The SpectraSelect Fixed and Variable Annuity Contract
issued by
United Life & Annuity Separate Account One
and
United Life & Annuity Insurance Company
April 30, 1999
This prospectus describes the SpectraSelect Fixed and Variable Annuity Contract
offered by United Life & Annuity Insurance Company (ULA, us or we).
The annuity has 35 investment options -- the Portfolios listed below, a one year
Fixed Account option of ULA and the Interest Adjustment Account.
<TABLE>
<CAPTION>
<S> <C>
AIM Variable Insurance Funds, Inc. Morgan Stanley Dean Witter Universal Funds, Inc.
AIM V.I. Capital Appreciation Fund Emerging Markets Debt Portfolio
AIM V.I. Diversified Income Fund Equity Growth Portfolio
AIM V.I. Growth Fund Global Equity Portfolio
AIM V.I. Growth and Income Fund High-Yield Portfolio
AIM V.I. International Equity Fund Value Portfolio
The Alger American Fund Neuberger Berman Advisers Management Trust
Alger American Growth Portfolio AMT Guardian Portfolio
AMT Limited Maturity Bond Portfolio
Dreyfus Stock Index Fund AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
Dreyfus Variable Investment Fund
Growth and Income Portfolio Scudder Variable Life Investment Fund
Money Market Portfolio
Federated Insurance Series International Portfolio, Class A
Federated American Leaders Fund II
Federated High Income Bond Fund II Van Eck Worldwide Insurance Trust
Federated Prime Money Fund II Worldwide Hard Assets Fund
Federated Utility Fund II
Federated Fund for U.S. Government Warburg Pincus Trust
Securities II International Equity Portfolio
Post-Venture Capital Portfolio
MFS Variable Insurance TrustSM
MFS Emerging Growth Series Warburg Pincus Trust II
MFS Growth With Income Series Fixed Income Portfolio
MFS Research Series
MFS Total Return Series
MFS Utilities Series
</TABLE>
Please read this prospectus before investing and keep it for future reference.
It contains important information about the SpectraSelect Fixed and Variable
Annuity Contract.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated April 30, 1999. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated by reference into this prospectus. The Table of Contents of the SAI
is found on the last page of this prospectus. For a free copy of the SAI, call
us at (800) 825-7568 or write us at: 851 SW Sixth Avenue, Suite 850, Portland,
Oregon 97204-1337. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference, and other information
regarding companies that file electronically with the SEC.
Inquiries. If you have any questions about your Contract or need more
information, please contact us at: United Life & Annuity Insurance Company,
Variable Annuity Service Center, 851 SW Sixth Avenue, Suite 850, Portland,
Oregon 97204-1337.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
Table of Contents
Page
----
Glossary of Terms..........................................................4
Summary....................................................................5
Fee Table................................................................. 8
The SpectraSelect Fixed and Variable Annuity Contract.....................16
Owner...................................................................17
Joint Owner.............................................................17
Annuitant...............................................................17
Beneficiary.............................................................17
Assignment..............................................................17
Annuity Payments (The Income Phase).......................................18
Annuity Options.........................................................18
How to Purchase a Contract............................................... 19
Purchase Payments.......................................................19
Allocation of Purchase Payments.........................................19
Right to Examine Contract...............................................20
Accumulation Units......................................................20
Investment Options........................................................21
Voting Rights...........................................................23
Substitution............................................................24
Transfers...............................................................24
Dollar Cost Averaging Program...........................................25
Rebalancing Program.....................................................25
Asset Allocation Programs...............................................25
Performance...............................................................26
Expenses..................................................................26
Insurance Charges.......................................................26
Mortality and Expense Risk Charge.....................................27
Administrative Charge.................................................27
Contingent Deferred Sales Charge........................................27
Reduction or Elimination of the Contingent Deferred Sales Charge........28
Transfer Fee............................................................28
Premium Taxes...........................................................28
Income Taxes............................................................28
Portfolio Expenses......................................................29
Taxes.....................................................................29
Annuity Contracts in General............................................29
Withdrawals -- Non-Qualified Contracts..................................30
Withdrawals -- Qualified Contracts......................................30
Withdrawals -- Tax-Sheltered Annuities..................................30
Diversification.........................................................30
Withdrawals...............................................................31
Systematic Withdrawal Program...........................................32
Suspension of Payments or Transfers.....................................32
Death Benefit.............................................................32
Upon Your Death.........................................................32
Death Benefit...........................................................33
Death of Annuitant......................................................34
Other Information.........................................................34
ULA.....................................................................34
Year 2000 Matters.......................................................34
The Separate Account....................................................35
Distribution............................................................35
Financial Statements....................................................35
Appendix A................................................................35
Table of Contents of the Statement of Additional Information..............41
Glossary of Terms
We have tried to make this prospectus as understandable for you as possible. We
have identified some of the technical terms used in this prospectus. To help you
understand these terms, we have defined them below.
Accounts: The Portfolios, the Fixed Account and each Guarantee Period of the
Interest Adjustment Account.
Accumulation Phase: Until you decide to begin receiving Annuity Payments, your
annuity is in the Accumulation Phase.
Accumulation Unit: The unit of measurement we use to keep track of the value of
your Contract during the Accumulation Phase.
Annuitant: The natural person on whose life we base Annuity Payments.
Annuity Options: You can choose among income plans for your Annuity Payments.
These are referred to as Annuity Options.
Annuity Payments: You can receive regular income payments from your Contract.
These are referred to as Annuity Payments.
Beneficiary: The person or entity you name to receive any death benefits.
Contract: An individual contract and the certificate issued to participants
under a group contract.
Fixed Account: An investment option within our general account.
Guarantee Periods: The periods for which interest rates are credited in the
Interest Adjustment Account or the Fixed Account.
Income Date: You can choose the month and year in which Annuity Payments will
begin. This is referred to as the Income Date.
Income Phase: The period during which we make Annuity Payments to you or someone
you name to receive them.
Interest Adjustment Account: An investment option within our general account
where we guarantee the rate of interest for a specified period (a Guarantee
Period).
Joint Owner: The Contract can be owned by you and your spouse (the Joint Owner).
Owner: The person or entity entitled to ownership rights under a Contract.
Non-Qualified: If you do not purchase the Contract under a qualified plan, your
Contract is referred to as a Non-Qualified Contract.
Portfolio: The variable investment options available under the Contract. Each
Portfolio has its own investment objective.
Purchase Payment: The money you give us to buy the Contract.
Qualified: If you purchase the Contract under a qualified plan, it is referred
to as a Qualified Contract (examples: individual retirement annuities,
tax-sheltered annuities, and pension and profit-sharing plans)
Tax Deferral: Tax deferral means that you are not taxed on any earnings or
appreciation on the assets in your Contract until you take money out of your
Contract.
Summary
The following information is a summary of some of the more important features of
your annuity Contract. More detailed information is contained in the
corresponding sections of this prospectus.
The SpectraSelect Fixed and Variable Annuity Contract. This prospectus describes
individual and group fixed and variable deferred annuity contracts and
certificates (together referred to as the "Contract"). The Contract offered by
ULA is a contract between you, the owner, and United Life & Annuity Insurance
Company, an insurance company. The Contract provides a means for investing on a
Tax-Deferred basis in the Portfolios, the Fixed Account and the Interest
Adjustment Account.
The SpectraSelect Fixed and Variable Annuity Contract is designed for people
seeking long-term Tax Deferred accumulation of assets, generally for retirement
or other long-term purposes. The Tax Deferred feature is most attractive to
people in high federal and state income tax brackets. You should not buy this
Contract if you are looking for a short-term investment or if you cannot accept
the risk of getting back less money than you put in.
You may invest in the Fixed Account, the Interest Adjustment Account or the
following Portfolios:
<TABLE>
<CAPTION>
<S> <C>
AIM Variable Insurance Funds, Inc. Morgan Stanley Dean Witter Universal Funds, Inc.
AIM V.I. Capital Appreciation Fund Emerging Markets Debt Portfolio
AIM V.I. Diversified Income Fund Equity Growth Portfolio
AIM V.I. Growth Fund Global Equity Portfolio
AIM V.I. Growth and Income Fund High-Yield Portfolio
AIM V.I. International Equity Fund Value Portfolio
The Alger American Fund Neuberger Berman Advisers Management Trust
Alger American Growth Portfolio AMT Guardian Portfolio
AMT Limited Maturity Bond Portfolio
Dreyfus Stock Index Fund AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
Dreyfus Variable Investment Fund
Growth and Income Portfolio Scudder Variable Life Investment Fund
Money Market Portfolio
Federated Insurance Series International Portfolio, Class A
Federated American Leaders Fund II
Federated High Income Bond Fund II Van Eck Worldwide Insurance Trust
Federated Prime Money Fund II Worldwide Hard Assets Fund
Federated Utility Fund II
Federated Fund for U.S. Government Warburg Pincus Trust
Securities II International Equity Portfolio
Post-Venture Capital Portfolio
MFS Variable Insurance TrustSM
MFS Emerging Growth Series Warburg Pincus Trust II
MFS Growth With Income Series Fixed Income Portfolio
MFS Research Series
MFS Total Return Series
MFS Utilities Series
</TABLE>
The Portfolios are fully described in the attached Portfolio prospectuses. You
can make or lose money in the Portfolios depending upon market conditions and
the performance of the Portfolio(s) you select.
The Fixed Account offers an interest rate that is guaranteed by us. You can also
invest in the Interest Adjustment Account, which is an option within our general
account where we guarantee a specific rate of interest for certain Guarantee
Periods. There are currently three Guarantee Periods available -- 3, 5 and 7
years. If you withdraw or transfer money from the Interest Adjustment Account
prior to the end of the selected Guarantee Period, it may be subject to an
interest adjustment.
Currently, there are thirty-five investment options (which include each
Portfolio, the fixed account and each guarantee period of the interest
Adjustment account). You may select to put your money in up to ten (10) of these
Options at any time.
Annuity Payments (The Income Phase). You can receive monthly Annuity Payments
from your Contract by selecting an Annuity Option. During the Income Phase,
payments will come from the Fixed Account.
