios; or (ii) you give us forty-five (45)
days written notice of your intention to make such other investment company
available as a funding vehicle for the Contracts; or (iii) such other investment
company is available as a funding vehicle for the Contracts at the date of this
Agreement and you so inform us prior to our signing this Agreement (a list of
such investment companies appears on Schedule E to this Agreement); or (iv) we
consent in writing to the use of such other investment company.
(d) You shall be the designee for us for receipt of purchase orders and requests
for redemption resulting from investment in and payments under the Contracts
("Instructions"). The Business Day on which such Instructions are received in
proper form by you and time stamped by the close of trading will be the date as
of which Portfolio shares shall be deemed purchased, exchanged, or redeemed as a
result of such Instructions. Instructions received in proper form by you and
time stamped after the close of trading on any given Business Day shall be
treated as if received on the next following Business Day. You warrant that all
orders, Instructions and confirmations received by you which will be transmitted
to us for processing on a Business Day will have been received and time stamped
prior to the Close of Trading on that Business Day. Instructions we receive
after 9 a.m. Eastern Time shall be processed on the next Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules of
the SEC and its current prospectus.
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<PAGE>
(e) We shall calculate the net asset value per share of each Portfolio on each
Business Day, and shall communicate these net asset values to you or your
designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern time).
(f) You shall submit payment for the purchase of shares of a Portfolio on behalf
of an Account no later than the close of business on the next Business Day after
we receive the purchase order. Payment shall be made in federal funds
transmitted by wire to the Trust or to its designated custodian.
(g) We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent) of the request for redemption, as established
in accordance with the provisions of the then current prospectus of the Trust.
We shall make payment for such shares in the manner we establish from time to
time, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act. Payments for the purchase or redemption of shares by
you may be netted against one another on any Business Day for the purpose of
determining the amount of any wire transfer on that Business Day.
(h) Issuance and transfer of the Portfolio shares will be by book entry only.
Stock certificates will not be issued to you or the Accounts. Portfolio shares
purchased from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
(i) We shall furnish, on or before the ex-dividend date, notice to you of any
income dividends or capital gain distributions payable on the shares of any
Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
(a) We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
(b) We shall prepare and be responsible for filing with the SEC, and any state
regulators requiring such filing, all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
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<PAGE>
(c) We shall use reasonable efforts to provide you, on a timely basis, with such
information about the Trust, the Portfolios and each Adviser, in such form as
you may reasonably require, as you shall reasonably request in connection with
the preparation of disclosure documents and annual and semi-annual reports
pertaining to the Contracts.
(d) At your request, we shall provide you with camera ready copy, in a form
suitable for printing, of portions of the Trust's current prospectus, annual
report, semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining specifically to
the Portfolios. We shall delete information relating to series of the Trust
other than the Portfolios to the extent practicable. We shall provide you with a
copy of the Trust's current statement of additional information, including any
amendments or supplements, in a form suitable for you to duplicate. The expenses
of furnishing such documents shall be borne by you. You shall bear the costs of
distributing prospectuses and statements of additional information to Contract
owners.
(e) We shall provide you, at our expense, with copies of any Trust-sponsored
proxy materials in such quantity as you shall reasonably require for
distribution to Contract owners who are invested in a designated subaccount. You
shall bear the costs of distributing proxy materials (or similar materials such
as voting solicitation instructions) to Contract owners.
(f) You assume sole responsibility for ensuring that the Trust's prospectuses,
shareholder reports and communications, and proxy materials are delivered to
Contract owners in accordance with applicable federal and state securities laws.
5. Voting
(a) All Participating Insurance Companies shall have the obligations and
responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
(b) If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners; and (iii) vote Trust shares for
which no instructions have been received in the same proportion as Trust shares
of such Portfolio for which instructions have been received; so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. You reserve the
right to vote Trust shares held in any Account in your own right, to the extent
permitted by law.
