AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
- ------------------------------------------------------------------------------
FILE NO. 333-00987
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GLENBROOK LIFE AND ANNUITY COMPANY
(Exact Name of Registrant)
ARIZONA 35-1113325
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
847-402-2400
(Address and Phone Number of Principal Executive Office)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
RICHARD T. CHOI, ESQUIRE TERRY R. YOUNG, ESQUIRE
FREEDMAN, LEVY, KROLL & SIMONDS ALLSTATE LIFE FINANCIAL SERVICES, INC
1050 CONNECTICUT AVENUE, N.W. 3100 SANDERS ROAD
SUITE 825 NORTHBROOK, IL 60062
WASHINGTON, D.C. 20036-5366
Approximate date of commencement of proposed sale to the public: The annuity
contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
<PAGE>
THE GLENBROOK PROVIDER VARIABLE ANNUITY
Glenbrook Life and Annuity Company Prospectus dated May 1, 1999
P.O. Box 94042
Palatine, IL 60094 or
Telephone Number: 1-800-755-5275
Glenbrook Life and Annuity Company ("Glenbrook") is offering the Glenbrook
Provider Variable Annuity, an individual flexible premium deferred variable
annuity contract ("Contract"). This prospectus contains information about the
Contract that you should know before investing. Please keep it for future
reference.
The Contract currently offers 25 investment alternatives ("investment
alternatives"). The investment alternatives include 2 fixed account options
("Fixed Account Options") and 23 variable sub-accounts ("Variable Sub-Accounts")
of the Glenbrook Life Multi-Manager Variable Account ("Variable Account"). Each
Variable Sub-Account invests exclusively in shares of the following mutual funds
("Funds"):
<TABLE>
<CAPTION>
<S> <C>
o AIM Variable Insurance Funds, Inc. o Dreyfus Stock Index Fund
o American Century Variable Portfolios (VP), Inc. o Fidelity Variable Insurance Products Fund (VIP)
o Dean Witter Variable Investment Series (VIS) o Fidelity Variable Insurance Products Fund II
o Dreyfus Variable Investment Fund (VIF) (VIPII)
o The Dreyfus Socially Responsible Growth Fund, Inc. o MFS(R) Variable Insurance Trust
</TABLE>
Each Fund has multiple investment portfolios ("Portfolios"). Not all of the
Funds and/or Portfolios, however, may be available with your Contract. You
should check with your representative for further information on the
availability of Funds and/or Portfolios. Your annuity application will list all
available Portfolios.
We (Glenbrook) have filed a Statement of Additional Information, dated May 1,
1999, with the Securities and Exchange Commission ("SEC"). It contains more
information about the Contract and is incorporated herein by reference, which
means it is legally a part of this prospectus. Its table of contents appears on
page __ of this prospectus. For a free copy, please write or call us at the
address or telephone number above, or go to the SEC's Web site
(http://www.sec.gov) You can find other information and documents about us,
including documents that are legally part of this prospectus, at the SEC's Web
site.
The Securities and Exchange Commission has not approved
or disapproved the securities described in this
prospectus, nor has it passed on the accuracy or the
adequacy of this prospectus. Anyone who tells you
otherwise is committing a federal crime.
The Contracts may be distributed through broker-dealers
that have relationships with banks or other
IMPORTANT financial institutions or by employees of such banks.
NOTICES However, the Contracts are not deposits, or obligations
of, or guaranteed by such institutions or any federal
regulatory agency. Investment in the Contracts
involves investment risks, including possible loss of
principal.
The Contracts are not FDIC insured.
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Important Terms......................................................
Overview The Contract At A Glance.............................................
How the Contract Works...............................................
Expense Table........................................................
Financial Information................................................
The Contract.........................................................
Purchases............................................................
Contract Value.......................................................
Investment Alternatives..............................................
The Variable Sub-Accounts...................................
The Fixed Account Options...................................
Transfers...................................................
Contract Features Expenses.............................................................
Access To Your Money.................................................
Income Payments......................................................
Death Benefits.......................................................
More Information About:
Glenbrook...................................................
The Variable Account........................................
The Portfolios..............................................
Other Information The Contract................................................
Qualified Plans.............................................
Legal Matters...............................................
Year 2000...................................................
Taxes................................................................
Annual Reports and Other Documents...................................
Performance Information..............................................
Appendix A--Accumulation Unit Values.................................
Appendix B - Illustration of a Market Value Adjustment ..............
Statement of Additional Information Table of Contents...............
</TABLE>
<PAGE>
IMPORTANT TERMS
- ------------------------------------------------------------------------------
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
Accumulation Phase...............................................
Accumulation Unit ...............................................
Accumulation Unit Value .........................................
Anniversary Values...............................................
Annuitant........................................................
Automatic Additions Plan.........................................
Automatic Portfolio Rebalancing Program..........................
Beneficiary......................................................
Cancellation Period..............................................
*Contract .......................................................
Contract Anniversary.............................................
Contract Owner ("You") ..........................................
Contract Value ..................................................
Contract Year...................................................
Death Benefit Anniversary .......................................
Dollar Cost Averaging Program....................................
Due Proof of Death...............................................
Enhanced Death Benefit Rider....................................
Fixed Account Options ...........................................
Free Withdrawal Amount ..........................................
Portfolios.......................................................
Glenbrook ("We").................................................
Guarantee Periods...............................................
Income Plan .....................................................
Investment Alternatives .........................................
Issue Date ......................................................
Market Value Adjustment .........................................
Payout Phase.....................................................
Payout Start Date ..............................................
Portfolios.......................................................
Qualified Contracts..............................................
SEC..............................................................
Settlement Value ...............................................
Systematic Withdrawal Program....................................
Valuation Date...................................................
Variable Account ................................................
Variable Sub-Account ............................................
* In certain states the Contract is available only as a group Contract.
In these states, we will issue you a certificate that represents your
ownership and that summarizes the provisions of the group Contract.
References to "Contract" in this prospectus include certificates,
unless the context requires otherwise.
<PAGE>
THE CONTRACT AT A GLANCE
- ------------------------------------------------------------------------------
The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
---------------------------------- -----------------------------------------
Flexible Payments
You can purchase a Contract with as little
as $3,000 ($2,000 for Qualified Contracts,
which are Contracts issued with qualified
plans. You can add to your Contract as
often and as much as you like, but each
payment must be at least $50. You must
maintain a minimum account size of $2,000.
---------------------------------- -----------------------------------------
Right to Cancel You may cancel your Contract
within 20 days of receipt or any longer
period as your state may require
("Cancellation Period"). Upon cancellation,
we will return your purchase payments
adjusted, to the extent state law permits,
to reflect the investment experience of any
amounts allocated to the Variable Account.
---------------------------------- -----------------------------------------
Expenses You will bear the following expenses:
o Total Variable Account annual fees
equal to 1.35% of average daily net
assets (1.45% if you select the
Enhanced Death Benefit Rider)
o Annual contract maintenance charge of
$35 (with certain exceptions)
o Withdrawal charges ranging from 0%
to 6% of purchase payment withdrawn
(with certain exceptions)
o Transfer fee of $10 after 12th
transfer in any Contract Year (fee
currently waived)
o State premium tax (if your state
imposes one)
In addition, each Portfolio pays expenses
that you will bear indirectly if you invest
in a Variable Sub-Account.
---------------------------------- -----------------------------------------
Investment The Contract offers 25 investment
Alternatives alternatives including:
o 2 Fixed Account Options (which credi
interest at rates we guarantee)
o 23 Variable Sub-Accounts investing in
Portfolios offering professional money
management by these investment
advisers:
o A I M Advisors, Inc.
o American Century Investment
Management, Inc.
o Dean Witter InterCapital, Inc.
o The Dreyfus Corporation
o Fidelity Management & Research
Company
o Massachusetts Financial Services
To find out current rates being paid on the
Fixed Account Options, call us at
1-800-755-5275. To find out how the
Variable Sub-Accounts have performed, check
out "Performance Information" beginning on
page __, or call us for more current
information
---------------------------------- -----------------------------------------
Special Services For your convenience, we offer these
special services:
o Automatic Portfolio Rebalancing Program
o Automatic Additions Program
o Dollar Cost Averaging Program
o Systematic Withdrawal Program
---------------------------------- ----------------------------------------
Income Payments You can choose fixed income
payments, variable income payments, or a
combination of the two. You can receive
your income payments in one of the
following ways:
o life income with guaranteed payments
o a joint and survivor life income with
guaranteed payments
o guaranteed payments for a specified
period (5 to 30 years)
---------------------------------- -----------------------------------------
Death Benefits If you or the Annuitant (if the
Contract is owned by a non-natural person)
die before the Payout Start Date, we will
pay the death benefit described in the
Contract. We offer an Enhanced Death
Benefit Rider.
---------------------------------- -----------------------------------------
Transfers Before the Payout Start Date, you may
transfer your Contract value ("Contract
Value") among the investment alternatives,
with certain restrictions.
We do not currently impose a fee upon
transfers. However, we reserve the right to
charge $10 per transfer after the 12th
transfer in each "Contract Year," which we
measure from the date we issue your
contract or a Contract anniversary
("Contract Anniversary").