How To Purchase A Contract. You can buy a Non-Qualified Contract with a minimum
payment of $5,000 and a Qualified Contract with $2,000, except for certain
Qualified plans. You can add $500 (or $100 if you use the automatic premium
check option) or more any time you like during the Accumulation Phase. Your
registered representative can help you fill out the proper forms.
Expenses. The Contract has insurance features and investment features, and there
are costs related to each.
* If you select Death Benefit Option 1 (Enhanced Death Benefit Rider), the
annual insurance charges total 1.60% of the average daily value of your
Contract allocated to the Portfolios. If you select Death Benefit Option 2
(Standard Death Benefit), the annual insurance charges total 1.40% of the
average daily vale of your Contract allocated to the Portfolios.
* There are also annual Portfolio charges which range from .26% to 1.52% of
the average daily value of the Portfolio, depending upon the Portfolio(s)
you invest in.
* You can transfer between Accounts up to 12 times a year without charge.
After 12 transfers, the charge is $25 or 2% of the amount transferred,
whichever is less.
* If you make a withdrawal from the Contract, ULA may assess a contingent
deferred sales charge (withdrawal charge) which ranges from 7% to 0%
depending upon how long ULA has your payment. Under certain circumstances,
you can make a partial withdrawal without incurring a contingent deferred
sales charge.
* ULA may assess a state premium tax charge which ranges from 0% - 4.0%
(depending up on the state).
Taxes. Your earnings are not taxed until you take them out. In most cases, if
you take money out, earnings come out first and are taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
tax penalty on the taxable amounts withdrawn. Payments during the Income Phase
are considered partly a return of your original investment. That part of each
payment is not taxable as income. If the Contract is tax-qualified, the entire
payment may be taxable. There are limits to the amount you can withdraw from a
Qualified plan known as a 403(b) plan (or tax-sheltered annuity).
Withdrawals. You may make a withdrawal at any time during the Accumulation
Phase. Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program). You may request a withdrawal or elect the
Systematic Withdrawal Program. Of course, you may also have to pay income tax
and a tax penalty on any money you take out.
Death Benefit. If you die during the Accumulation Phase, the person you have
selected as your Beneficiary will receive a death benefit. The death benefit
that the Beneficiary will receive will be the death benefit you selected (Option
1 or Option 2).
Other Information
Free Look/Right to Examine. If you cancel the Contract within 10 days after
receiving it (or whatever period is required in your state), we will send your
money back without assessing a contingent deferred sales charge. You will
receive whatever your Contract is worth on the day we receive your request. This
may be more or less than your original payment. (Some states require that we
return your Purchase Payment.)
No Probate. In most cases, when you die, your Beneficiary will receive the death
benefit without going through probate.
Additional Features. The Contract offers additional features which you might be
interested in. These include:
Dollar Cost Averaging Program -- You can arrange to have a regular amount of
money automatically transferred from the Scudder Money Market Portfolio or the
one year Fixed Account to one or more selected Portfolios monthly, quarterly or
semi-annually, theoretically giving you a lower average cost per unit over time
than a single one time purchase. However, there are no guarantees that this will
take place.
Rebalancing Program -- ULA will automatically readjust your money among the
Portfolios to maintain your specified allocation mix. This can be done
quarterly, semi-annually or annually if the value of your Contract is at least
$5,000.
Systematic Withdrawal Program -- You can elect to receive periodic payments from
your Contract. Of course, you may have to pay taxes and a tax penalty on the
money you receive.
Fee Table
(See Note 1 below)
Owner Transaction Expenses
Contingent Deferred Sales Charge (see Note 2 below)
Number Of Complete
Years Since Receipt
of Purchase Payment Charge
- ------------------- ------
0.............................. 7.0%
1.............................. 6.0%
2.............................. 5.0%
3.............................. 4.0%
4.............................. 3.0%
5.............................. 2.0%
6.............................. 1.0%
7 years or more................ 0.0%
<TABLE>
<CAPTION>
<S> <C>
Transfer Fee (see Note 3 below) No charge for first 12 transfers in a Contract year. After that,
the fee is lesser of $25 or 2% of the amount transferred.
</TABLE>
Separate Account Annual Expenses for Contracts with Death Benefit Option 1
(Enhanced Death Benefit Rider) (as a percentage of average daily net asset
value)
Mortality and Expense Risk Charge........................... 1.45%
Administrative Charge....................................... .15%
---
Total Separate Account Annual Expenses...................... 1.60%
Separate Account Annual Expenses for Contracts with Death Benefit Option 2
(Standard Death Benefit) (as a percentage of average daily net asset value)
Mortality and Expense Risk Charge........................... 1.25%
Administrative Charge....................................... .15%
---
Total Separate Account Annual Expenses...................... 1.40%
Notes To Fee Table
Note 1. The purpose of the Fee Table is to show you the various expenses you
will incur directly or indirectly with the Contract. The Fee Table reflects
expenses of the Separate Account as well as the Portfolios.
Note 2. Under certain circumstances, you can make a withdrawal without incurring
the contingent deferred sales charge.
Note 3. ULA will not charge you the transfer fee even if there are more than 12
transfers in a year if the transfer is part of the Dollar Cost Averaging or
Rebalancing Programs.
<TABLE>
<CAPTION>
Annual Expenses of the Portfolios
(as a percentage of the average daily net assets of a Portfolio)
Total Annual
Other Expenses Expenses
Management (After Expense (After Expense
Fees Reimbursement) Reimbursement)
---- -------------- --------------
AIM Variable Insurance Funds, Inc.
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund............. .62% .05% .67%
AIM V.I. Diversified Income Fund............... .60% .17% .77%
AIM V.I. Growth Fund........................... .64% .08% .72%
AIM V.I. Growth and Income Fund................ .61% .04% .65%
AIM V.I. International Equity Fund............. .75% .16% .91%
The Alger American Fund
Alger American Growth Portfolio................ .75% .04% .79%
Dreyfus Stock Index Fund......................... .25% .01% .26%
Dreyfus Variable Investment Fund
Growth and Income Portfolio.................... .75% .03% .78%
Federated Insurance Series
Federated American Leaders Fund II(a) .74% .14% .88%
Federated High Income Bond Fund II .60% .18% .78%
Federated Prime Money Fund II(b)............... .49% .31% .80%
Federated Utility Fund II(c)................... .68% .25% .93%
Federated Fund for U.S. Government
Securities II(d............................. .52% .33% .85%
MFS Variable Insurance TrustSM(e)
MFS Emerging Growth Series..................... .75% .10% .85%
MFS Growth With Income Series.................. .75% .13% .88%
MFS Research Series............................ .75% .11% .86%
MFS Total Return Series........................ .75% .16% .91%
MFS Utilities Series........................... 75% .26% 1.01%
Morgan Stanley Dean Witter Universal Funds, Inc.
Emerging Markets Debt Portfolio (f)............ .27% 1.25% 1.52%
Equity Growth Portfolio (f).................... .09% .76% .85%
Global Equity Portfolio (f).................... .32% .83% 1.15%
High-Yield Portfolio (f)....................... .15% .65% .80%
Value Portfolio (f)............................ .08% .77% .85%
Neuberger Berman Advisers Management Trust(g)
AMT Guardian Portfolio (h)..................... .85% .15% 1.00%
AMT Limited Maturity Bond Portfolio .65% .11% .76%
AMT Mid-Cap Growth Portfolio (h)............... .85% .15% 1.00%
AMT Partners Portfolio......................... .78% .06% .84%
Scudder Variable Life Investment Fund
Money Market Portfolio......................... .37% .07% .44%
International Portfolio, Class A .............. .87% .18% 1.05%
Van Eck Worldwide Insurance Trust
Worldwide Hard Assets Fund(i).................. 1.00% .20% 1.20%
Warburg Pincus Trust
International Equity Portfolio (j)............. 1.00% .33% 1.33%
Post-Venture Capital Portfolio (j)............. 1.08% .32% 1.40%
Warburg Pincus Trust II
Fixed Income Portfolio (j)..................... .20% .79% .99%
</TABLE>
(a) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.75%. The total operating expenses were .89% absent the voluntary waiver of
a portion of the management fee.
(b) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.50%. The total operating expenses were .81% absent the voluntary waiver of
a portion of the management fee.
(c) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.75%. The total operating expenses were 1.00% absent the voluntary waiver
of a portion of the management fee.
(d) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is .60%. The total
operating expenses were 0.93% absent the voluntary waiver of the management
fee and the voluntary reimbursement of certain other operating expenses.
(e) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements (which would
also have the effect of reducing the Series' expenses). Expenses do not
take into account these expense reductions, and are therefore higher than
the actual expenses of the Series.
(f) The management fee has been reduced to reflect the voluntary waiver of a
portion or all of the management fee and the reimbursement by the
portfolio's adviser to the extent "Total Annual Expenses" exceed: Emerging
Markets Debt Portfolio 1.30%; Equity Growth Portfolio 0.85%; Global Equity
Portfolio 1.15%; High Yield Portfolio 0.80%; and Value Portfolio 0.85%. The
adviser may terminate this voluntary waiver at any time at its sole
discretion. Absent such reductions, Management Fees", "Other Expenses"
and "Total Annual Expenses", respectively, would be as follows: Emerging
Markets Debt Portfolio - 0.80%, 1.25%, 2.05%; Equity Growth Portfolio -
0.55%, .76%, 1.31%; Global Equity Portfolio - 0.80%, .83%, 1.63%;
High-Yield Portfolio - 0.50%, .65%, 1.15%; and Value Portfolio- 0.55%,
.77%, 1.32%. Additionally, in determining the actual amount of voluntary
management fee waiver and/or expense reimbursement for a Portfolio, if any,
the adviser excludes from total annual operating expenses certain
investment related expenses, such as foreign country tax expense and
interest expense on borrowing. Included in Other Expenses of the Emerging
Markets Debt Portfolio are 0.22% of such investment related expenses.
(g) Neuberger Berman Advisers Management Trust is divided into portfolios
(Portfolios) each of which invests all of its net investable assets in a
corresponding series (Series) of Advisers Managers Trust. The figures
reported under Management Fees include the aggregate of the
administration fees paid by the Portfolio and the management fees paid by
its corresponding Series. Similarly, Other Expenses includes all other
expenses of the Portfolio and corresponding Series.