(c) So long as, and to the extent that, the SEC interprets the 1940 Act to
require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
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<PAGE>
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. Sales Material, Information and Trademarks
(a) For purposes of this Section 6, "Sales literature or other Promotional
material" includes, but is not limited to, portions of the following that use
any logo or other trademark related to the Trust or Underwriter or refer to the
Trust or affiliates of the Trust: advertisements (such as material published or
designed for use in a newspaper, magazine or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboards,
motion pictures, electronic communication or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees in
any media, and disclosure documents, shareholder reports and proxy materials.
(b) You shall furnish, or cause to be furnished to us or our designee, at least
one complete copy of each registration statement, prospectus, statement of
additional information, private placement memorandum, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "disclosure documents"), as well as any report, solicitation for
voting instructions, Sales literature or other Promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. You shall furnish, or shall cause to be furnished, to us
or our designee each piece of Sales literature or other Promotional material in
which the Trust or an Adviser is named, at least five (5) Business Days prior to
its proposed use. No such material shall be used unless we or our designee
approve such material and its proposed use.
(c) You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
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<PAGE>
(d) We shall not give any information or make any representations or statements
on behalf of you or concerning you, the Accounts or the Contracts other than
information or representations contained in and accurately derived from
disclosure documents for the Contracts (as such disclosure documents may be
amended or supplemented from time to time), or in materials approved by you for
distribution, including Sales literature or other Promotional materials, except
as required by legal process or regulatory authorities or with your written
permission. We may use the names of you, the Accounts and the Contracts in our
sales literature and disclosure documents.
(e) Except as provided in Section 6(b), you shall not use any designation
comprised in whole or part of the names or marks "Franklin" or "Templeton" or
any logo or other trademark relating to the Trust or the Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
you shall cease all use of any such name or mark as soon as reasonably
practicable.
7. Indemnification
(a) Indemnification By You
1. You agree to indemnify and hold harmless the Underwriter, the
Trust and each of its Trustees, officers, employees and agents and each person,
if any, who controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the "Indemnified
Party" for purposes of this Section 7) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with your written
consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of
shares of the Trust or the Contracts and
a. arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a disclosure
document for the Contracts or in the Contracts themselves or in sales
literature generated or approved by you on behalf of the Contracts or
Accounts (or any amendment or supplement to any of the foregoing)
(collectively, "Company Documents" for the purposes of this Section 7),
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this indemnity shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written information
furnished to you by or on behalf of the Trust for use in Company
Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
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<PAGE>
b. arise out of or result from statements or representations (other
than statements or representations contained in and accurately
derived from Trust Documents as defined below in Section 7(b)) or
wrongful conduct of you or persons under your control, with
respect to the sale or acquisition of the Contracts or Trust
shares; or
c. arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust Documents
as defined below in Section 7(b) or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance
upon and accurately derived from written information furnished to
the Trust by or on behalf of you; or
d. arise out of or result from any failure by you to provide the
services or furnish the materials required under the terms of
this Agreement;
e. arise out of or result from any material breach of any
representation and/or warranty made by you in this Agreement or
arise out of or result from any other material breach of this
Agreement by you; or
f. arise out of or result from a Contract failing to be considered a
life insurance policy or an annuity Contract, whichever is
appropriate, under applicable provisions of the Code thereby
depriving the Trust of its compliance with Section 817(h) of the
Code.
2. You shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Trust or Underwriter, whichever is applicable.
You shall also not be liable under this indemnification provision with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified you in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify you of any such claim shall not relieve you from any liabilit which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, you shall be entitled to participate,
at your own expense, in the defense of such action. Unless the Indemnified Party
releases you from any further obligations under this Section 7(a), you also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from you to such party of the your
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and you will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
3. The Indemnified Parties will promptly notify you of the commencement
of any litigation or proceedings against them in connection with the issuance or
sale of the Trust shares or the Contracts or the operation of the Trust.