---------------------------------- -----------------------------------------
Withdrawals You may withdraw some or all of your
Contract Value at anytime prior to the
Payout Start Date. In general, you must
withdraw at least $50 at a time. A 10%
federal tax penalty may apply if you
withdraw before you are 59 1/2 years old.
A withdrawal charge and Market Value
Adjustment also may apply.
---------------------------------- -----------------------------------------
<PAGE>
HOW THE CONTRACT WORKS
- ------------------------------------------------------------------------------
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner)
save for retirement because you can invest in up to 25 investment alternatives
and pay no federal income taxes on any earnings until you withdraw them. You do
this during what we call the "Accumulation Phase" of the Contract. The
Accumulation Phase begins on the date we issue your Contract (we call that date
the "Issue Date") and continues until the Payout Start Date, which is the date
we apply your money to provide income payments. During the Accumulation Phase,
you may allocate your purchase payments to any combination of the Variable
Sub-Accounts and/or Fixed Account Options. If you invest in any of the three
Fixed Account Options, you will earn a fixed rate of interest that we declare
periodically. If you invest in any of the Variable Sub-Accounts, your investment
return will vary up or down depending on the performance of the corresponding
Portfolios.
Second, the Contract can help you plan for retirement because you can use
it to receive retirement income for life and/or for a pre-set number of years,
by selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last payment required by the Income Plan you select.
During the Payout Phase, if you select a fixed income payment option, we
guarantee the amount of your payments, which will remain fixed. If you select a
variable income payment option, based on one or more of the Variable
Sub-Accounts, the amount of your payments will vary up or down depending on the
performance of the corresponding Portfolios. The amount of money you accumulate
under your Contract during the Accumulation Phase and apply to an Income Plan
will determine the amount of your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Issue Payout Start
Date Accumulation Phase Date Payout Phase
- --------------------------------------------------------------------------------------------------------------------
You save for retirement
| | | ?
You buy You elect to receive income You can receive Or you can receive
a Contract payments or receive a income payments income payments
lump sum payment for a set period for life
</TABLE>
As the Contract owner, you exercise all of the rights and privileges
provided by the Contract. If you die, any surviving Contract owner or, if none,
the Beneficiary will exercise the rights and privileges provided by the
Contract. See "The Contract." In addition, if you die before the Payout Start
Date, we will pay a death benefit to any surviving Contract owner, or if there
is none, to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any question about how the
Contract works.
<PAGE>
EXPENSE TABLE
- ------------------------------------------------------------------------------
The table below lists the expenses that you will bear directly or indirectly
when you buy a Contract. The table and the examples that follow do not reflect
premium taxes that may be imposed by the state where you reside. For more
information about Variable Account expenses, see "Expenses," below. For more
information about Portfolio expenses, please refer to the accompanying
prospectuses for the Funds.
---------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
Number of Complete Years
Since We Received the
Purchase Payment Being
Withdrawn: 0 1 2 3 4 5 6+
Applicable Charge: 6% 6% 5% 5% 4% 3% 0%
Annual Contract Maintenance Charge...........................$35.00**
Transfer Fee................................................$10.00***
-------------------
* Each Contract Year, you may withdraw up to 15% of your aggregate
purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
***Applies solely to the thirteenth and subsequent transfers within a
Contract Year, excluding transfers due to dollar cost averaging and
automatic portfolio rebalancing. We are currently waiving the transfer
fee.
---------------------------------------------------------------------
<PAGE>
---------------------------------------------------------------------
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily net asset value deducted from each
Variable Sub-Account)
Mortality and Expense Risk Charge............................1.25%*
Administrative Expense Charge................................0.10%
Total Variable Account Annual Expenses.............1.35%
-------------------
*If you select the Enhanced Death Benefit Rider, the mortality and
expense risk charge is 1.35%.
--------------------------------------------------------------------
PORTFOLIO ANNUAL EXPENSES (After Voluntary Reductions and
Reimbursements) (as a percentage of Portfolio average daily assets)
<TABLE>
<CAPTION>
Total Portfolio
Portfolio Management Fees Other Expenses Annual Expenses
- --------- --------------- -------------- ---------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 0.62% 0.05% 0.67%
AIM V.I. Diversified Income Fund 0.60% 0.17% 0.77%
AIM V.I. Growth and Income Fund 0.61% 0.04% 0.65%
AIM V.I. Global Utilities Fund 0.65% 0.46% 1.11%
AIM V.I. Government Securities Fund 0.50% 0.26% 0.76%
AIM V.I. Growth Fund 0.64% 0.08% 0.72%
AIM V.I. International Equity Fund 0.75% 0.16% 0.91%
AIM V.I. Value Fund 0.61% 0.05% 0.66%
American Century VP Balanced 0.97% 0.0% 0.97%
American Century VP International 1.47% 0.0% 1.47%
VIS Dividend Growth 0.62% 0.01% 0.63%
VIS European Growth 0.99% 0.12% 1.11%
VIS Utilities 0.65% 0.02% 0.67%
VIS Quality Income Plus 0.50% 0.02% 0.52%
VIP Growth(1) 0.59% 0.07% 0.66%
VIP High Income 0.58% 0.12% 0.70%
VIP Equity-Income(1) 0.49% 0.08% 0.57%
VIP II Contrafund(1) 0.59% 0.07% 0.66%
Dreyfus Socially Responsible Growth 0.75% 0.05% 0.80%
Dreyfus Stock Index Fund 0.25% 0.01% 0.26%
VIF Small Company Stock 0.75% 0.23% 0.98%
VIF Growth and Income 0.75% 0.03% 0.78%
VIF Money Market 0.50% 0.06% 0.56%
MFS Emerging Growth 0.75% 0.10% 0.85%
MFS Limited Maturity(2) 0.55% 0.48% 1.03%
</TABLE>
(1) Absent expense offset and other arrangements that reduce expenses, total
Portfolio annual expenses expressed as a percentage of average net assets
of the Portfolios would have been 0.68% for VIP Growth, 0.58% for VIP
Equity-Income, and 0.70% for VIP II Contrafund.
(2) The total Portfolio annual expenses shown do not reflect expense offset and
other arrangements, and are therefore higher than the actual expenses of
the Portfolio.
EXAMPLE 1
The example below shows the dollar amount of expenses that you would bear
directly or indirectly if you:
o invested $1,000 in a Variable Sub-Account,
o earned a 5% annual return on your investment,
o surrendered your Contract, or you began receiving income payments for a
specified period of less than 120 months, at the end of each time period,
and
o elected the Enhanced Death Benefit Rider.
The example does not include any taxes or tax penalties you may be required to
pay if you surrender your Contract.
<TABLE>
<CAPTION>
VARIABLE SUB-ACCOUNT 1 Year 3 Years 5 Years 10 Years
- -------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation $73 $112 $144 $254
AIM V.I. Diversified Income $74 $115 $149 $264
AIM V.I. Growth and Income $73 $111 $143 $252
AIM V.I. Global Utilities Fund $78 $125 $167 $299
AIM V.I. Government Securities $74 $114 $149 $263
AIM V.I. Growth $74 $113 $147 $259
AIM V.I. International Equity $76 $119 $156 $278
AIM V.I. Value $73 $111 $143 $253
American Century VP Balanced $76 $119 $156 $277
American Century VP International $82 $137 $186 $337
VIS Dividend Growth $72 $107 $137 $239
VIS European Growth $78 $125 $167 $299
VIS Utilities $73 $112 $144 $254
VIS Quality Income Plus $72 $107 $136 $238
VIP Growth $74 $112 $144 $255
VIP High Income $74 $113 $146 $257
VIP Equity-Income $73 $109 $139 $244
VIP II Contrafund $74 $113 $146 $257
Dreyfus Socially Responsible Growth $75 $116 $151 $267
Dreyfus Stock Index Fund $69 $ 99 $123 $210
VIF Small Company Stock $77 $121 $160 $286
VIF Growth and Income $75 $115 $150 $265
VIF Money Market $72 $108 $138 $242
MFS Emerging Growth $75 $117 $153 $272
MFS Limited Maturity $77 $123 $162 $291
</TABLE>
<PAGE>
EXAMPLE 2
Same assumptions as Example 1 above, except that you decided not to surrender
your Contract, or you began receiving income payments for a specified period of
at least 120 months at the end of each period.
<TABLE>
<CAPTION>
VARIABLE SUB-ACCOUNT 1 Year 3 Years 5 Years 10 Years
- -------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation $22 $69 $118 $254
AIM V.I. Diversified Income $23 $72 $124 $264
AIM V.I. Growth and Income $22 $69 $117 $252
AIM V.I. Global Utilities $27 $83 $141 $299
AIM V.I. Government Securities $23 $72 $123 $263
AIM V.I. Growth $23 $71 $121 $259
AIM V.I. International Equity $25 $77 $131 $278
AIM V.I. Value $22 $69 $118 $253
American Century VP Balanced $25 $76 $130 $277
American Century VP International $31 $95 $161 $337
VIS Dividend Growth $21 $65 $111 $239
VIS European Growth $27 $83 $141 $299
VIS Utilities $22 $69 $118 $254
VIS Quality Income Plus $21 $65 $111 $238
VIP Growth $23 $70 $119 $255
VIP High Income $23 $70 $120 $257
VIP Equity-Income $22 $66 $114 $244
VIP II Contrafund $23 $70 $120 $257
Dreyfus Socially Responsible Growth $24 $73 $125 $267
Dreyfus Stock Index Fund $18 $56 $ 97 $210
VIF Small Company Stock $26 $79 $134 $286
VIF Growth and Income $24 $73 $124 $265
VIF Money Market $21 $66 $113 $242
MFS Emerging Growth $24 $75 $128 $272
MFS Limited Maturity $26 $80 $137 $291
</TABLE>
Please remember that you are looking at examples and not a representation of
past or future earnings. Your actual expenses may be lower or greater than those
shown above. Similarly, your rate of return may be lower or greater than 5%,
which is not guaranteed. The above examples assume the election of the Enhanced
Death Benefit Rider with a mortality and expense risk charge of 1.35%. If that
rider were not elected, the expense figures shown above would be slightly lower.