(h) Expenses reflect expense reimbursement. Neuberger Berman Management Inc.
(NBMI)has undertaken to reimburse certain operating expenses, including
the compensation of NBMI and excluding taxes, interest, extraordinary
expenses, brokerage commissions and transaction costs, that exceed, in the
aggregate, 1% of the Guardian and Mid-Cap Growth Portfolios average daily
net asset value. Absent such reimbursement, the Total Annual Expenses for
the year ended December 31, 1998 would have been 1.43% for the Mid-Cap
Growth Portfolio and 1.14% for the Guardian Portfolio. These expenses
reimbursement agreements are subject to termination upon 60 days written
notice with respect to the Guardian and Mid-Cap Growth Portfolios, and
there can be no assurance that these policies will be continued thereafter.
(i) The expenses are reduced to 1.16% by the directed brokerage and custodian
fee arrangement.
(j) Management Fees, Other Expenses and Total Annual Expenses for the Fixed
Income, International Equity, and Post-Venture Capital Portfolios are based
on actual expenses for the fiscal year ended December 31, 1998, net of any
fee waivers and/or expense reimbursements. Without such waivers and/or
reimbursements, Management Fees would be .50%, 1.00% and 1.25%, Other
Expenses would be 4.82%, .33%, and .45%, and Total Annual Expenses would be
5.32%, 1.33% and 1.70%, respectively. Fee waivers and expense
reimbursements or credits may be discontinued at any time.
Examples - There are two sets of examples below:
* One set is for Contracts with Death Benefit Option 1 (Enhanced Death
Benefit Rider),
* The other set is for Contracts with Death Benefit Option 2 (Standard Death
Benefit).
Death Benefit Option 1 (Enhanced Death Benefit Rider)
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if:
(a) you surrender your Contract at the end of each time period, and
(b) if your Contract is not surrendered or if you apply the Contract value to
an Annuity Option:
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
AIM Variable Insurance Funds, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund............. a) $ 93 a) $123 a) $159 a) $293
b) $ 23 b) $ 73 b) $129 b) $293
AIM V.I. Diversified Income Fund............... a) $ 94 a) $127 a) $164 a) $306
b) $ 24 b) $ 77 b) $134 b) $306
AIM V.I. Growth Fund........................... a) $ 94 a) $125 a) $161 a) $299
b) $ 24 b) $ 75 b) $131 b) $299
AIM V.I. Growth and Income Fund................ a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
AIM V.I. International Equity Fund............. a) $ 96 a) $131 a) $172 a) $324
b) $ 26 b) $ 81 b) $142 b) $324
</TABLE>
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
The Alger American Fund
<S> <C> <C> <C> <C>
Alger American Growth Portfolio................ a) $ 94 a) $127 a) $165 a) $308
b) $ 24 b) $ 77 b) $135 b) $308
Dreyfus Stock Index Fund......................... a) $ 89 a) $110 a) $135 a) $240
b) $ 19 b) $ 60 b) $105 b) $240
Dreyfus Variable Investment Fund
Growth and Income Portfolio.................... a) $ 94 a) $127 a) $165 a) $307
b) $ 24 b) $ 77 b) $135 b) $307
Federated Insurance Series
Federated American Leaders Fund II............. a) $ 95 a) $130 a) $170 a) $320
b) $ 25 b) $ 80 b) $140 b) $320
Federated High Income Bond Fund II............. a) $ 94 a) $127 a) $165 a) $307
b) $ 24 b) $ 77 b) $135 b) $307
Federated Prime Money Fund II.................. a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
Federated Utility Fund II...................... a) $ 96 a) $132 a) $173 a) $326
b) $ 26 b) $ 82 b) $143 b) $326
Federated Fund for U.S. Government Securities II a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
MFS Variable Insurance TrustSM
MFS Emerging Growth Series..................... a) $ 95 a) $130 a) $169 a) $316
b) $ 25 b) $ 80 b) $139 b) $316
MFS Growth With Income Series.................. a) $ 95 a) $129 a) $170 a) $320
b) $ 25 b) $ 79 b) $140 b) $320
MFS Research Series............................ a) $ 95 a) $129 a) $169 a) $317
b) $ 25 b) $ 79 b) $139 b) $317
MFS Total Return Series........................ a) $ 96 a) $131 a) $172 a) $324
b) $ 26 b) $ 81 b) $142 b) $324
MFS Utilities Series........................... a) $ 97 a) $134 a) $178 a) $336
b) $ 27 b) $ 84 b) $148 b) $336
Morgan Stanley Dean Witter Universal Funds, Inc.
Emerging Markets Debt Portfolio................ a) $102 a) $151 a) $207 a) $402
b) $ 32 b) $101 b) $177 b) $402
Equity Growth Portfolio........................ a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
Global Equity Portfolio........................ a) $ 98 a) $139 a) $186 a) $355
b) $ 28 b) $ 89 b) $156 b) $355
High-Yield Portfolio........................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
Value Portfolio................................ a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
Neuberger Berman Advisers Management Trust
ATM Guardian Portfolio......................... a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
AMT Limited Maturity Bond Portfolio............ a) $ 94 a) $126 a) $164 a) $304
b) $ 24 b) $ 76 b) $134 b) $304
AMT Mid-Cap Growth Portfolio................... a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
AMT Partners Portfolio......................... a) $ 95 a) $129 a) $168 a) $315
b) $ 25 b) $ 79 b) $138 b) $315
</TABLE>
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Scudder Variable Life Investment Fund
<S> <C> <C> <C> <C>
Money Market Portfolio......................... a) $ 91 a) $116 a) $146 a) $263
b) $ 21 b) $ 66 b) $116 b) $263
International Portfolio, Class A............... a) $ 97 a) $136 a) $180 a) $342
b) $ 27 b) $ 86 b) $150 b) $342
Van Eck Worldwide Insurance Trust
Worldwide Hard Assets Fund..................... a) $ 99 a) $140 a) $189 a) $361
b) $ 29 b) $ 90 b) $159 b) $361
Warburg Pincus Trust
International Equity Portfolio................. a) $100 a) $145 a) $196 a) $378
b) $ 30 b) $ 95 b) $166 b) $378
Post-Venture Capital Portfolio................. a) $101 a) $147 a) $200 a) $387
b) $ 31 b) $ 97 b) $170 b) $387
Warburg Pincus Trust II
Fixed Income Portfolio......................... a) $ 97 a) $134 a) $177 a) $334
b) $ 27 b) $ 84 b) $147 b) $334
</TABLE>
Death Benefit Option 2 (Standard Death Benefit)
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if:
(a) you surrender your Contract at the end of each time period, and
(b) if your Contract is not surrendered or if you apply the Contract value to
an Annuity Option:
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Aim Variable Insurance Funds, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund............. a) $ 91 a) $117 a) $147 a) $267
b) $ 21 b) $ 67 b) $117 b) $267
AIM V.I. Diversified Income Fund............... a) $ 92 a) $120 a) $153 a) $280
b) $ 22 b) $ 70 b) $123 b) $280
AIM V.I. Growth Fund........................... a) $ 92 a) $119 a) $150 a) $273
b) $ 22 b) $ 69 b) $120 b) $273
AIM V.I. Growth and Income Fund................ a) $ 91 a) $116 a) $146 a) $264
b) $ 21 b) $ 66 b) $116 b) $264
AIM V.I. International Equity Fund............. a) $ 94 a) $125 a) $161 a) $298
b) $ 24 b) $ 75 b) $131 b) $298
The Alger American Fund
Alger American Growth Portfolio................ a) $ 92 a) $121 a) $154 a) $282
b) $ 22 b) $ 71 b) $124 b) $282
Dreyfus Stock Index Fund......................... a) $ 87 a) $104 a) $124 a) $214
b) $ 17 b) $ 54 b) $ 94 b) $214
Dreyfus Variable Investment Fund
Growth and Income Portfolio.................... a) $ 92 a) $120 a) $153 a) $281
b) $ 22 b) $ 70 b) $123 b) $281
</TABLE>
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Federated Insurance Series
<S> <C> <C> <C> <C>
Federated American Leaders Fund II............. a) $ 93 a) $124 a) $159 a) $294
b) $ 23 b) $ 74 b) $129 b) $294
Federated High Income Bond Fund II............. a) $ 92 a) $120 a) $153 a) $281
b) $ 22 b) $ 70 b) $123 b) $281
Federated Prime Money Fund II.................. a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
Federated Utility Fund II...................... a) $ 94 a) $125 a) $162 a) $300
b) $ 24 b) $ 75 b) $132 b) $300
Federated Fund for U.S. Government Securities II a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
MFS Variable Insurance TrustSM
MFS Emerging Growth Series..................... a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
MFS Growth With Income Series.................. a) $ 93 a) $124 a) $159 a) $294
b) $ 23 b) $ 74 b) $129 b) $294
MFS Research Series............................ a) $ 93 a) $123 a) $158 a) $291
b) $ 23 b) $ 73 b) $128 b) $291
MFS Total Return Series........................ a) $ 94 a) $125 a) $161 a) $298
b) $ 24 b) $ 75 b) $131 b) $298
MFS Utilities Series........................... a) $ 95 a) $128 a) $166 a) $311
b) $ 25 b) $ 78 b) $136 b) $311
Morgan Stanley Dean Witter Universal Funds, Inc.