(b) Indemnification By The Underwriter
1. The Underwriter agrees to indemnify and hold harmless you, and each
of your directors and officers and each person, if any, who controls you within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually an "Indemnified Party" for purposes of this Section
7(b)) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Underwriter, which
consent shall not be unreasonably withheld) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses") to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such Losses
are related to the sale or acquisition of the shares of the Trust or the
Contracts and:
a. arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement, prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing)
(collectively, the "Trust Documents") or arise out of or are
based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission of such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to us by or on behalf of you for use in the
Registration Statement or prospectus for the Trust or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
b. arise out of or as a result of statements or representations
(other than statements or representations contained in the
disclosure documents or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or
wrongful conduct of the Trust, Adviser or Underwriter or persons
under their control, with respect to the sale or distribution of
the Contracts or Trust shares; or
c. arise out of any untrue statement or alleged untrue statement of
a material fact contained in a disclosure document or sales
literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished to you by or on behalf of the Trust;
or
d. arise as a result of any failure by us to provide the services
and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the qualification representation
specified above in Section 2(b)(7) and the diversification
requirements specified above in Section 2(b)(8); or
e. arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 7(b)(2) and 7(b)(3)
hereof.
2. The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to you or the Accounts, whichever
is applicable.
3. The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further obligations under this Section
7(b), the Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
4. You agree promptly to notify the Underwriter of the commencement of
any litigation or proceedings against you or the Indemnified Parties in
connection with the issuance or sale of the Contracts or the operation of each
Account.
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(c) Indemnification By The Trust
1. The Trust agrees to indemnify and hold harmless you, and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 7(c)) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Trust, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct of
the Board or any member thereof, are related to the operations of the Trust, and
arise out of or result from any material breach of any representation and/or
warranty made by the Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Sections 7(c)(2) and 7(c)(3) hereof. It is
understood and expressly stipulated that neither the holders of shares of the
Trust nor any Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation hereunder, but the
Trust only shall be liable.
2. The Trust shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against any Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
you, the Trust, the Underwriter or each Account, whichever is applicable.
3. The Trust shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claims shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve the Trust from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Trust will be entitled to participate, at its own
expense, in the defense thereof. Unless the Indemnified Party releases the Trust
from any further obligations under this Section 7(c), the Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Trust to such party of the Trust's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Trust will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
4. You agree promptly to notify the Trust of the commencement of any
litigation or proceedings against you or the Indemnified Parties in connection
with this Agreement, the issuance or sale of the Contracts, with respect to the
operation of the Account, or the sale or acquisition of shares of the Trust.
8. Notices
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. Termination
(a) This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by sixty (60)
days advance written notice delivered to the other parties, unless a
shorter time is agreed to in writing by the parties, and shall
terminate immediately in the event of its assignment, as that term is
used in the 1940 Act.
(b) This Agreement may be terminated immediately by us upon written notice
to you if:
1. you notify the Trust or the Underwriter that the exemption from
registration under Section 3(c) of the 1940 Act no longer applies, or might not
apply in the future, to the unregistered Accounts, or that the exemption from
registration under Section 4(2) or Regulation D promulgated under the 1933 Act
no longer applies or might not apply in the future, to interests under the
unregistered Contracts; or
2. either one or both of the Trust or the Underwriter respectively,
shall determine, in their sole judgment exercised in good faith, that you have
suffered a material adverse change in your business, operations, financial
condition or prospects since the date of this Agreement or are the subject of
material adverse publicity; or
3. you give us the written notice specified above in Section 3(c) and at
the same time you give us such notice there was no notice of termination
outstanding under any other provision of this Agreement; provided, however, that
any termination under this Section 9(b)(3) shall be effective forty-five (45)
days after the notice specified in Section 3(c) was given; or
4. upon your assignment of this Agreement without our prior written
approval.
(c) If this Agreement is terminated for any reason, except as required by the
Shared Funding Order or pursuant to Section 9(b)(1), above, we shall, at your
option, continue to make available additional shares of any Portfolio and redeem
shares of any Portfolio pursuant to all of the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement. If this Agreement is terminated as required by the Shared
Funding Order, its provisions shall govern.