To reflect the contract maintenance charge in the examples, we estimated an
equivalent percentage charge, based on an assumed average Contract size of
$47,490.
<PAGE>
FINANCIAL INFORMATION
- ------------------------------------------------------------------------------
To measure the value of your investment in the Variable Sub-Accounts during the
Accumulation Phase, we use a unit of measure we call the "Accumulation Unit."
Each Variable Sub-Account has a separate value for its Accumulation Units we
call "Accumulation Unit Value." Accumulation Unit Value is analogous to, but not
the same as, the share price of a mutual fund.
Attached as Appendix A to this prospectus are tables showing the Accumulation
Unit Values of each Variable Sub-Account since its inception. To obtain a fuller
picture of each Variable Sub-Account's finances, please refer to the Variable
Account's financial statements contained in the Statement of Additional
Information. The financial statements of Glenbrook also appear in the Statement
of Additional Information.
<PAGE>
THE CONTRACT
- ------------------------------------------------------------------------------
CONTRACT OWNER
The Glenbrook Provider Variable Annuity is a contract between you, the Contract
owner, and Glenbrook, a life insurance company. As the Contract owner, you may
exercise all of the rights and privileges provided to you by the Contract. That
means it is up to you to select or change (to the extent permitted):
o the investment alternatives during the Accumulation and Payout Phases, o the
amount and timing of your purchase payments and withdrawals, o the programs you
want to use to invest or withdraw money, o the income payment plan you want to
use to receive retirement income,
o the Annuitant (either yourself or someone else) on whose life the income
payments will be based, o the Beneficiary or Beneficiaries who will receive the
benefits that the Contract provides when you die, and o any other rights that
the Contract provides.
If you die, any surviving Contract owner, or , if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person.
You can use the Contract with or without a qualified plan. A qualified plan is a
personal retirement savings plan, such as an IRA or tax-sheltered annuity, that
meets the requirements of the Internal Revenue Code. Qualified plans may limit
or modify your rights and privileges under the Contract. We use the term
"Qualified Contract" to refer to a Contract issued with a qualified plan. See
"Qualified Plans" on page __.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). You initially designate an Annuitant in your application. You
may change the Annuitant at any time prior to the Payout Start Date (only if the
Contract owner is a natural person). You may designate a joint Annuitant, who is
a second person on whose life income payments depend. We permit joint Annuitants
only on or after the Payout Start Date. If the Annuitant dies prior to the
Payout Start Date, the new Annuitant will be:
(i) the youngest Contract owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly.
If you did not name a Beneficiary or, unless otherwise provided in the
Beneficiary designation, if a named Beneficiary is no longer living and there
are no other surviving Beneficiaries, the new Beneficiary will be:
o your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you (or survives the Annuitant, if the
Contract owner is not a natural person) we will divide the death benefit among
your Beneficiaries according to your most recent written instructions. If you
have not given us written instructions, we will pay the death benefit in equal
amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Glenbrook officer may approve a change in or waive any provision of the
Contract. Any change or waiver must be in writing. None of our agents has the
authority to change or waive the provisions of the Contract. We may not change
the terms of the Contract without your consent, except to conform the Contract
to applicable law or changes in the law. If a provision of the Contract is
inconsistent with state law, we will follow state law.
ASSIGNMENT
We will not honor an assignment of an interest in a Contract as collateral or
security for a loan. However, you may assign periodic income payments under the
Contract prior to the Payout Start Date. No Beneficiary may assign benefits
under the Contract until they are payable to the Beneficiary. We will not be
bound by any assignment until you sign it and file it with us. We are not
responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. You should consult with an
attorney before trying to assign your Contract.
<PAGE>
PURCHASES
- ------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified
Contract). All subsequent purchase payments must be $50 or more. You may make
purchase payments at any time prior to the Payout Start Date. We reserve the
right to limit the maximum amount of purchase payments we will accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account. Consult your sales representative for more detailed
information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your
purchase payments among the investment alternatives. The allocation you specify
on your application will be effective immediately. All allocations must be in
whole percents that total 100% or in whole dollars. You can change your
allocations by notifying us in writing.
We will allocate your purchase payments to the investment alternatives according
to your most recent instructions on file with us. Unless you notify us in
writing otherwise, we will allocate subsequent purchase payments according to
the allocation for the previous purchase payment. We will effect any change in
allocation instructions at the time we receive written notice of the change in
good order.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our home office. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
home office.
We are open for business each day Monday through Friday that the New York Stock
Exchange is open for business. We also refer to these days as "Valuation Dates."
Our business day closes when the New York Stock Exchange closes, usually 4 p.m.
Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 3
p.m. Central Time on any Valuation Date, we will credit your purchase payment
using the Accumulation Unit Values computed on the next Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 20 day period after you receive the Contract, or such
longer period that your state may require. You may return it by delivering it or
mailing it to us. If you exercise this "Right to Cancel," the Contract
terminates and we will pay you the full amount of your purchase payments
allocated to the Fixed Account. We also will return your purchase payments
allocated to the Variable Account adjusted, to the extent state law permits, to
reflect investment gain or loss that occurred from the date of allocation
through the date of cancellation. Some states may require us to return a greater
amount.
In states where we are required to refund purchase payments, we reserve the
right during the Cancellation Period to invest any purchase payments you
allocated to a Variable Sub-Account to the Money Market Variable Sub-Account
available under the Contract. We will notify you if we do so. At the end of the
Cancellation Period, you may then allocate your money to other Variable
Sub-Accounts.
<PAGE>
CONTRACT VALUE
- ------------------------------------------------------------------------------
Your Contract Value at any time during the Accumulation Phase is equal to the
sum of the value of your Accumulation Units in the Variable Sub-Accounts you
have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to
credit to your Contract, we divide (i) the amount of the purchase payment you
have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of
that Variable Sub-Account next computed after we receive your payment. For
example, if we receive a $10,000 purchase payment allocated to a Variable
Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we
would credit 1,000 Accumulation Units of that Variable Sub-Account to your
Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account
will rise or fall to reflect:
o changes in the share price of the Portfolio in which the Variable
Sub-Account invests, and
o the deduction of amounts reflecting the mortality and expense risk charge,
administrative expense charge, and any provision for taxes that have
accrued since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees
(currently waived) separately for each Contract. They do not affect Accumulation
Unit Value. Instead, we obtain payment of those charges and fees by redeeming
Accumulation Units. For details on how we calculate Accumulation Unit Value,
please refer to the Statement of Additional Information.
We determine a separate Accumulation Unit Value for each Variable Sub-Account on
each Valuation Date. We also determine a separate set of Accumulation Unit
Values reflecting the cost of the Enhanced Death Benefit Rider and the Enhanced
Death and Income Benefit Combination Rider described on page __ below.
You should refer to the prospectuses for the Funds that accompany this
prospectus for a description of how the assets of each Portfolio are valued,
since that determination directly bears on the Accumulation Unit Value of the
corresponding Variable Sub-Account and, therefore, your Contract Value.
<PAGE>
INVESTMENT ALTERNATIVES: The Variable Sub-Accounts
- ------------------------------------------------------------------------------
You may allocate your purchase payments to up to 23 Variable Sub-Accounts. Each
Variable Sub-Account invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with the Portfolio, please refer to the accompanying prospectuses for
the Funds. You should carefully review the Fund prospectuses before allocating
amounts to the Variable Sub-Accounts.
<TABLE>
<CAPTION>
- ------------------------------------------ -------------------------------------------------------- ----------------------
<S> <C> <C>
Portfolio: Each Portfolio Seeks: Investment Adviser:
- --------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc.
- --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Capital Appreciation Fund Growth of capital
AIM Advisors, Inc.
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Diversified Income Fund A high level of current income
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Global Utilities Fund To achieve a high level of current income and,
secondarily, capital appreciation
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Government Securities Fund A high level of current income consistent with
reasonable concern for safety of principal
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Growth Fund Growth of capital
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Growth and Income Fund Growth of capital, and secondarily, current income
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. International Equity Fund Long-term growth of capital
- ------------------------------------------ -------------------------------------------------------- ----------------------
AIM V.I. Value Fund Long-term growth of capital
- --------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios (VP), Inc.
- ------------------------------------------ -------------------------------------------------------- ----------------------
American Century VP Balanced Capital growth and income over time American Century
Investment
Management, Inc.