Emerging Markets Debt Portfolio................ a) $100 a) $144 a) $195 a) $376
b) $ 30 b) $ 94 b) $165 b) $376
Equity Growth Portfolio........................ a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
Global Equity Portfolio........................ a) $ 96 a) $132 a) $174 a) $329
b) $ 26 b) $ 82 b) $144 b) $329
High-Yield Portfolio........................... a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
Value Portfolio............................... a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
Neuberger Berman Advisers Management Trust
AMT Guardian Portfolio......................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
AMT Limited Maturity Bond Portfolio............ a) $ 92 a) $120 a) $152 a) $278
b) $ 22 b) $ 70 b) $122 b) $278
AMT Mid-Cap Growth Portfolio................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
AMT Partners Portfolio......................... a) $ 93 a) $122 a) $157 a) $289
b) $ 23 b) $ 72 b) $127 b) $289
Scudder Variable Life Investment Fund
Money Market Portfolio......................... a) $ 89 a) $109 a) $134 a) $237
b) $ 19 b) $ 59 b) $104 b) $237
International Portfolio, Class A............... a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
Van Eck Worldwide Insurance Trust
Worldwide Hard Assets Fund..................... a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
</TABLE>
<TABLE>
<CAPTION>
Time Periods
------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Warburg Pincus Trust
<S> <C> <C> <C> <C>
International Equity Portfolio................. a) $ 98 a) $138 a) $185 a) $352
b) $ 28 b) $ 88 b) $155 b) $352
Post-Venture Capital Portfolio................. a) $ 99 a) $140 a) $189 a) $361
b) $ 29 b) $ 90 b) $159 b) $361
Warburg Pincus Trust II
Fixed Income Portfolio......................... a) $ 94 a) $127 a) $165 a) $308
b) $ 24 b) $ 77 b) $135 b) $308
</TABLE>
The annual expenses of the portfolios and the examples are based on data
Provided by the respective fund groups for the 1998 fiscal year. Future expenses
May be greater or less than those shown. We have not independently verified such
Data.
* Premium taxes are not reflected. They may apply.
* the examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
See the Appendix for Accumulation Unit Values (condensed Financial Information).
The SpectraSelect Fixed and Variable Annuity Contract
This prospectus describes individual and group fixed and variable deferred
annuity contracts and certificates (together referred to as the "Contracts")
offered by ULA.
An annuity is a contract between you, the owner, and an insurance company (in
this case ULA), where the insurance company promises to pay you (or someone else
you choose) an income, in the form of Annuity Payments, beginning on a
designated date that is at least three years in the future.
Like all deferred annuity contracts, your Contract has two phases: the
Accumulation Phase and the Income Phase. Until you begin receiving Annuity
Payments, your annuity is in the Accumulation Phase. During the Accumulation
Phase, your earnings accumulate on a Tax-Deferred basis and are based on the
investment performance of the Portfolio(s) you selected and/or the interest rate
earned on the money you have in the Fixed Account and the Interest Adjustment
Account. During the Accumulation Phase, the earnings are taxed as income only
when you make a withdrawal. The Income Phase occurs when you begin receiving
regular payments from your Contract. The amount of the payments you may receive
Accumulation during the Income Phase depends, in part, upon the amount of money
you are able to accumulate in your Contract during the Accumulation Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on earnings or appreciation on the assets in your Contract until you take
money out of your Contract.
The Contract is called a variable annuity because you can choose among the
available Portfolios and, depending upon market conditions, you can make or lose
money in any of these Portfolios. If you select the variable annuity portion of
the Contract, the amount of money you are able to accumulate in your Contract
during the Accumulation Phase depends upon the investment performance of the
Portfolio(s) you select. The Annuity Payments you will receive during the Income
Phase will come from the Fixed Account.
The Contract contains a Fixed Account. The Fixed Account offers an interest rate
that is guaranteed by ULA. There is a one year Guarantee Period available for
the Fixed Account. ULA guarantees that the interest credited to the Fixed
Account will not be less than 3% per year. If you select the Fixed Account, your
money will be placed with our other general assets. If you select the Fixed
Account, the amount of money you are able to accumulate in your Contract during
the Accumulation Phase depends upon the total interest credited to your
Contract.
The Contract also has an Interest Adjustment Account with three Guarantee
Periods currently available: 3 years, 5 years and 7 years. Each allocation to a
Guarantee Period locks in a fixed annual interest rate declared by ULA. If you
make a withdrawal, transfer or apply your Contract value to an Annuity Option of
amounts you have allocated a Guarantee Period prior to the end of that Guarantee
Period, it may be subject to an interest adjustment.
We may make changes to your Contract in order to comply with applicable law.
Owner. The SpectraSelect Fixed and Variable Annuity is a group deferred annuity
contract. A group contract is issued to a contractholder, for the benefit of the
participants in the group. You are a participant in the group and will receive a
certificate evidencing your ownership. You, as the Owner of a certificate, are
entitled to all the rights and privileges of ownership. In some states an
individual fixed and variable deferred annuity contract is issued instead, which
is identical to the group contract described in this prospectus except that it
is issued directly to the Owner. As used in this prospectus, the term Contract
refers to your certificate or individual contract. The Owner is as designated at
the time the Contract is issued, unless changed.
You may change Owners at any time prior to the Income Date. This may be a
taxable event. You should consult with your tax adviser before doing this.
Joint Owner. The Contract can be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Owner. Upon the death of either Joint Owner, the
surviving spouse will be the primary Beneficiary. Any other Beneficiary
designation will be treated as a contingent Beneficiary unless otherwise
indicated. Unless otherwise specified, if there are Joint Owners, both
signatures will be required for all transactions except telephone transfers.
Annuitant. The Annuitant is the person whose life we look to when we make
Annuity Payments. You choose the Annuitant at the time the Contract is issued.
You may change the Annuitant at any time before the Income Date unless the
Contract is owned by a non-individual (for example, a corporation). Any change
of Annuitant is subject to our underwriting rules then in effect. On or after
the Income Date, the Annuitant will include any Joint Annuitant.
Beneficiary. The Beneficiary is the person(s) or entity you name to receive any
death benefit. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.
Assignment. You can assign the Contract at any time during your lifetime. ULA
will not be bound by the assignment until it receives the written notice of the
assignment. ULA will not be liable for any payment or other action we take in
accordance with the Contract before we receive notice of the assignment. Any
assignment made after the death benefit has become payable can only be done with
our consent. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the Contract is issued pursuant to a Qualified plan, there may be limitations
on your ability to assign the Contract.
Annuity Payments (The Income Phase)
Income Date
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be at least three years after you buy the
Contract. The Income Date may not be later than when the Annuitant reaches age
85 or 10 years after the Contract is issued for Annuitants older than 75.
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with thirty (30) days notice to us.
Annuity Payments
* You (or someone you designate) will receive the Annuity Payments.
* Annuity Payments are paid in monthly installments.
* Annuity Payments will be made on a fixed basis only (which means they will
come from the Fixed Account and will not be based on the investment
performance of the Portfolios).
* If the value of your Contract to be applied to an Annuity Option is less
than $2,000, we reserve the right to pay you a lump sum amount instead of
Annuity Payments. Also, if the Annuity Payments would be or become less
than $200, we reserve the right to reduce the frequency of payments so that
they will be at least $200.
Annuity Options
You can also choose among income plans. We call those Annuity Options. You can
choose one of the following Annuity Options or any other Annuity Option you want
and that ULA agrees to provide. If you do not choose an Annuity Option prior to
the Income Date, we will assume that you selected Option B which provides a life
annuity with 120 monthly payments guaranteed. Prior to the Income Date, you can
change the Annuity Option. Any change must be requested at least thirty (30)
days prior to the Income Date. After Annuity Payments begin, you cannot change
the Annuity Option.
Option A. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
Option B. Life Annuity With 60, 120, 180 or 240 Monthly Payments Guaranteed.
Under this option, we will make monthly Annuity Payments so long as the
Annuitant is alive. However, if, when the Annuitant dies, we have made Annuity
Payments for less than the selected guaranteed period, we will continue to make
Annuity Payments to you for the rest of the guaranteed period. If you do not
want to receive Annuity Payments, you can ask us for a single lump sum.
Option C. Joint and Survivor Annuity. Under this option, we will make monthly
Annuity Payments during the joint lifetime of the Annuitant and the joint
Annuitant. When the Annuitant dies, if the joint Annuitant is still alive, we
will continue to make Annuity Payments, so long as the joint Annuitant continues
to live. The monthly Annuity Payments will end when the last surviving Annuitant
dies.
How to Purchase a Contract
Purchase Payments
A Purchase Payment is the money you give us to buy the Contract. The following
are the Purchase Payment requirements:
* The minimum payment ULA will accept is $5,000 when the Contract is bought
as a Non-Qualified Contract.
* If the Contract is bought as a Qualified Contract, the minimum payment we
will accept is $2,000. This requirement may be waived if you buy this
Contract as part of an IRA (Individual Retirement Annuity) or 403(b) plan.
* We may also waive the minimum Purchase Payment requirements if you select
the automatic premium check option. plan.
* The maximum amount we will accept without our prior approval is $500,000.
plan.
* You can make additional Purchase Payments of $500 (or as low as $100 if you
have selected the automatic premium check option) or more to either type of
Contract.
* We reserve the right to reject any Purchase Payment or application.
At the time you buy the Contract, you and the Annuitant cannot be older than 85
years old for a Non-Qualified Contract and 75 years old for a Qualified
Contract.
Allocation of Purchase Payments plan.
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account, one or more Guarantee Periods of the Interest Adjustment Account
and/or one or more of the Portfolios you have selected. We ask that you allocate
your money in whole percentages with a minimum allocation of 5% of each Purchase
Payment or transfer or $500 (whichever is greater). You can instruct us how to
allocate additional Purchase Payments you make. If you do not instruct us, we
will allocate them in the same way as your previous instructions to us. Under
certain circumstances, we will allocate your initial Purchase Payment to the
Money Market Portfolio until the end of the right to examine contract period
same (see below). CURRENTLY, YOU CAN SELECT UP TO TEN OF THE THIRTY-FIVE
INVESTMENT OPTIONS (WHICH INCLUDE EACH PORTFOLIO, THE FIXED ACCOUNT AND EACH
GUARANTEE PERIOD OF THE INTEREST ADJUSTMENT ACCOUNT).
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you make additional
Purchase Payments, we will these amounts to your Contract within one business
day. Our business day closes when the New York Stock Exchange closes, which is
usually at 4:00 p.m. Eastern time.
Right to Examine Contract
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the Contract within this time period, ULA will not assess a contingent deferred
sales charge. You will receive back whatever your Contract is worth on the day
we receive your request. In certain states or if you have purchased the Contract
as an IRA, we may be required to refund your Purchase Payment if you decide to
cancel your Contract within 10 days after receiving it (or whatever period is
required in your state). If that is the case, we will allocate your Purchase
Payment(s) received during the right to examine period to the Money Market
Portfolio (except for any portion of your Purchase Payment(s) which you selected
to be allocated to the Fixed Account and/or the Interest Adjustment Account) for
15 days and refund the greater of the value of your Contract or your Purchase
Payment(s). (In some states, the period may be longer.) At the end of the
period, we will re-allocate your Purchase Payment as you selected.