(d) The provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 9(c), except that we shall have no further obligation
to sell Trust shares with respect to Contracts issued after termination.
(e) You shall not redeem Trust shares attributable to the Contracts (as opposed
to Trust shares attributable to your assets held in the Account) except: (i) as
necessary to implement Contract owner initiated or approved transactions; (ii)
as required by state and/or federal laws or regulations or judicial or other
legal precedent of general application (hereinafter referred to as a "Legally
Required Redemption"); or (iii) as permitted by an order of the SEC pursuant to
Section 26(b) of the 1940 Act. Upon request, you shall promptly furnish to us
the opinion of your counsel (which counsel shall be reasonably satisfactory to
us) to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, you shall not prevent Contract owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving us ninety (90) days notice of your intention to do so.
10. Miscellaneous
(a) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
of this Agreement or otherwise affect their construction or effect.
(b) This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the
same instrument.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) This Agreement shall be construed and its provisions interpreted under
and in accordance with the laws of the State of California. It shall
also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder, to any orders of the SEC on
behalf of the Trust granting it exemptive relief, and to the
conditions of such orders. We shall promptly forward copies of any
such orders to you.
(e) The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this
Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and that no Trustee, officer,
agent or holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
(f) Each party to this Agreement shall cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
(g) Each party to this Agreement shall treat as confidential all
information reasonably identified as confidential in writing by any
other party to this Agreement, and, except as permitted by this
Agreement or as required by legal process or regulatory authorities,
shall not disclose, disseminate, or use such names and addresses and
other confidential information until such time as they may come into
the public domain, without the express written consent of the affected
party. Without limiting the foregoing, no party to this Agreement
shall disclose any information that such party has been advised is
proprietary, except such information that such party is required to
disclose by any appropriate governmental authority (including, without
limitation, the SEC, the NASD, and state securities and insurance
regulators).
(h) The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties to this Agreement
are entitled to under state and federal laws.
(i) The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided
above in Section 3(c).
(j) Neither this Agreement nor any rights or obligations created by it may
be assigned by any party without the prior written approval of the
other parties.
(k) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by both parties.
Last Revised 02/23/0
<PAGE>
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Company: Acacia National Life Insurance Company
By:
Name: Robert W. Clyde
Title: President
The Trust: Franklin Templeton Variable Insurance Products Trust
By:
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant Secretary
The Underwriter: Franklin Templeton Distributors, Inc.
By:
Name: Philip J. Kearns
Title: Vice President
Last Revised 02/23/0
<PAGE>
Schedule A
The Company
Acacia National Life insurance Company
[address]
[state of incorporation]
Last Revised 02/23/0
<PAGE>
Schedule B
Accounts of the Company
1. Name: Acacia National Life Insurance Company Variable
Life Separate Account I ("Separate Account I")
Date Established: [date]
SEC Registration Number: 811- 08998
2. Name: Acacia National Life Insurance Company Variable
Annuity Separate Account II ("Separate Account II")
Date Established: [date]
SEC Registration Number: 811- 08998
Last Revised 02/23/0
<PAGE>
Schedule C
Available Portfolios and Classes of Shares of the Trust; Investment Advisers
Franklin Templeton Variable Insurance Products Trust Investment Adviser
Templeton Asset Strategy Fund Templeton Investment Counsel, Inc.
Templeton International Securities Fund Templeton Investment Counsel, Inc.
Last Revised 02/23/0
<PAGE>
Schedule D
Contracts of the Company
Contract 1 Contract 2 Contract 3
Contract/Product
Name
Registered (Y/N) Yes Yes
SEC Registration Number 811-08998 811-08998
Representative
Form Numbers
Separate Account
Name/Date Separate Account I Separate Account II
SEC Registration
Number
Portfolios and
Classes Adviser
Templeton Asset
Stragtegy Fund, Class 2 -
Templeton Investment
Counsel, Inc.
Templeton International
Securities Fund, Class 2 -
Templeton Investment
Counsel, Inc.