- ------------------------------------------ -------------------------------------------------------- ----------------------
American Century VP International Long-term capital growth around the world
- ------------------------------------------ -------------------------------------------------------- ----------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------ -------------------------------------------------------- ---------------------
<S> <C> <C>
Portfolio: Each Portfolio Seeks: Investment Adviser:
- -------------------------------------------------------------------------------------------------------------------------
Dean Witter Variable Investment Series (VIS)
- -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIS Dividend Growth Reasonable current income and long-term growth of
income and capital
Dean Witter
InterCapital, Inc.
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIS European Growth To maximize capital appreciation
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIS Quality Income Plus To earn a high level of current income and,
secondarily, capital appreciation
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIS Utilities Current income and long-term growth of income
- -------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund (VIF); The Dreyfus Socially Responsible Growth Fund, Inc.; and Dreyfus Stock Index
Fund (collectively, the Dreyfus Funds)
- -------------------------------------------------------------------------------------------------------------------------
VIF Growth and Income Long-term capital
growth, current income and growth of
income, consistent with reasonable
investment risk
The
Dreyfus
Corporation
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIF Money Market Current income as is consistent with the preservation
of capital and the maintenance of liquidity
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIF Small Company Stock Investment results that are greater than the total
performance of the Russell 2500(TM) Index
- ------------------------------------------ -------------------------------------------------------- ---------------------
The Dreyfus Socially Responsible Growth Capital growth and, secondarily, current
income Fund, Inc.
- ------------------------------------------ -------------------------------------------------------- ---------------------
Dreyfus Stock Index Fund Investment results
that correspond to the price and
yield performance of the Standard &
Poor's 500 Composite Stock Price
Index
- -------------------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II (VIPII)
- -------------------------------------------------- ------------------------------------------------ ---------------------
VIP II Contrafund Capital appreciation Fidelity Management
& Research Company
- ------------------------------------------ -------------------------------------------------------- ---------------------
- -------------------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund (VIP)
- -------------------------------------------------------------------------------------------------------------------------
VIP High Income High current income Fidelity Management
& Research Company
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIP Equity-Income Reasonable income
- ------------------------------------------ -------------------------------------------------------- ---------------------
VIP Growth Capital appreciation
- -------------------------------------------------------------------------------------------------------------------------
MFS(R) Variable Insurance Trust SM*
- -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ -------------------------------------------------------- ---------------------
MFS Emerging Growth Series Long-term growth of capital
Massachusetts
Financial
Services
- ------------------------------------------ -------------------------------------------------------- ---------------------
MFS Limited Maturity Series To provide as
high a level of current income as is
believed to be consistent with
prudent investment risk
- ------------------------------------------ -------------------------------------------------------- ---------------------
</TABLE>
* Effective May 1, 1999, the MFS Variable Sub-Accounts are closed to new
investment (including transfers).
Amounts you allocate to Variable Sub-Accounts may grow in value, decline in
value, or grow less than you expect, depending on the investment performance of
the Portfolios in which those Variable Sub-Accounts invest. You bear the
investment risk that the Portfolios might not meet their investment objectives.
Shares of the Portfolios are not deposits, or obligations of, or guaranteed or
endorsed by any bank and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
<PAGE>
INVESTMENT ALTERNATIVES : The Fixed Account Options
- ------------------------------------------------------------------------------
You may allocate all or a portion of your purchase payments to the Fixed
Account. You may choose from among 2 Fixed Account Options including a dollar
cost averaging option and the option to invest in one or more Guarantee Periods.
The Fixed Account Options may not be available in all states. Please consult
with your sales representative for current information. The Fixed Account
supports our insurance and annuity obligations. The Fixed Account consists of
our general assets other than those in segregated asset accounts. We have sole
discretion to invest the assets of the Fixed Account, subject to applicable law.
Any money you allocate to a Fixed Account Option does not entitle you to share
in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
Dollar Cost Averaging Fixed Account Option. Purchase payments that you allocate
to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option")
will earn interest for a one year period at the current rate in effect at the
time of allocation. We will credit interest daily at a rate that will compound
over the year to the annual interest rate we guaranteed at the time of
allocation. After the one year period, we will declare a renewal rate which we
guarantee for a full year. Subsequent renewal dates will be every twelve months
for each payment or transfer.
We will follow your instructions in transferring amounts monthly from the DCA
Fixed Account Option. However, you may not choose less than 3 or more than 36
monthly installments. Further, you must transfer each purchase payment and all
its earnings out of this Option by means of dollar cost averaging within 36
months of payment. At the end of 36 months, we will transfer the remaining
payment and associated earnings to the Money Market Variable Sub-Account. No
transfers are permitted into the Dollar Cost Averaging Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account
Option. That is because we guarantee the current and renewal interest rates we
credit to the amounts you allocate to this Option, which will never be less than
the minimum guaranteed rate in the Contract. Currently, we determine, in our
sole discretion, the amount of interest credited in excess of the guaranteed
rate.
We may declare more than one interest rate for different monies based upon the
date of allocation to the DCA Fixed Account Option. For current interest rate
information, please contact your sales representative or our customer support
unit at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years. We are currently offering Guarantee Periods of 3, 5,
7, and ten years in length. In the future we may offer Guarantee Periods of
different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not
select a Guarantee Period, we will assign the same period(s) you selected for
your most recent purchase payment.
Each payment or transfer allocated to a Guarantee Period must be at least $50.
We reserve the right to limit the number of additional purchase payments that
you may allocate to this Option.
Interest Rates. We will tell you what interest rates and Guarantee Periods we
are offering at a particular time. We will not change the interest rate that we
credit to a particular allocation until the end of the relevant Guarantee
Period. We may declare different interest rates for Guarantee Periods of the
same length that begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, our sales commission and administrative
expenses, general economic trends, and competitive factors. We determine the
interest rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your sales representative or Glenbrook at
1-800-755-5275.
How We Credit Interest. We will credit interest daily to each amount allocated
to a Guarantee Period at a rate that compounds to the annual interest rate that
we declared at the beginning of the applicable Guarantee Period. The following
example illustrates how a purchase payment allocated to a Guaranteed Period
would grow, given an assumed Guarantee Period and annual interest rate:
Purchase Payment..............................$10,000
Guarantee Period..............................5 years
Annual Interest Rate........................... 4.50%
END OF CONTRACT YEAR
<TABLE>
<CAPTION>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X 1.045
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X 1.045
$10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X 1.045
$11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X 1.045
$11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X 1.045
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82 -$10,000)
</TABLE>
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. The hypothetical interest rate
is for illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for any
given Guarantee Period may be more or less than shown above.
Renewals. Prior to the end of each Guarantee Period, we will mail you a notice
asking you what to do with your money, including the accrued interest. During
the 30-day period after the end of the Guarantee Period, you may:
1) take no action. We will automatically apply your money to a new
Guarantee Period of the same length as the expiring Guarantee Period.
The new Guarantee Period will begin on the day the previous Guarantee
Period ends. The new interest rate will be our then current declared
rate for a Guarantee Period of that length; or
2) instruct us to apply your money to one or more new Guarantee Periods of
your choice. The new Guarantee Period(s) will begin on the day the
previous Guarantee Period ends. The new interest rate will be our then
current declared rate for those Guarantee Periods; or
3) instruct us to transfer all or a portion of your money to one or more
Variable Sub-Accounts of the Variable Account. We will effect the
transfer on the day we receive your instructions. We will not adjust
the amount transferred to include a Market Value Adjustment; or
4) withdraw all or a portion of your money. You may be required to pay a
withdrawal charge, but we will not adjust the amount withdrawn to
include a Market Value Adjustment. You may also be required to pay
premium taxes and withholding, if applicable. We will pay interest from
the day the Guarantee Period expired until the date of withdrawal. The
interest will be the rate for the shortest Guarantee Period then being
offered. Amounts not withdrawn will be applied to a new Guarantee
Period of the same length as the previous Guarantee Period. The new
Guarantee Period will begin on the day the previous Guarantee Period
ends.
Under our Automatic Laddering Program, you may choose, in advance, to use
Guarantee Periods of the same length for all renewals. You can select this
Program at any time during the Accumulation Phase, including on the Issue Date.
We will apply renewals to Guarantee Periods of the selected length until you
direct us in writing to stop. We may stop offering this Program at any time. For
additional information on the Automatic Laddering Program, please call our
Customer Service unit at 1-800-755-5275.