Accumulation Units
The value of the portion of your Contract allocated to the Portfolios will go up
or down depending upon the investment performance of the Portfolio(s) you
choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund).
Every business day we determine the value of an Accumulation Unit by multiplying
the Accumulation Unit value for the previous period by a factor for the current
period. The factor is determined by:
1. dividing the value of a Portfolio share at the end of the current period by
the value of a Portfolio share for the previous period; and
2. subtracting from that amount any insurance charges.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units. We determine the number of Accumulation Units to credit to your Contract
by dividing the amount of the Purchase Payment allocated to a Portfolio by the
value of the Accumulation Unit for that Portfolio.
We calculate the value of an Accumulation Unit for each Portfolio after the New
York Stock Exchange closes each day and then credit your Contract accordingly.
Example:
On Tuesday we receive an additional Purchase Payment of $4,000 from you. You
have told us you want this to go to the Alger American Growth Portfolio. When
the New York Stock Exchange closes on that Tuesday, we determine that the value
of an Accumulation Unit for investment in the Alger American Growth Portfolio is
$11.25. We then divide $4,000 by $11.25 and credit your Contract on Tuesday
night with 355.56 Accumulation Units for the Alger American Growth Portfolio.
Investment Options Growth Portfolio.
When you buy the Contract you have the opportunity to allocate your money to:
(1) the Fixed Account;
(2) the Interest Adjustment Account; and
(3) the Portfolios set forth below. Additional Portfolios may be available in
the future. In certain states, certain Portfolios may not be available
until approved by the Insurance Department (check with your registered
representative regarding availability).
You should read the prospectuses for the portfolios carefully before investing.
The prospectuses for the portfolios accompany this prospectus.
AIM Variable Insurance Funds, Inc.
AIM Advisors, Inc. serves as the Fund's investment adviser. The Fund is
comprised of thirteen funds, the following five of which are available under the
Contract:
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
The Alger American Fund
Fred Alger Management, Inc. is the investment manager. The Trust is comprised of
six Portfolios, the following one of which is available under the Contract:
Alger American Growth Portfolio
Dreyfus Stock Index Fund
The Dreyfus Corporation serves as the Fund's manager and Mellon Equity
Associates serves as the Fund's index fund manager.
Dreyfus Variable Investment Fund
The Dreyfus Corporation serves as the investment adviser. The Fund is comprised
of thirteen Portfolios, the following one of which is available under the
Contract:
Growth and Income Portfolio
Federated Insurance Series
Federated Investment Management Company (formerly, Federated Advisers) is the
investment adviser to each Fund. The Trust has multiple separate Funds, the
following five of which are available under the Contract:
Federated American Leaders Fund II (a capital growth portfolio)
Federated High Income Bond Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Fund for U.S. Government Securities II
MFS Variable Insurance TrustSM
Massachusetts Financial Services Company is the investment adviser to each
Series. The Trust is comprised of twelve Series, the following five of which are
available under the Contract:
MFS Emerging Growth Series
MFS Growth With Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
Morgan Stanley Dean Witter Universal Funds, Inc.
(formerly known as Morgan Stanley Universal Funds, Inc.)
Morgan Stanley Dean Witter Investment Management Inc. (formerly known as Morgan
Stanley Asset Management Inc.) serves as the investment adviser for the Emerging
Markets Debt, Equity Growth, and Global Equity Portfolios. Miller Anderson &
Sherrerd, LLP serves as the investment adviser for the High-Yield and Value
Portfolios. The Fund is comprised of eighteen portfolios, the following five of
which are available under the Contract:
Emerging Markets Debt Portfolio
Equity Growth Portfolio
Global Equity Portfolio
High-Yield Portfolio
Value Portfolio (an equity value portfolio)
Neuberger Berman Advisers Management Trust
Each portfolio of Neuberger Berman Advisers Management Trust invests in a
corresponding series of Advisers Managers Trust. All series of Advisers Managers
Trust are managed by Neuberger Berman Management Inc. The following are
available under the Contract:
AMT Guardian Portfolio (a capital appreciation and secondarily, current
income portfolio)
AMT Limited Maturity Bond Portfolio
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio (a capital growth portfolio)
Scudder Variable Life Investment Fund
Scudder, Stevens & Clark, Inc. is the investment adviser to the Fund. The Trust
is comprised of seven portfolios, the following two of which are available under
the Contract:
Money Market Portfolio
International Portfolio, Class A
Van Eck Worldwide Insurance Trust
Van Eck Associates Corporation is the investment adviser to the Fund. The Trust
is comprised of five funds, the following one of which is available under the
Contract:
Worldwide Hard Assets Fund
Warburg Pincus Trust
Warburg Pincus Asset Management, Inc. serves as the investment adviser to the
Trust. The Trust is comprised of seven portfolios, the following two of which
are available under the Contract:
International Equity Portfolio
Post-Venture Capital Portfolio (a long-term capital growth portfolio)
Warburg Pincus Trust II
Warburg Pincus Asset Management, Inc. serves as the investment adviser to the
Trust. The Trust is comprised of multiple portfolios, the following one of which
is available under the Contract:
Fixed Income Portfolio
Shares of the Portfolios may be offered in connection with certain variable
annuity contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated with ULA. Certain Portfolios may
also be sold directly to qualified plans. The Portfolios believe that offering
their shares in this manner will not be disadvantageous to you.
ULA may enter into certain arrangements under which it is reimbursed by the
Portfolios advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
Voting Rights
ULA is the legal owner of the Portfolio shares. However, ULA believes that when
a Portfolio solicits proxies in conjunction with a shareholder vote, it is
required to obtain from you and other affected Contract owners instructions as
to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. This will also
include any shares that ULA owns on its own behalf. Should ULA determine that it
is no longer required to comply with the above, we will vote the shares in our
own right.
Substitution
ULA may be required to substitute one of the Portfolios you have selected with
another Portfolio. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this.
Transfers
During the Accumulation Phase, you can transfer money among the Portfolios, the
Fixed Account and the Interest Adjustment Account, after the right to examine
contract period is over. During the Accumulation Phase, ULA currently allows you
to make as many transfers as you want to each year. However, this product is not
designed for professional market timing organizations or other individuals using
programmed and frequent transfers. Such activity may be disruptive to a
Portfolio. We reserve the right to stop or prohibit these types of transfers if
we determine that they could harm a Portfolio.
If you make more than 12 transfers in a year, there is a transfer fee deducted.
The fee is the lesser of $25 per transfer or 2% of the amount transferred. The
following applies to any transfer:
1. The minimum amount which you can transfer is $250 from an Account or your
entire value in the Account. This requirement is waived if the transfer is
in connection with the Dollar Cost Averaging Program (which is described
below).
2. You cannot make transfers during the right to examine contract period.
3. The minimum amount which must remain in an Account after a transfer is
$500, or $0 if the entire amount in the Account is transferred.
4. The maximum amount which can be transferred from the Fixed Account to the
Portfolios is 25% of the value of your Contract in the Fixed Account in any
one Contract year. This requirement is waived if the transfer is made
pursuant to the Dollar Cost Averaging or Rebalancing Programs.
5. The maximum amount which can be transferred from each Guarantee Period in
the Interest Adjustment Account to the Portfolios, the Fixed Account or
another Guarantee Period of the Interest Adjustment Account is 25% of the
value of your Contract in the Interest Adjustment Account as of the
beginning of the current Contract year. If there was no Contract value in
the Interest Adjustment Account at the beginning of the year, then the
transfer is limited to 25% of the Purchase Payment allocated to the
Interest Adjustment Account.
6. We reserve the right, at any time, to terminate, suspend or modify the
transfer privileges described above.
7. You cannot make transfers during the Income Phase.
Telephone Transfers
You can make transfers by telephone during the Accumulation Phase. We may allow
you to authorize someone else to make transfers by telephone on your behalf. If
you own the Contract with a Joint Owner, unless ULA is instructed otherwise, ULA
will accept telephone instructions from either one of you. ULA will use
reasonable procedures to confirm that instructions given us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. We may tape record all telephone
instructions. The telephone privilege may be discontinued at any time.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money on a monthly, quarterly or semi-annual basis from a Money Market
Portfolio or the Fixed Account to one or more Portfolios. Transfers to the Fixed
Account or Interest Adjustment Account are not permitted under Dollar Cost
Averaging. By allocating amounts on a regularly scheduled basis, as opposed to
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations. You may only participate in this program
during the Accumulation Phase. The minimum amount which may be transferred is
$50 (per Portfolio). We will notify you for instructions if at any time the
value of the Money Market Portfolio or the Fixed Account is not sufficient to
make the requested transfer.
All Dollar Cost Averaging transfers will be made at any time prior to the 25th
of a calendar month. If you choose this Program, you must participate in it for
at least one year.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the Program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and the Rebalancing
Program at the same time.
We reserve the right to terminate, suspend or modify the Dollar Cost Averaging
Program.
Rebalancing Program
Once your money has been invested, the performance of the Portfolios and the
earnings from the Fixed Account and Guarantee Periods of the Interest Adjustment
Account may cause your allocation to shift. The Rebalancing Program is designed
to help you maintain your specified allocation mix among the different
Portfolios. You can direct us to readjust your money quarterly, semi-annually or
annually to return to your particular percentage allocations. The value of your
Contract must be at least $5,000 to have transfers made under this Program. You
may not rebalance your money in the Fixed Account or the Interest Adjustment
Account.
If you participate in the Rebalancing Program, the transfers made under the
Program are not taken into account in determining any transfer fee. You may not
participate in the Rebalancing Program and the Dollar Cost Averaging Program at
the same time.
Asset Allocation Programs
ULA understands the importance of having available on a continuous basis advice
from a financial adviser regarding your investments in the Contract (asset
allocation program). Certain investment advisers have made arrangements with us
to make their services available to you. ULA has not made any independent
investigation of these advisers and is not endorsing such programs. You may be
required to enter into an advisory agreement with your investment adviser. You
are responsible for the compensation of the adviser you choose.