Last Revised 02/23/0
<PAGE>
Schedule E
Other Portfolios Available under the Contracts
[names of other portfolios]
Last Revised 02/23/0
<PAGE>
Schedule F
Rule 12b-1 Plans
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
Templeton International Securities Fund 0.25%
Templeton Asset Strategy Fund 0.25%
.
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide administrative and other services which assist in
the promotion and distribution of Eligible Shares or variable contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares Contract Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD rules.
Your acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the value of
Eligible Shares owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the Compensation Schedule
stated above. The aggregate annual fees paid pursuant to each Plan shall not
exceed the amounts stated as the "annual maximums" in the Portfolio's
prospectus, unless an increase is approved by shareholders as provided in the
Plan. These maximums shall be a specified percent of the value of a Portfolio's
net assets attributable to Eligible Shares owned by the Company on behalf of its
Accounts (determined in the same manner as the Portfolio uses to compute its net
assets as set forth in its effective Prospectus). The Rule 12b-1 fee will be
paid to you within thirty (30) days after the end of the three-month periods
ending in January, April, July and November.
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the
Trustees, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Trustees, including the Trustees who are not
interested persons of the Trust and who have no financial interest in the Plans
or any related agreement ("Disinterested Trustees"). Each Plan may be terminated
at any time by the vote of a majority of the Disinterested Trustees, or by a
vote of a majority of the outstanding shares as provided in the Plan, on sixty
(60) days' written notice, without payment of any penalty. The Plans may also be
terminated by any act that terminates the Underwriting Agreement between the
Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the Trust. Continuation
of the Plans is also conditioned on Disinterested Trustees being ultimately
responsible for selecting and nominating any new Disinterested Trustees. Under
Rule 12b-1, the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to furnish, such
information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, the Trust is permitted to implement or continue Plans or the provisions
of any agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Trustees are able to conclude that the Plans
will benefit each affected Trust Portfolio and class. Absent such yearly
determination, the Plans must be terminated as set forth above. In the event of
the termination of the Plans for any reason, the provisions of this Schedule F
relating to the Plans will also terminate. You agree that your selling
agreements with persons or entities through whom you intend to distribute
Contracts will provide that compensation paid to such persons or entities may be
reduced if a Portfolio's Plan is no longer effective or is no longer applicable
to such Portfolio or class of shares available under the Contracts.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the Contracts.
Last Revised 02/23/0
<PAGE>
Schedule G
Addresses for Notices
To the Company: Acacia National Life Insurance Company
[address]
[address]
Attention: [name, title]
To the Trust: Franklin Templeton Variable Insurance Products Trust
777 Mariners Island Boulevard
San Mateo, California 94404
Attention: Karen L. Skidmore, Assistant Vice
President, Assistant Secretary
To the Underwriter: Franklin Templeton Distributors, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
Attention: Philip J. Kearns, Vice President
Last Revised 02/23/0
<PAGE>
Schedule H
Shared Funding Order
Last Revised 02/23/0
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. 1 to Registration Statement
333-81057 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. 1 to said Form S-6 Registration Statement and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Robert-John H. Sands
Robert-John H. Sands
Senior Vice President,Corporate Secrtary 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
EXHIBIT 7. (A)(B)
Opinion and Consent of Russell J. Wiltgen
<PAGE>
February 25, 2000
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, MD 20814
Gentlemen:
This opinion is furnished in connection with the registration by Acacia National
Life Insurance Company, of a survivorship flexible premium variable universal
life insurance policy ("Contract") under the Securities Act of 1933. The
prospectus included in Post-Effective Amendment No. 1 to Registration Statement
No. 333-81057 on Form S-6 describes the Contract. The form of Contract was
prepared under my direction and I am familiar with the Registration Statement
and Exhibits thereto. This contract was developed and filed under Securities and
Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff.
In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 65 and a female age 65, than to prospective purchasers of the Contract
for other ages or for two males or two females.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment No. 1 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Sincerely,
/s/ Russell J. Wiltgen
Russell J. Wiltgen
Vice President - Individual Product Management