Market Value Adjustment. All withdrawals and transfers from a Guarantee Period,
other than those taken during the 30 day period after such Guarantee Period
expires, are subject to a Market Value Adjustment. A Market Value Adjustment
also may apply upon payment of a death benefit and when you apply amounts
currently invested in a Guarantee Period to an Income Plan (unless paid or
applied during the 30-day period after such Guarantee Period expires). We also
will not apply a Market Value Adjustment to a withdrawal you make within the
Free Withdrawal Amount as described on page __.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the Treasury Rate for a period equal to the Guarantee Period at its
inception to the Treasury Rate for a period equal to the Guarantee Period when
you remove your money. "Treasury Rate" means the U.S. Treasury Note Constant
Maturity Yield as reported in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly, the Market Value
Adjustment and any withdrawal charge, premium taxes, and income tax withholding
(if applicable) could reduce the amount you receive upon full withdrawal from a
Guaranteed Period to an amount that is less than the purchase payment applied to
that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a
Guarantee Period is higher than the applicable current Treasury Rate for a
period equal to the Guarantee Period, then the Market Value Adjustment will
result in a higher amount payable to you, transferred or applied to an Income
Plan. Conversely, if the Treasury Rate at the time you allocate money to a
Guarantee Period is lower than the applicable Treasury Rate for a period equal
to the Guarantee Period, then the Market Value Adjustment will result in a lower
amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial
Guarantee Period of 5 years and the 5 year Treasury Rate for that duration is
4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at
that later time, the current 5 year Treasury Rate is 4.20%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current 5 year Treasury Rate is 4.80%,
then the Market Value Adjustment will be negative, which will result in a
decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
INVESTMENT ALTERNATIVES: Transfers
- ------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives. You may request transfers in writing on a form that we
provided or by telephone according to the procedure described below. The minimum
amount that you may transfer into a Guarantee Period is $50. We currently do not
assess, but reserve the right to assess, a $10 charge on each transfer in excess
of 12 per Contract Year. We treat transfers to or from more than one Portfolio
on the same day as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time
on any Valuation Date using the Accumulation Unit Values for that Date. We will
process requests completed after 3:00 p.m. on any Valuation Date using the
Accumulation Unit Values for the next Valuation Date. The Contract permits us to
defer transfers from the Fixed Account for up to six months from the date we
receive your request. If we decide to postpone transfers for 30 days or more, we
will pay interest as required by applicable law. Any interest would be payable
from the date we receive the transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day
period after such Guarantee Period expires, we will increase or decrease the
amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts
so as to change the relative weighting of the Variable Sub-Accounts on which
your variable income payments will be based. In addition, you will have a
limited ability to make transfers from the Variable Sub-Accounts to increase the
proportion of your income payments consisting of fixed income payments. You may
not, however, convert any portion of your right to receive fixed income payments
into variable income payments.
If you choose an Income Plan that depends on any person's life, you may not make
any transfers for the first 6 months after the Payout Start Date. Thereafter,
you may make transfers among the Variable Sub-Accounts or make transfers from
the Variable Sub-Accounts to increase the proportion of your income payments
consisting of fixed income payments. Your transfers must be at least 6 months
apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275 if you first send
us a completed authorization form. The cut off time for telephone transfer
requests is 3:00 p.m. Central time. In the event that the New York Stock
Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that
the Exchange closes early for a period of time but then reopens for trading on
the same day, we will process telephone transfer requests as of the close of the
Exchange on that particular day. We will not accept telephone requests received
at any telephone number other than the number that appears in this paragraph or
received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege at any time
without notice.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a
fixed dollar amount every month during the Accumulation Phase from the Dollar
Cost Averaging Fixed Account, to any Variable Sub-Account. You may not use the
Dollar Cost Averaging Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor
will such transfer count against the 12 transfers you can make each Contract
Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this Program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the
performance of each Sub-Account may cause a shift in the percentage you
allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing
Program, we will automatically rebalance the Contract Value in each Variable
Sub-Account and return it to the desired percentage allocations. We will not
include money you allocate to the Fixed Account Options in the Automatic
Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We
will transfer amounts among the Variable Sub-Accounts to achieve the percentage
allocations you specify. You can change your allocations at any time by
contacting us in writing or by telephone. The new allocation will be effective
with the first rebalancing that occurs after we receive your request. We are not
responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable
Sub-Accounts. You want 40% to be in the AIM V.I. High Yield Variable
Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account.
Over the next 2 months the bond market does very well while the stock
market performs poorly. At the end of the first quarter, the AIM V.I. High
Yield Variable Sub-Account now represents 50% of your holdings because of
its increase in value. If you choose to have your holdings rebalanced
quarterly, on the first day of the next quarter, we would sell some of
your units in the AIM V.I. High Yield Variable Sub-Account and use the
money to buy more units in the AIM V.I. Growth Variable Sub-Account so
that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the
Accumulation Phase. The transfers made under the Program do not count towards
the 12 transfers you can make without paying a transfer fee, and are not subject
to a transfer fee. Portfolio rebalancing is consistent with maintaining your
allocation of investments among market segments, although it is accomplished by
reducing your Contract Value allocated to the better performing segments.
<PAGE>
EXPENSES
- ------------------------------------------------------------------------------
As a Contract owner, you will bear, directly or indirectly, the charges and
expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a
$35 contract maintenance charge from your Contract Value invested in each
Variable Sub-Account in proportion to the amount invested. If you surrender your
Contract, we will deduct the contract maintenance charge pro rated for the part
of the Contract Year elapsed, unless your Contract qualifies for a waiver,
described below.
The charge is to compensate us for the cost of administering the Contracts and
the Variable Account. Maintenance costs include expenses we incur in billing and
collecting purchase payments; keeping records; processing death claims, cash
withdrawals, and policy changes; proxy statements; calculating Accumulation Unit
Values and income payments; and issuing reports to Contract owners and
regulatory agencies. We cannot increase the charge. We will waive this charge
if, as of the Contract Anniversary or upon full surrender:
o total purchase payments equal $50,000 or more, or
o all money is allocated to the Fixed Account.
In addition, we will waive the contract maintenance charge if total purchase
payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.25%
of the daily net assets you have invested in the Variable Sub-Accounts (1.35% if
you select the Enhanced Death Benefit Rider). The mortality and expense risk
charge is for all the insurance benefits available with your Contract (including
our guarantee of annuity rates and the death benefits), for certain expenses of
the Contract, and for assuming the risk (expense risk) that the current charges
will be sufficient in the future to cover the cost of administering the
Contract. If the charges under the Contract are not sufficient, then we will
bear the loss. We charge an additional amount for the Enhanced Death Benefit
Rider to compensate us for the additional risk that we accept by providing these
options.
We guarantee the mortality and expense risk charge and we cannot increase it. We
assess the mortality and expense risk charge during both during the Accumulation
Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of
the average daily net assets you have invested in the Variable Sub-Accounts. We
intend this charge to cover actual administrative expenses that exceed the
revenues from the contract maintenance charge. There is no necessary
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributed to that Contract. We
assess this charge each day during the Accumulation Phase and the Payout Phase.
We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment
alternatives. However, we reserve the right to charge $10 per transfer after the
12th transfer in each Contract Year. We will not charge a transfer fee on
transfers that are part of a Dollar Cost Averaging or Automatic Portfolio
Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you
withdraw. The charge declines to 0% over a 6 year period that begins on the day
we receive your payment. A schedule showing how the charge declines is shown on
page ___, above. During each Contract Year, you can withdraw up to 15% of the
aggregate amount of your purchase payments without paying the charge. Unused
portions of this "Free Withdrawal Amount" are not carried forward to future
Contract Years. We will deduct withdrawal charges, if applicable, from the
amount paid.
For purposes of the withdrawal charge, we will treat withdrawals as coming from
the oldest purchase payments first. However, for federal income tax purposes,
please note that withdrawals are considered to have come first from earnings,
which means you pay taxes on the earnings portion of your withdrawal.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date;
o the death of the Contract owner (Annuitant if Contract owner is not a
natural person);
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; or
o withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts. To the extent that the withdrawal charge does not cover all sales
commissions and other promotional or distribution expenses, we may use any of
our corporate assets, including potential profit which may arise from the
mortality and expense risk charge or any other charges or fee described above,
to make up any difference.
Withdrawals also may be subject to tax penalties or income tax and a Market
Value Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
Confinement Waiver. We will waive the withdrawal charge and any Market Value
Adjustment on all withdrawals taken prior to the Payout Start Date under your
Contract if the following conditions are satisfied:
1) you or the Annuitant, if the Contract owner are not a natural person,
are confined to a long term care facility or a hospital for at least
90 consecutive days. You or the Annuitant must enter the long term
care facility or hospital at least 30 days after the Issue Date;
2) You request the withdrawal and provide written proof of the stay no
later than 90 days following the end of your or the Annuitant's stay
at the long term care facility or hospital; and
3) A physician must have prescribed the stay and the stay must be
medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the
Annuitant's immediate family, is the physician prescribing your or the
Annuitant's stay in a long term care facility.
Terminal Illness Waiver. We will waive the withdrawal charge and any Market
Value Adjustment on all withdrawals taken prior to the Payout Start Date under
your Contract if:
1) you or the Annuitant (if the Contract owner is not a natural person)
are first diagnosed with a terminal illness at least 30 days after the
Issue Date; and
2) you claim this benefit and deliver adequate proof of diagnosis to us.
Unemployment Waiver. We will waive the withdrawal charge and any Market Value
Adjustment on one partial or a full withdrawal taken prior to the Payout Start
Date under your Contract, if you meet the following requirements:
1) you or the Annuitant, if the Contract owner is not a natural person,,
become unemployed at least one year after the Issue Date;
2) you or the Annuitant, if the Contract owner is not a natural person,
receive unemployment compensation as defined in the Contract for at
least 30 days as a result of that unemployment; and
3) you or the Annuitant, if the Contract owner is not a natural person,
claim this benefit within 180 days of your or the Annuitant's initial
receipt of unemployment compensation.