Under certain asset allocation programs, if you are under age 59 1/2, you will
be billed for the services of the investment adviser. If you are 59 1/2 or
older, ULA will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and will be includible in gross income for federal tax
purposes and, under certain circumstances, may be subject to a tax penalty.
Performance
ULA may periodically advertise performance of the various Portfolios. ULA will
calculate performance by determining the percentage change in the value of an
Accumulation Unit by dividing the increase (decrease) for that unit by the value
of the Accumulation Unit at the beginning of the period. This performance number
reflects the deduction of the insurance charges and the expenses of the
Portfolio. It does not reflect the deduction of any applicable contingent
deferred sales charge. The deduction of any applicable contingent deferred sales
charge would reduce the percentage increase or make greater any percentage
decrease. Any advertisement will also include average annual total return which
reflect the deduction of the insurance charges, contingent deferred sales
charges and the expenses of the Portfolios.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are relatively new. In order to
demonstrate how the actual investment experience of the Portfolios may affect
your Accumulation Unit values, ULA prepares performance information. The
performance is based on the performance of the Portfolios, modified to reflect
the charges and expenses of your Contract as if it had been in existence for the
time periods shown. ULA will also provide standardized total return performance
figures for the Accumulation Unit values for the applicable time periods, where
available. The information is based upon the historical experience of the
Portfolios and does not necessarily represent what your investment would earn in
those Portfolios.
From time to time, we may advertise the Money Market Portfolio's yield and
effective yield. ULA may also in the future advertise yield information for one
or more of the other Portfolios. If it does, it will provide you with
information regarding how yield is calculated. More detailed information
regarding how performance is calculated is found in the SAI.
Any performance advertised will be based on historical data and does not
guarantee future results of the Portfolios.
Expenses
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
Insurance Charges
We deduct insurance charges each day. We do this as part of the calculation of
the value of the Accumulation Units. The insurance charges are:
1) the mortality and expense risk charge, and
2) the administrative charge.
Mortality and Expense Risk Charge.
Death Benefit Option 1 (Enhanced Death Benefit Rider). The Mortality and Expense
Risk Charge for Contracts with the Enhanced Death Benefit Rider is equal, on an
annual basis, to 1.45% of the average daily value of the Contract invested in a
Portfolio, after the deduction of expenses.
Death Benefit Option 2 (Standard Death Benefit). The Mortality and Expense Risk
charge for Contracts with the Standard Death Benefit is equal, on an annual
basis, to 1.25% of the average daily value of the Contract invested in a
Portfolio, after the deduction of expenses.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, the guarantee of annuity rates in your Contract, the
death benefits, certain expenses related to the Contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in a Portfolio, after the deduction
of expenses. This charge is for all the expenses associated with the
administration of the Contract. Some of these expenses include: preparation of
the Contract, confirmations, annual statements, maintenance of Contract records,
personnel costs, legal and accounting fees, filing fees, and computer and
systems costs.
Contingent Deferred Sales Charge
Withdrawals may be subject to a contingent deferred sales charge. During the
Accumulation Phase, you can make withdrawals from your Contract (see the
"Withdrawals" section). ULA keeps track of each Purchase Payment you make. The
amount of the contingent deferred sales charge depends upon how long ULA has had
your payment. The charge is calculated at the time of each withdrawal and will
be deducted from the value remaining in your Contract. The charge is:
<TABLE>
<CAPTION>
Number of complete years from
receipt of Purchase Payment: 0 1 2 3 4 5 6 7 years or more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Contingent Deferred Sales Charge: 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
However, after ULA has had a Purchase Payment for 7 years, there is no charge
when you withdraw that Purchase Payment. For purposes of the contingent deferred
sales charge, ULA treats withdrawals as coming from the oldest Purchase Payments
first. ULA does not assess the contingent deferred sales charge on any payments
paid out as Annuity Payments or as death benefits.
Note: For tax purposes, withdrawals are considered to have come from the last
money you put into the Contract. Thus, for tax purposes, earnings are considered
to come out first.
Free Withdrawal Amount -- You can make a partial withdrawal without incurring a
contingent deferred sales charge of the "free withdrawal amount." The free
withdrawal amount is equal to the greater of: (a) earnings, or (b) 10% of
remaining Purchase Payments at the beginning of the current year. If your
withdrawal is not on a Contract anniversary, the free withdrawal amount is equal
to the free withdrawal amount at the beginning of the Contract year less amounts
withdrawn without the contingent deferred sales charge during the current
Contract year. If you make a complete withdrawal, the free withdrawal amount is
not available. Any amounts withdrawn as the free withdrawal amount will not be
subject to an Interest Adjustment.
In addition, in certain states, you can make a total or partial withdrawal and
ULA will not deduct the contingent deferred sales charge if you are confined to
a skilled nursing home facility for 90 consecutive days after the first Contract
year.
Reduction or Elimination of the Contingent Deferred Sales Charge
ULA may reduce or eliminate the amount of the contingent deferred sales charge
when the Contract is sold under circumstances which reduce its sales expenses.
Some examples are: if there is a large group of individuals that will be
purchasing the Contract or a prospective purchaser already had a relationship
with ULA. ULA will not deduct a contingent deferred sales charge under a
Contract issued to an officer, director or employee of ULA or any of its
affiliates. Any circumstances resulting in the reduction or elimination of the
contingent deferred sales charge requires our prior approval.
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred, whichever is less,
for each additional transfer.
If the transfer is part of the Dollar Cost Averaging or Rebalancing Programs, it
will not count in determining the transfer fee.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. ULA is responsible for the payment of these
taxes and will make a deduction from the value of your Contract for them. Some
of these taxes are due when the Contract is issued, others are due when Annuity
Payments begin. It is ULA's current practice to pay any premium taxes when they
become payable to the states. Premium taxes generally range from 0% to 4.0%,
depending on the state.
Income Taxes
ULA will deduct from the Contract any income taxes which it may incur because of
the Contract. Currently, ULA is not making any such deductions.
Portfolio Expenses
There are deductions from and expenses paid out of the assets of the various
Portfolios which are described in the prospectuses for the Portfolios.
Taxes
Note: ULA has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice. You should consult
your own tax adviser about your own circumstances. ULA has included additional
information regarding taxes in the Statement of Additional Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs -- usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on the earnings on the
money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract --
Qualified or Non-Qualified (see following sections).
You, as the Owner, will not be taxed on increases in the value of your Contract
until a distribution occurs -- either as a withdrawal or as Annuity Payments.
When you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For Annuity Payments, different rules apply. A portion of each Annuity
Payment you receive will be treated as a partial return of your Purchase
Payments and will not be taxed. The remaining portion of the Annuity Payment
will be treated as ordinary income. How the Annuity Payment is divided between
taxable and non-taxable portions depends upon the period over which the Annuity
Payments are expected to be made. Annuity Payments received after you have
received all of your Purchase Payments are fully includible in income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
Qualified and Non-Qualified Contracts
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) Contracts), pension and profit-sharing plans, which include 401(k) plans
and H.R. 10 Plans and Section 457 Deferred Compensation Plans.
If you do not purchase the Contract under a Qualified plan, your Contract is
referred to as a Non-Qualified Contract.
Withdrawals Non-Qualified Contracts
If you make a withdrawal from your Contract, the Code treats such a withdrawal
as first coming from earnings and then from your Purchase Payments. In most
cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for the life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
Withdrawals Qualified Contracts
The above information describing the taxation of Non-Qualified Contracts does
not apply to Qualified Contracts. There are special rules that govern Qualified
Contracts. A more complete discussion of withdrawals from Qualified Contracts is
contained in the Statement of Additional Information.
Withdrawals Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to purchase payments made
pursuant to a salary reduction agreement by owners from Tax- Sheltered
Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship. However, in the case of hardship, the owner can
only withdraw the purchase payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. ULA believes that the Portfolios are being managed so as to
comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not ULA would be
considered the owner of the shares of the Portfolios. If you are considered the
owner of the shares, it will result in the loss of the favorable tax treatment
for the Contract. It is unknown to what extent under federal tax law Contract
Owners are permitted to select Portfolios, to make transfers among the
Portfolios or the number and type of Portfolios Owners may select from without
being considered the owner of the shares. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the Owner of the
Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, ULA reserves the right to modify the
Contract in an attempt to maintain favorable tax treatment.
Withdrawals
You can have access to the money in your Contract:
(1) by making a withdrawal (either a partial or a total withdrawal);
(2) by receiving Annuity Payments; or
(3) when a death benefit is paid to your Beneficiary.
Withdrawals can only be made during the Accumulation Phase.
When you make a complete withdrawal you will receive the value of the Contract
on the day you made the withdrawal:
* less any applicable contingent deferred sales charge, and
* less any premium tax.
(See "Expenses" for a discussion of the charges.) A withdrawal from the Interest
Adjustment Account may be subject to an adjustment.
Partial Withdrawals
* Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program, see below).
* Unless you tell us otherwise, partial withdrawals will be made pro-rata
from the Portfolios. ULA requires that after you make a partial withdrawal
the value of your Contract must be at least $2,000 and the value of any
Account must be at least $500.
* A partial withdrawal from the Fixed Account or the Interest Adjustment
Account is made first from the one year Fixed Account Guarantee Period and
then next from the Guarantee Period of the shortest remaining duration and
then from the Guarantee Period with the earliest effective date where the
Guarantee Periods are of the same duration.
* A partial withdrawal is taken first from the value of the Contract for
which the free withdrawal provision applies and then from the value for
which there is no waiver.
Income taxes, tax penalties and certain restrictions may apply to any Withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see -- Taxes and the
discussion in the SAI.
Systematic Withdrawal Program
If the value of your Contract is at least $12,000, ULA offers a Program which
provides automatic periodic payments to you each year. Systematic withdrawals
can be made at any time, including during the first year. You can instruct us
how much you want to withdraw under the Program as long as each payment is at
least $100. You may terminate systematic withdrawals by giving us thirty (30)
days prior written notice. We do not currently charge for systematic withdrawals
but reserve the right to charge for them in the future. The contingent deferred
sales charge may apply to systematic withdrawals (see "Expenses"). Systematic
withdrawals are available for Qualified and Non-Qualified Contracts.