You may exercise this benefit once during the life of your Contract.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waivers. You should
consult your Contract for further details on these variations. Also, even if you
do not need to pay our withdrawal charge or a Market Value Adjustment because of
these waivers, you still may be required to pay taxes or tax penalties on the
amount withdrawn. You should consult your tax adviser to determine the effect of
a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may discontinue this practice some time in the future and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from each
investment alternative in the proportion that the Contract owner's value in the
investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however,
we may establish a provision for taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any taxes we incur as a result of the operation of the
Variable Account, whether or not we previously made a provision for taxes and
whether or not it was sufficient. Our status under the Internal Revenue Code is
briefly described in the Statement of Additional Information.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Sub-Accounts. These fees and expenses are described in the
accompanying prospectuses for the Funds. For a summary of current estimates of
those charges and expenses, see pages ___ above. We may receive compensation
from the investment advisers or administrators of the Portfolios in connection
with the administrative services we provide to the Portfolios.
<PAGE>
ACCESS TO YOUR MONEY
- ------------------------------------------------------------------------------
You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date.
The amount payable upon withdrawal is the Contract Value next computed after we
receive the request for a withdrawal at our home office, adjusted by any Market
Value Adjustment, less any withdrawal charges, contract maintenance charges,
income tax withholding, penalty tax, and any premium taxes. We will pay
withdrawals from the Variable Account within 7 days of receipt of the request,
subject to postponement in certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account Options.
To complete a partial withdrawal from the Variable Account, we will cancel
Accumulation Units in an amount equal to the withdrawal and any applicable
withdrawal charge and premium taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is named, then the withdrawal request is incomplete and
cannot be honored.
In general, you must withdraw at least $50 at a time. You also may withdraw a
lesser amount if you are withdrawing your entire interest in a Variable
Sub-Account.
If you request a total withdrawal, you must return your Contract to us.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
1) The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2) An emergency exists as defined by the SEC; or
3) The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options
for up to 6 months or shorter period if required by law. If we delay payment for
30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $50. At our
discretion, systematic withdrawals may not be offered in conjunction with the
Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program.
Depending on fluctuations in the net asset value of the Variable Sub-Accounts
and the value of the Fixed Account Options, systematic withdrawals may reduce or
even exhaust the Contract Value. Income taxes may apply to systematic
withdrawals. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. We
may modify or suspend the Systematic Withdrawal Program and charge a processing
fee for the service. If we modify or suspend the Systematic Withdrawal Program,
existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to
less than $2,000, we may treat it as a request to withdraw your entire Contract
Value. Your Contract will terminate if you withdraw all of your Contract Value.
We will, however, ask you to confirm your withdrawal request before terminating
your Contract. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges, and premium taxes.
<PAGE>
INCOME PAYMENTS
- ------------------------------------------------------------------------------
PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that money is applied to an Income Plan. The Payout Start Date must be:
o at least 30 days after the Issue Date; and
o no later than the day the Annuitant reaches age 90, or the 10th Contract
Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years.
Three Income Plans are available under the Contract. Each is available to
provide:
o fixed income payments;
o variable income payments; or
o a combination of the two.
The three Income Plans are:
Income Plan 1 -- Life Income with Guaranteed Payments. Under this plan,
we make periodic income payments for at least as long as the Annuitant
lives. If the Annuitant dies before we have made all of the guaranteed
income payments, we will continue to pay the remainder of the
guaranteed income payments as required by the Contract.
Income Plan 2 -- Joint and Survivor Life Income with Guaranteed
Payments. Under this plan, we make periodic income payments for at
least as long as either the Annuitant or the joint Annuitant is alive.
If both the Annuitant and the joint Annuitant die before we have made
all of the guaranteed income payments, we will continue to pay the
remainder of the guaranteed income payments as required by the
Contract.
Income Plan 3 -- Guaranteed Payments for a Specified Period (5 Years to
30 Years). Under this plan, we make periodic income payments for the
period you have chosen. These payments do not depend on the Annuitant's
life. You may elect to receive guaranteed payments for periods ranging
from 5 to 30 years. We will deduct the mortality and expense risk
charge from variable income payments even though we may not bear any
mortality risk.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant are alive
before we make each payment. Please note that under such Income Plans, if you
elect to take no minimum guaranteed payments, it is possible that the payee
could receive only 1 income payment if the Annuitant and any joint Annuitant
both die before the second income payment, or only 2 income payments if they die
before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One
exception to this rule applies if you are receiving variable income payments
that do not depend on the life of the Annuitant (such as under Income Plan 3).
In that case you may terminate the Variable Account portion of the income
payments at any time and receive a lump sum equal to the commuted balance of the
remaining variable payments due. A withdrawal charge may apply. We also assess
applicable premium taxes against all income payments.
We may make other Income Plans available. You may obtain information about them
by writing or calling us.
You must apply at least the Contract Value in the Fixed Account on the Payout
Start Date to fixed income payments. If you wish to apply any portion of your
Fixed Account balance to provide variable income payments, you should plan ahead
and transfer that amount to the Variable Sub-Accounts prior to the Payout Start
Date. If you do not tell us how to allocate your Contract Value among fixed and
variable income payments, we will apply your Contract Value in the Variable
Account to variable income payments and your Contract Value in the Fixed Account
to fixed income payments.
We will apply your Contract Value, adjusted by a Market Value Adjustment, less
applicable taxes to your Income Plan on the Payout Start Date. If the amount
available to apply under an Income Plan is less than $2,000, or not enough to
provide an initial payment of at least $20, and state law permits, we may:
o pay you the Contract Value, adjusted by any Market Value Adjustment and
less any applicable taxes, in a lump sum instead of the periodic payments
you have chosen; or
o reduce the frequency of your payments so that each payment will be at least
$20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Sub-Accounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) actual mortality experience and (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your
variable income payments may be more or less than your total purchase payments
because (a) variable income payments vary with the investment results of the
underlying Portfolios; and (b) the Annuitant could live longer or shorter than
we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the
Contract, we assumed an annual investment rate of 3%. If the actual net
investment return of the Variable Sub-Accounts you choose is less than this
assumed investment rate, then the dollar amount of your variable income payments
will decrease. The dollar amount of your variable income payments will increase,
however, if the actual net investment return exceeds the assumed investment
rate. The dollar amount of the variable income payments stays level if the net
investment return equals the assumed investment rate. Please refer to the
Statement of Additional Information for more detailed information as to how we
determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for
the duration of the Income Plan. We calculate the fixed income payments by:
1) adjusting the portion of the Contract Value in any Fixed Account Option on
the Payout Start Date by any applicable Market Value Adjustment;
2) deducting any applicable premium tax; and
3) applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as
we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any
shorter time state law may require. If we defer payments for 30 days or more, we
will pay interest as required by law from the date we receive the withdrawal
request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is to be used in connection with an employment-related retirement
or benefit plan and we do not offer unisex annuity tables in your state, you
should consult with legal counsel as to whether the purchase of a Contract is
appropriate.
<PAGE>
DEATH BENEFITS
- ------------------------------------------------------------------------------
We will pay a death benefit prior to the Payout Start Date on:
1) the death of any Contract owner or,
2) the death of the Annuitant, if the Contract is owned by a non-natural
person.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary.
A claim for a distribution on death must include Due Proof of Death. We will
accept the following documentation as "Due Proof of Death":
o a certified copy of a death certificate,
o a certified copy of a decree of a court of competent jurisdiction as to the
funding of death, or
o any other proof acceptable to us.
Death Benefit Amount
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1) the Contract Value as of the date we determine the value of the death
benefit, or
2) the Settlement Value (that is, the amount payable on a full withdrawal of
Contract Value) on the date we determine the value of the death benefit, or
3) the Contract Value on each Death Benefit Anniversary prior to the date we
determine the death benefit, increased by purchase payments made since that
Death Benefit Anniversary and reduced by an adjustment for any partial
withdrawals since that Death Benefit Anniversary. A "Death Benefit
Anniversary" is every seventh Contract Anniversary beginning with the Issue
Date. For example, the Issue Date, 7th and 14th Contract Anniversaries are
the first 3 Death Benefit Anniversaries.
The withdrawal adjustment is equal to (a) divided by (b), with the result
multiplied by (c), where:
(a) is the withdrawal amount;
(b) is the Contract Value immediately prior to the withdrawal; and
(c) is the Contract value on the Death Benefit Anniversary adjusted by
any prior purchase payments or withdrawals made since that
Anniversary.
Enhanced Death Benefit Rider
For Contracts with the Enhanced Death Benefit Rider, the death benefit will be
the greatest of (1) through (3) above, or (4) the value of the Enhanced Death
Benefit Rider, which is the greatest of the Anniversary Values as of the date we
determine the death benefit. An "Anniversary Value" is equal to the Contract
Value on a Contract Anniversary, increased by purchase payments made since that
Anniversary and reduced by an adjustment for any partial withdrawals since that
Anniversary. The adjustment is equal to (a) divided by (b), and the result
multiplied by (c) where:
(a) is the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the Contract Value on that Contract Anniversary adjusted by any prior
purchase payments and withdrawals since that Contract Anniversary.
We will calculate Anniversary Values for each Contract Anniversary prior to the
oldest Contract owner's or the Annuitant's, if the Contract owner is not a
natural person, 80th birthday. The Enhanced Death Benefit Rider will never be
greater than the maximum death benefit allowed by any non-forfeiture laws that
govern the Contract.
Death Benefit Payments
A death benefit will be paid:
1) if the Contract owner elects to receive the death benefit distributed in a
single payment within 180 days of the date of death, and
2) if the death benefit is paid as of the day the value of the death benefit
is determined. Otherwise, the Settlement Value will be paid. We are
currently waiving the 180 day limit, but we reserve the right to enforce
the limitation in the future.
In any event, the entire value of the Contract must be distributed within 5
years after the date of death unless an Income Plan is elected or a surviving
spouse continues the Contract in accordance with the provisions described below.
If the Contract owner eligible to receive the distribution upon death is not a
natural person, the Contract owner may elect to receive the distribution upon
death in one or more distributions.
If the Contract owner is a natural person, the Contract owner may elect to
receive the distribution upon death either in one or more distributions or by
periodic payments through an Income Plan. Payments from the Income Plan must
begin within one year of the date of death and must be payable throughout:
o the life of the Contract owner; or
o a period not to exceed the life expectancy of the Contract owner; or
o the life of the Contract owner with payments guaranteed to a period not to
exceed the life expectancy of the Contract owner.
If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect one of the options listed above or may continue
the Contract in the Accumulation Phase as if the death had not occurred. If the
Contract is continued in the Accumulation Phase, the surviving spouse may make a
single withdrawal of any amount within one year of the date of death without
incurring a withdrawal charge. However, any applicable Market Value Adjustment,
determined as of the date of the withdrawal, will apply.
<PAGE>
MORE INFORMATION
- ------------------------------------------------------------------------------
GLENBROOK
Glenbrook is the issuer of the Contract. Glenbrook is a stock life insurance
company organized under the laws of the State of Arizona in 1998. Previously,
Glenbrook was organized under the laws of the State of Illinois in 1992.
Glenbrook was originally organized under the laws of the State of Indiana in
1965. From 1965 to 1983 Glenbrook was known as "United Standard Life Assurance
Company" and from 1983 to 1992 as "William Penn Life Assurance Company of
America."
Glenbrook is currently licensed to operate in the District of Columbia and all
states except New York. We intend to offer the Contract in those jurisdictions
in which we are licensed. Our home office is located at 3100 Sanders Road,
Northbrook, Illinois, 60062.
Glenbrook is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company, a stock property-liability insurance company incorporated
under the laws of Illinois. All of the outstanding capital stock of Allstate
Insurance Company is owned by The Allstate Corporation.
Glenbrook and Allstate Life entered into a reinsurance agreement effective June
5, 1992. Under the reinsurance agreement, Allstate Life reinsures substantially
all of Glenbrook's liabilities under its various insurance contracts. The
reinsurance agreement provides us with financial backing from Allstate Life.
However, it does not create a direct contractual relationship between Allstate
Life and you. In other words, the obligations of Allstate Life under the
reinsurance agreement are to Glenbrook; Glenbrook remains the sole obligor under
the Contract to you.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns A+ (Superior) to Allstate Life which automatically reinsures all
net business of Glenbrook. A.M. Best Company also assigns Glenbrook the rating
of A+(r) because Glenbrook automatically reinsures all net business with
Allstate Life. Standard & Poor's Insurance Rating Services assigns an AA+ (Very
Strong) financial strength rating and Moody's assigns an Aa2 (Excellent)
financial strength rating to Glenbrook. Glenbrook shares the same ratings of its
parent, Allstate Life. These ratings do not reflect the investment performance
of the Variable Account. We may from time to time advertise these ratings in our
sales literature.
THE VARIABLE ACCOUNT
Glenbrook established the Glenbrook Life Multi-Manager Variable Account on
January 15, 1996. We have registered the Variable Account with the SEC as a unit
investment trust. The SEC does not supervise the management of the Variable
Account or Glenbrook.
We own the assets of the Variable Account. The Variable Account is a segregated
asset account under Arizona law. That means we account for the Variable
Account's income, gains and losses separately from the results of our other
operations. It also means that only the assets of the Variable Account that are
in excess of the reserves and other Contract liabilities with respect to the
Variable Account are subject to liabilities relating to our other operations.
Our obligations arising under the Contracts are general corporate obligations of
Glenbrook.
The Variable Account consists of 44 Variable Sub-Accounts, of which 23 are
currently available for investment. Each Variable Sub-Account invests in a
corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one
or more of them, if we believe marketing, tax, or investment conditions so
warrant. We may also add other Variable Sub-Accounts that may be available under
other variable annuity contracts. We do not guarantee the investment performance
of the Variable Account, its Sub-Accounts or the Portfolios. We may use the
Variable Account to fund our other annuity contracts. We will account separately
for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
Dividends and Capital Gain Distributions. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolio at their net asset value.
Voting Privileges. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Sub-Accounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Sub-Account by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable Variable
Sub-Account by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted upon on a pro-rata basis to reduce the votes
eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi-annual financial report we send to you.
Changes in Portfolios. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment fund. Any substitution of securities will comply with the
requirements of the Investment Company Act. We also may add new Variable
Sub-Accounts that invest in additional mutual funds. We will notify you in
advance of any change.
Conflicts of Interest. Certain of the Portfolios sell their shares to separate
accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the same Portfolio. The boards of directors of these Portfolios monitor for
possible conflicts among separate accounts buying shares of the Portfolios.
Conflicts could develop for a variety of reasons. For example, differences in
treatment under tax and other laws or the failure by a separate account to
comply with such laws could cause a conflict. To eliminate a conflict, a
Portfolio's board of directors may require a separate account to withdraw its
participation in a Portfolio. A Portfolio's net asset value could decrease if it
had to sell investment securities to pay redemption proceeds to a separate
account withdrawing because of a conflict.
THE CONTRACT
Distribution. Allstate Life Financial Services ("ALFS"), located at 3100 Sanders
Road, Northbrook, IL 60062-7154, serves as distributor of the Contracts. ALFS is
a wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a
registered broker dealer under the Securities and Exchange Act of 1934, as
amended ("Exchange Act"), and is a member of the National Association of
Securities Dealers, Inc. ALFS also is registered as an investment adviser under
the Investment Advisers Act, as amended.
We will pay commissions to broker-dealers who sell the contracts. Commissions
paid may vary, but we estimate that the total commissions paid on all Contract
sales will not exceed 8% of all purchase payments. These commissions are
intended to cover distribution expenses. Sometimes, we also pay the
broker-dealer a persistency bonus in addition to the standard commissions. A
persistency bonus is not expected to exceed 0.25%, on an annual basis, of the
Contract Values considered in connection with the bonus. In some states,
Contracts may be sold by representatives or employees of banks which may be
acting as broker-dealers without separate registration under the Securities
Exchange Act of 1934, pursuant to legal and regulatory exceptions.
Glenbrook does not pay ALFS a commission for distribution of the Contracts. The
underwriting agreement with ALFS provides that we will reimburse ALFS for any
liability to Contract owners arising out of services rendered or Contracts
issued.
Administration. We have primary responsibility for all administration of the
Contracts and the Variable Account. We provide the following administrative
services, among others:
o issuance of the Contracts;
o maintenance of Contract owner records;
o Contract owner services;
o calculation of unit values;
o maintenance of the Variable Account; and
o preparation of Contract owner reports.
We will send you Contract statements at least annually. You should notify us
promptly in writing of any address change. You should read your statements and
confirmations carefully and verify their accuracy. You should contact us
promptly if you have a question about a periodic statement. We will investigate
all complaints and make any necessary adjustments retroactively, but you must
notify us of a potential error within a reasonable time after the date of the
questioned statement. If you wait too long, we reserve the right to make the
adjustment as of the date that we receive notice of the potential error.
We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Glenbrook on
certain federal securities law matters. All matters of state insurance law
pertaining to the Contracts, including the validity of the Contracts and
Glenbrook's right to issue such Contracts under state insurance law, have been
passed upon by Michael J. Velotta, General Counsel of Glenbrook.
YEAR 2000
Glenbrook is heavily dependent upon complex computer systems for all phases of
its operations, including customer service, and policy and contract
administration. Since many of Glenbrook's older computer software programs
recognize only the last two digits of the year in any date, some software may
fail to operate properly in or after the year 1999, if the software is not
reprogrammed or replaced ("Year 2000 Issue"). Glenbrook believes that many of
its counterparties and suppliers also have Year 2000 Issues which could affect
Glenbrook. In 1995, Allstate Insurance Company commenced a plan intended to
mitigate and/or prevent the adverse effects of Year 2000 Issues. These
strategies include normal development and enhancement of new and existing
systems, upgrades to operating systems already covered by maintenance agreements
and modifications to existing systems to make them Year 2000 compliant. The plan
also includes Glenbrook actively working with its major external counterparties
and suppliers to assess their compliance efforts and Glenbrook's exposure to
them. Glenbrook presently believes that it will resolve the Year 2000 Issue in a
timely manner, and the financial impact will not materially affect its results
of operations, liquidity or financial position. Year 2000 costs are and will be
expensed as incurred.