Income taxes, tax penalties and certain restrictions may apply to Systematic
withdrawals.
Suspension of Payments or Transfers
ULA may be required to suspend or postpone payments for withdrawals or transfers
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio shares
is not reasonably practicable or ULA cannot reasonably value the Portfolio
shares;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
ULA has reserved the right to defer payment for a withdrawal or transfer from
the Fixed Account or the Interest Adjustment Account for the period permitted by
law but not for more than six months.
Death Benefit
Upon Your Death
If you die during the Accumulation Phase, ULA will pay a death benefit to your
Beneficiary (see below). No death benefit is paid during the Income Phase. If
you have a Joint Owner, and the Joint Owner dies, the surviving Owner will be
considered the primary Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses.
Death Benefit
You can select Death Benefit Option 1 (Enhanced Death Benefit Rider) or Death
Benefit Option 2 (Standard Death Benefit). If you bought your Contract before
May 1, 1998, your Contract had Death Benefit Option 1 (Enhanced Death Benefit
Rider). On your next Contract anniversary after May 1, 1998, you were given a
chance to make a one time only election to choose Death Benefit Option 2
(Standard Death Benefit). In certain states, only Death Benefit Option 1 is
available until approved by the Insurance Department in your state (check with
your registered representative regarding availability).
Death Benefit Option 1 Enhanced Death Benefit Rider
If you select Death Benefit Option 1, the death benefit will be the value of
your Contract in the Fixed Account and the Interest Adjustment Account plus the
greatest of:
(a) the value of your Contract invested in the Portfolios as of the date ULA
receives proof of death and an election for the method of payment; or
(b) the Purchase Payments you have made which are invested in the Portfolios,
less any money taken out and transfers from the Portfolios (and related
contingent deferred sales charges and transfer fees), increased by 4% per
year up to the first Contract anniversary after your 75th birthday; or
(c) the highest reset value up to the date of death. The reset value is the
value of your Contract invested in the Portfolios on each Contract
anniversary prior to your 80th birthday, plus Purchase Payments you have
made after such Contract anniversary and invested in the Portfolios, less
any money taken out and transfers from the Portfolios after such
anniversary and any related contingent deferred sales charges and transfer
fees.
Death Benefit Option 2 - Standard Death Benefit
If you select Death Benefit Option 2, the Death Benefit will be the greaterof:
(a) the Purchase Payments you have made, less any money you have taken out and
related contingent deferred sales charges; or
(b) the value of your Contract on the date we receive both proof of death and
an election for the payment method.
A Beneficiary may request that the death benefit be paid in one of the following
ways:
(1) lump sum payment of the death benefit;
(2) payment of the entire death benefit within 5 years of the date of death; or
(3) payment of the death benefit under an Annuity Option.
The death benefit payable under an Annuity Option must be paid over the
Beneficiary's lifetime or for a period not extending beyond the Beneficiary's
life expectancy. Payment must begin within one year of the date of death. Any
portion of the death benefit not applied under (3) above within one year of the
date of the Owner's death must be distributed within five years of the date of
death.
If the Beneficiary is the spouse of the Owner, he/she can choose to continue the
Contract in his/her own name at the then current value, elect a lump sum payment
of the death benefit or apply the death benefit to an Annuity Option. Payment to
the Beneficiary, other than in a lump sum, may only be elected during the
sixty-day period beginning with the date we receive proof of death. If a lump
sum payment is elected and all the necessary requirements are met, we will make
the payment within seven days.
If you (or any Joint Owner) die on or after the Income Date and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Income Phase, the Beneficiary becomes the Owner.
Death of Annuitant
If the Annuitant, who is not an Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If a new Annuitant is not
named within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Owner is a non-natural person (e.g., a corporation),
then the death of the Annuitant will be treated as the death of the Owner, and a
new Annuitant may not be named.
If the Annuitant dies on or after the Income Date, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Owner at least as rapidly as they
were being paid at the Annuitant's death.
Other Information
ULA
United Life & Annuity Insurance Company (ULA) is a stock life insurance company
organized in 1955. ULA was originally domiciled in Louisiana. On December 18,
1998, ULA was re-domesticated to Texas. ULA is authorized to conduct business in
47 states, the District of Columbia and Puerto Rico. On July 24, 1996, Pacific
Life and Accident Insurance Company (PLAIC) acquired one hundred percent
ownership of ULA. PLAIC is a wholly-owned subsidiary of PennCorp Financial
Group, Inc.
On February 21, 1999, PLAIC signed a definitive agreement to sell ULA and its
wholly-owned subsidiary, United Variable Services, Inc. to ING America Insurance
Holdings Inc. ("ING"). ING's ultimate parent is ING Group, headquartered in the
Netherlands. ING Group is one of the largest financial services organizations in
the world. The sale of ULA to ING was completed on April 30, 1999.
Year 2000 Matters
ULA has initiated comprehensive reviews and plans to determine the readiness of
its computer systems. These plans include a process which ensures that when a
particular system, or software application, is determined to be "non- compliant"
the proper steps are in place to remedy the "non-compliance" or cease using the
particular system or software.
These plans specifically provide for an inventory of all critical computer
systems, testing of such systems and resolution of Year 2000 issues. ULA has
identified and made available what it believes are the appropriate resources,
hardware, personnel and funds to ensure Year 2000 compliance. It is anticipated
that all compliance issues will be resolved on or before December 31, 1999.
ULA will not conclusively know the success of its plan until the Year 2000. Even
with appropriate and diligent pursuit of a well-conceived response plan,
including testing procedures, there is no certainty that any company will
achieve complete success.
The Separate Account
ULA established a separate account, United Life & Annuity Separate Account One
(Separate Account), to hold the assets that underlie the Contracts. Prior to May
1, 1997, the Separate Account was known as United Companies Separate Account
One. Our Board of Directors adopted a resolution to establish the Separate
Account under Louisiana insurance law on November 2, 1994. ULA has registered
the Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. The Separate Account
is divided into sub-accounts. Each sub-account invests in a portfolio.
The assets of the Separate Account are held in ULA's name on behalf of the
Separate Account and legally belong to ULA. However, those assets that underlie
the Contracts, are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
Contracts and not against any other Contracts we may issue.
Distribution
United Variable Services, Inc. (UVS), 851 S.W. Sixth Avenue, Suite 850,
Portland, OR 97204, acts as the distributor of the Contracts. UVS is a wholly-
owned subsidiary of ULA. Commissions will be paid to broker-dealers who sell the
Contracts.
Financial Statements
The financial statements of ULA and the Separate Account have been included in
the Statement of Additional Information.
Appendix Condensed Financial Information
Accumulation Unit Values
The following schedule includes Accumulation Unit values for the periods
indicated. This data has been taken from the Separate Account's financial
statements. This information should be read in conjunction with the Separate
Account's financial statements and related notes thereto which appear in the
Statement of Additional Information. Chart 1 reflects Contracts with Death
Benefit Option 1. Chart 2 reflects Contracts with Death Benefit Option 2.
<TABLE>
<CAPTION>
Chart 1:
Period from
Commencement
Date of of Operations or
Commencement Year Ended Year Ended for Year Ended
of Operations 12-31-98 12-31-97 12-31-96
------------- -------- -------- --------
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C> <C>
Unit value at beginning of period 7/9/98 $ 8.84 N/A N/A
Unit value at end of period 10.38
Number of units outstanding at end of period 196,604
AIM V.I. Diversified Income Sub-Account
Unit value at beginning of period 7/31/98 $ 9.72 N/A N/A
Unit value at end of period 9.91
Number of units outstanding at end of period 51,420
AIM V.I. Growth Sub-Account
Unit value at beginning of period 7/15/98 $ 8.72 N/A N/A
Unit value at end of period 11.51
Number of units outstanding at end of period 102,814
AIM V.I. Growth And Income Sub-Account
Unit value at beginning of period 7/31/98 $ 8.99 N/A N/A
Unit value at end of period 11.29
Number of units outstanding at end of period 122,167
AIM V.I. International Equity Sub-Account
Unit value at beginning of period 6/12/98 $ 8.66 N/A N/A
Unit value at end of period 9.84
Number of units outstanding at end of period 114,030
Alger American Growth Sub-Account
Unit value at beginning of period 1/19/96 $13.88 $11.21 $ 10.05
Unit value at end of period 20.22 $13.88 $ 11.21
Number of units outstanding at end of period 871,098 58,256 42,143
AMT Guardian Sub-Account
Unit value at beginning of period 8/14/98 $ 7.21 N/A N/A
Unit value at end of period 9.35
Number of units outstanding at end of period 41,940
AMT Limited Maturity Bond Sub-Account
Unit value at beginning of period 8/24/98 $ 9.87 N/A N/A
Unit value at end of period 10.14
Number of units outstanding at end of period 2,059
AMT Mid-Cap Growth Sub-Account
Unit value at beginning of period 8/24/98 $ 8.26 N/A N/A
Unit value at end of period 11.32
Number of units outstanding at end of period 33,595
AMT Partners Sub-Account
Unit value at beginning of period 8/6/98 $ 9.09 N/A N/A
Unit value at end of period 9.32
Number of units outstanding at end of period 35,832
Dreyfus Stock Index Sub-Account
Unit value at beginning of period 3/4/96 $16.02 $12.25 $ 10.15
Unit value at end of period 20.22 $16.02 $ 12.25
Number of units outstanding at end of period 1,057,803 45,285 20,958
Dreyfus Growth And Income Sub-Account
Unit value at beginning of period 1/19/96 $14.23 $12.45 $ 10.48
Unit value at end of period 15.67 $14.23 $ 12.45
Number of units outstanding at end of period 605,589 30,751 11,261
Federated Fund For U.S. Government Securities II Sub-Account
Unit value at beginning of period 3/15/96 $11.11 $10.39 $ 10.14
Unit value at end of period 11.77 $11.11 $ 10.39
Number of units outstanding at end of period 237,976 27,911 3,447
Federated High Income Bond Fund II Sub-Account
Unit value at beginning of period 1/19/96 $12.81 $11.43 $ 10.16
Unit value at end of period 12.94 $12.81 $ 11.43
Number of units outstanding at end of period 520,480 37,974 30,495
Federated American Leaders Fund II Sub-Account
Unit value at beginning of period 8/17/98 $ 8.76 N/A N/A
Unit value at end of period 10.14
Number of units outstanding at end of period 95,071
Federated Prime Money Fund II Sub-Account
Unit value at beginning of period 8/14/98 $ 9.84 N/A N/A
Unit value at end of period 10.20
Number of units outstanding at end of period 329,821
Federated Utility Fund II Sub-Account
Unit value at beginning of period 1/19/96 $14.10 $11.31 $ 10.30
Unit value at end of period 15.81 $14.10 $ 11.31
Number of units outstanding at end of period 193,281 20,103 8,368
MFS Emerging Growth Sub-Account
Unit value at beginning of period 1/19/96 $14.08 $11.74 $ 10.19
Unit value at end of period 18.60 $14.08 $ 11.74
Number of units outstanding at end of period 1,098,386 69,658 43,337
MFS Growth With Income Sub-Account
Unit value at beginning of period 7/14/98 $ 8.78 N/A N/A
Unit value at end of period 10.57
Number of units outstanding at end of period 92,389
MFS Research Sub-Account
Unit value at beginning of period 10/9/98 $ 8.81 N/A N/A
Unit value at end of period 10.46
Number of units outstanding at end of period 127,109
MFS Total Return Sub-Account
Unit value at beginning of period 9/12/96 $13.77 $11.53 $ 10.25
Unit value at end of period 15.22 $13.77 $ 11.53
Number of units outstanding at end of period 952,508 52,392 24,528
MFS Utilities Sub-Account
Unit value at beginning of period 8/24/98 $ 9.05 N/A N/A
Unit value at end of period 10.52
Number of units outstanding at end of period 83,695
Morgan Stanley Dean Witter Emerging Markets Debt Sub-Account
Unit value at beginning of period N/A N/A N/A N/A
Unit value at end of period
Number of units outstanding at end of period
Morgan Stanley Dean Witter Equity Growth Sub-Account
Unit value at beginning of period N/A N/A N/A N/A
Unit value at end of period
Number of units outstanding at end of period
Morgan Stanley Dean Witter Global Equity Sub-Account
Unit value at beginning of period 10/19/98 $ 8.81 N/A N/A
Unit value at end of period 9.83
Number of units outstanding at end of period 121,267
Morgan Stanley Dean Witter High-Yield Sub-Account
Unit value at beginning of period 8/10/98 $ 9.65 N/A N/A
Unit value at end of period 9.95
Number of units outstanding at end of period 138,827
Morgan Stanley Dean Witter Value Sub-Account
Unit value at beginning of period 6/23/98 $ 9.19 N/A N/A
Unit value at end of period 8.86
Number of units outstanding at end of period 64,497
Scudder International, Class A Sub-Account
Unit value at beginning of period 1/19/96 $12.26 $11.42 $ 10.11
Unit value at end of period 14.30 $12.26 $ 11.42
Number of units outstanding at end of period 422,522 27,011 18,553
Scudder Money Market Sub-Account
Unit value at beginning of period 1/12/96 $10.75 $10.38 $ 10.04
Unit value at end of period 11.13 $10.75 $ 10.38
Number of units outstanding at end of period 606,111 44,108 17,583
Van Eck Worldwide Hard Assets Sub-Account
Unit value at beginning of period 1/29/97 $11.40 11.78 N/A
Unit value at end of period 7.74 $11.40
Number of units outstanding at end of period 24,187 1,652
Warburg Pincus Fixed Income Sub-Account
Unit value at beginning of period 8/10/98 $ 9.87 N/A N/A
Unit value at end of period 10.50
Number of units outstanding at end of period 207,482
Warburg Pincus International Equity Sub-Account
Unit value at beginning of period N/A N/A N/A N/A
Unit value at end of period.
Number of units outstanding at end of period.
Warburg Pincus Post-Venture Capital Sub-Account
Unit value at beginning of period N/A N/A N/A N/A
Unit value at end of period
Number of units outstanding at end of period
</TABLE>
<TABLE>
<CAPTION>
Chart 2:
Date of
Commencement Year Ended
of Operations 12-31-98
------------- --------
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C> <C>
Unit value at beginning of period 8/4/98 $ 8.84
Unit value at end of period $10.40
Number of units outstanding at end of period 196,604
AIM V.I. Diversified Income Sub-Account
Unit value at beginning of period 9/1/98 $ 9.71
Unit value at end of period $ 9.92
Number of units outstanding at end of period 51,420
AIM V.I. Growth Sub-Account
Unit value at beginning of period 7/23/98 $ 8.71
Unit value at end of period $11.53
Number of units outstanding at end of period 102,814
AIM V.I. Growth and Income Sub-Account
Unit value at beginning of period 7/23/98 $ 8.98
Unit value at end of period $11.31
Number of units outstanding at end of period 122,167
AIM V.I. International Equity Sub-Account
Unit value at beginning of period 9/1/98 $ 8.65
Unit value at end of period $ 9.85
Number of units outstanding at end of period 114,030
Alger American Growth Sub-Account
Unit value at beginning of period 1/19/96 $ 8.61
Unit value at end of period $12.49
Number of units outstanding at end of period 871,098
AMT Guardian Sub-Account
Unit value at beginning of period N/A N/A
Unit value at end of period
Number of units outstanding at end of period
AMT Limited Maturity Bond Sub-Account
Unit value at beginning of period N/A $ 9.87
Unit value at end of period $10.16
Number of units outstanding at end of period 2,059
AMT Mid-Cap Growth Sub-Account
Unit value at beginning of period N/A $ 8.26
Unit value at end of period $11.34
Number of units outstanding at end of period 33,595
AMT Partners Sub-Account
Unit value at beginning of period N/A $ 9.08
Unit value at end of period $ 9.33
Number of units outstanding at end of period 35,832
Dreyfus Stock Index Sub-Account
Unit value at beginning of period 3/4/96 $ 8.74
Unit value at end of period $11.05
Number of units outstanding at end of period 1,057,803
Dreyfus Growth And Income Sub-Account
Unit value at beginning of period 1/19/96 $ 8.97
Unit value at end of period $ 9.90
Number of units outstanding at end of period 605,589
Federated Fund For U.S. Government Securities II Sub-Account
Unit value at beginning of period 3/15/96 $ 9.84
Unit value at end of period $10.45
Number of units outstanding at end of period 237,976
Federated High Income Bond Fund II Sub-Account
Unit value at beginning of period 1/19/96 $ 9.69
Unit value at end of period $ 9.82
Number of units outstanding at end of period 520,480
Federated American Leaders Fund II Sub-Account
Unit value at beginning of period N/A N/A
Unit value at end of period
Number of units outstanding at end of period
Federated Prime Money Fund II Sub-Account
Unit value at beginning of period 8/31/98 $ 9.84
Unit value at end of period $10.22
Number of units outstanding at end of period 329,821
Federated Utility Fund II Sub-Account
Unit value at beginning of period 1/19/96 $ 9.69
Unit value at end of period $10.89
Number of units outstanding at end of period 193,281
MFS Emerging Growth Sub-Account
Unit value at beginning of period 1/19/96 $ 8.43
Unit value at end of period $11.15
Number of units outstanding at end of period 1,098,386
MFS Growth With Income Sub-Account
Unit value at beginning of period 10/5/98 $ 8.78
Unit value at end of period $10.59
Number of units outstanding at end of period 92,389
MFS Research Sub-Account
Unit value at beginning of period 8/4/98 $ 8.80
Unit value at end of period $10.47
Number of units outstanding at end of period 127,109
MFS Total Return Sub-Account
Unit value at beginning of period 9/12/96 $ 9.34
Unit value at end of period . $10.35
Number of units outstanding at end of period 952,508
MFS Utilities Sub-Account
Unit value at beginning of period N/A N/A
Unit value at end of period
Number of units outstanding at end of period
Morgan Stanley Dean Witter Emerging Markets Debt Sub-Account
Unit value at beginning of period 7/14/98 $ 9.58
Unit value at end of period $ 6.77
Number of units outstanding at end of period 10,208
Morgan Stanley Dean Witter Equity Growth Sub-Account
Unit value at beginning of period 8/4/98 $ 8.83
Unit value at end of period. $10.36
Number of units outstanding at end of period 40,838
Morgan Stanley Dean Witter Global Equity Sub-Account
Unit value at beginning of period 9/4/98 $ 8.81
Unit value at end of period. $ 9.84
Number of units outstanding at end of period 121,267
Morgan Stanley Dean Witter High-Yield Sub-Account
Unit value at beginning of period 7/14/98 $ 9.65
Unit value at end of period $ 9.97
Number of units outstanding at end of period 138,827
Morgan Stanley Dean Witter Value Sub-Account
Unit value at beginning of period N/A N/A
Unit value at end of period.
Number of units outstanding at end of period
Scudder International, Class A Sub-Account
Unit value at beginning of period. 1/19/96 $ 8.62
Unit value at end of period $10.07
Number of units outstanding at end of period. 422,522
Scudder Money Market Sub-Account
Unit value at beginning of period 1/12/96 $ 9.88
Unit value at end of period $10.24
Number of units outstanding at end of period. 606,111
Van Eck Worldwide Hard Assets Sub-Account
Unit value at beginning of period 1/29/97 $10.01
Unit value at end of period $ 6.85
Number of units outstanding at end of period. 24,187
Warburg Pincus Fixed Income Sub-Account
Unit value at beginning of period 8/27/98 $ 9.87
Unit value at end of period $10.52
Number of units outstanding at end of period 207,482
Warburg Pincus International Equity Sub-Account
Unit value at beginning of period 7/14/98 $ 8.60
Unit value at end of period $ 8.93
Number of units outstanding at end of period 8,207
Warburg Pincus Post-Venture Capital Sub-Account
Unit value at beginning of period N/A N/A
Unit value at end of period
Number of units outstanding at end of period
</TABLE>
Table of Contents of the Statement of Additional Information
Company
Independent Auditors
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Distributor
Reduction or Elimination of the Contingent Deferred Sales Charge
Yield Calculation for Money Market Portfolio
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
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