<PAGE>
TAXES
- ------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice. Glenbrook
makes no guarantee regarding the tax treatment of any Contract or transaction
involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
Taxation of Annuities in General
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
1) the Contract owner is a natural person,
2) the investments of the Variable Account are "adequately diversified"
according to Treasury Department regulations, and
3) Glenbrook is considered the owner of the Variable Account assets for
federal income tax purposes.
Non-natural Owners. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
is taxed as ordinary income received or accrued by the owner during the taxable
year. Please see the Statement of Additional Information for a discussion of
several exceptions to the general rule for Contracts owned by non-natural
persons.
Diversification Requirements. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the Contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the Contract owner during the taxable
year. Although Glenbrook does not have control over the Portfolios or their
investments, we expect the Portfolios to meet the diversification requirements.
Ownership Treatment. The IRS has stated that you will be considered the owner of
Variable Account assets if you possess incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. At the time
the diversification regulations were issued, the Treasury Department announced
that the regulations do not provide guidance concerning circumstances in which
investor control of separate account investments may cause an investor to be
treated as the owner of the separate account. The Treasury Department also
stated that future guidance would be issued regarding the extent that owners
could direct sub-account investments without being treated as owners of the
underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in
rulings in which it found that contract owners were not owners of separate
account assets. For example, you have the choice to allocate premiums and
Contract Values among more investment alternatives. Also, you may be able to
transfer among investment alternatives more frequently than in such rulings.
These differences could result in you being treated as the owner of the Variable
Account. If this occurs, income and gain from the Variable Account assets would
be includible in your gross income. Glenbrook does not know what standards will
be set forth in any regulations or rulings which the Treasury Department may
issue. It is possible that future standards announced by the Treasury Department
could adversely affect the tax treatment of your Contract. We reserve the right
to modify the Contract as necessary to attempt to prevent you from being
considered the federal tax owner of the assets of the Variable Account. However,
we make no guarantee that such modification to the Contract will be successful.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that bears the same ratio
to the total payment that the investment in the Contract (i.e., nondeductible
IRA contributions, after tax contributions to qualified plans) bears to the
Contract Value, is excluded from your income. If you make a full withdrawal
under a non-Qualified Contract or a Qualified Contract, the amount received will
be taxable only to the extent it exceeds the investment in the Contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. "Qualified distributions" from Roth IRAs are
not included in gross income. "Qualified distributions" are any distributions
made more than 5 taxable years after the taxable year of the first contribution
to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2,
o made to a beneficiary after the Contract owner's death,
o attributable to the Contract owner being disabled, or
o for a first time home purchase (first time home purchases are subject to a
lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the Contract. If you elect variable annuity payments, the amount excluded from
taxable income is determined by dividing the investment in the Contract by the
total number of expected payments. The annuity payments will be fully taxable
after the total amount of the investment in the Contract is excluded using these
ratios. If you die, and annuity payments cease before the total amount of the
investment in the Contract is recovered, the unrecovered amount will be allowed
as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
1) if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
2) if distributed under an annuity option, the amounts are taxed in the same
manner as an annuity payment. Please see the Statement of Additional
Information for more detail on distribution at death requirements.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
1) made on or after the date the Contract owner attains age 59 1/2;
2) made as a result of the Contract owner's death or disability;
3) made in substantially equal periodic payments over the Contract
owner's life or life expectancy,
4) made under an immediate annuity, or
5) attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Glenbrook (or its affiliates) to the same Contract owner during any
calendar year will be aggregated and treated as one annuity contract for
purposes of determining the taxable amount of a distribution.
Tax Qualified Contracts
Contracts may be used as investments with certain qualified plans such as:
o Individual Retirement Annuities or Accounts (IRAs) under Section 408
of the Code;
o Roth IRAs under Section 408A of the Code;
o Simplified Employee Pension Plans under Section 408(k) of the Code;
o Savings Incentive Match Plans for Employees (SIMPLE) Plans under
Section 408(p) of the Code;
o Tax Sheltered Annuities under Section 403(b) of the Code;
o Corporate and Self Employed Pension and Profit Sharing Plans; and
o State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans.
In the case of certain qualified plans, the terms of the plans may govern the
right to benefits, regardless of the terms of the Contract.
Restrictions Under Section 403(b) Plans. Section 403(b) of the Tax Code provides
tax-deferred retirement savings plans for employees of certain non-profit and
educational organizations. Under Section 403(b), any Contract used for a 403(b)
plan must provide that distributions attributable to salary reduction
contributions made after 12/31/88, and all earnings on salary reduction
contributions, may be made only:
1) on or after the date of employee
o attains age 59 1/2,
o separates from service,
o dies,
o becomes disabled, or
2) on account of hardship (earnings on salary reduction contributions may
not be distributed on the account of hardship).
These limitations do not apply to withdrawals where Glenbrook is directed to
transfer some or all of the Contract Value to another 403(b) plan.
Income Tax Withholding
Glenbrook is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
1) required minimum distributions, or
2) a series of substantially equal periodic payments made over a period
of at least 10 years, or,
3) over the life (joint lives) of the participant (and beneficiary).
Glenbrook may be required to withhold federal and state income taxes on any
distributions from non-Qualified Contracts or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election to not
have taxes withheld.
<PAGE>
ANNUAL REPORTS AND OTHER DOCUMENTS
- ------------------------------------------------------------------------------
Glenbrook's annual report on Form 10-K for the year ended December 31, 1998 is
incorporated herein by reference, which means that it is legally a part of this
prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act of 1934 are also incorporated herein by reference, which
means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0001007285. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of SEC's Public Reference Room,
call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents) , please
write or call us at P.O. Box 94042, Palatine, IL 60094 (telephone :
1-800-755-5275).
EXPERTS
The financial statements and financial statement schedules of Glenbrook at
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 included in Glenbrook's Annual Report on Form 10-K, which is
incorporated herein by reference, have been examined by Deloitte & Touche LLP,
independent accountants, whose reports thereon also are incorporated herein by
reference. Such financial statements and financial statement schedules have been
incorporated herein by reference in reliance upon the reports of Deloitte &
Touche LLP given upon their authority as experts in accounting and auditing.
<PAGE>
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
We may advertise the performance of the Variable Sub-Accounts, including yield
and total return information. Total return represents the change, over a
specified period of time, in the value of an investment in a Variable
Sub-Account after reinvesting all income distributions. Yield refers to the
income generated by an investment in a Variable Sub-Account over a specified
period.
All performance advertisements will include, as applicable, standardized yield
and total return figures that reflect the deduction of insurance charges, the
contract maintenance charge, and withdrawal charge. Performance advertisements
also may include total return figures that reflect the deduction of insurance
charges, but not the contract maintenance or withdrawal charges. The deduction
of such charges would reduce the performance shown. In addition, performance
advertisements may include aggregate average, year-by-year, or other types of
total return figures.
Performance information for periods prior to the inception date of the Variable
Sub-Accounts will be based on the historical performance of the corresponding
Portfolios for the periods beginning with the inception dates of the Portfolios
and adjusted to reflect current Contract expenses. You should not interpret
these figures to reflect actual historical performance of the Variable Account.
We may include in advertising and sales materials tax deferred compounding
charts and other hypothetical illustrations that compare currently taxable and
tax deferred investment programs based on selected tax brackets. Our
advertisements also may compare the performance of our Variable Sub-Accounts
with: (a) certain unmanaged market indices, including but not limited to the Dow
Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman
Bond Index; and/or (b) other management investment companies with investment
objectives similar to the underlying funds being compared. In addition, our
advertisements may include the performance ranking assigned by various
publications, including the Wall Street Journal, Forbes, Fortune, Money,
Barron's, Business Week, USA Today, and statistical services, including Lipper
Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, and SEI.
<PAGE>
APPENDIX A
Accumulation Unit Value and Number of Accumulation Units
Outstanding for Each Variable Sub-Account Since Inception
Basic Policy
For the Years Beginning January 1* and Ending December 31 1998
----
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $12.355
Number of Units Outstanding, End of Period 6,340
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $10.131
Number of Units Outstanding, End of Period 9,369
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.444
Number of Units Outstanding, End of Period 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $10.868
Number of Units Outstanding, End of Period 590
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $13.490
Number of Units Outstanding, End of Period 14,847
AIM V.I. GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $12.897
Number of Units Outstanding, End of Period 19,408
AIM V.I. INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.445
Number of Units Outstanding, End of Period 1,608
AIM V.I. VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $13.299
Number of Units Outstanding, End of Period 32,804
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.025
Accumulation Unit Value, End of Period $11.752
Number of Units Outstanding, End of Period 319
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.618
Accumulation Unit Value, End of Period $12.134
Number of Units Outstanding, End of Period 9,151
VIS DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.515
Accumulation Unit Value, End of Period $11.861
Number of Units Outstanding, End of Period 0
VIS EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.522
Accumulation Unit Value, End of Period $12.876
Number of Units Outstanding, End of Period 0
VIS QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.682
Accumulation Unit Value, End of Period $11.459
Number of Units Outstanding, End of Period 0
VIS UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.948
Accumulation Unit Value, End of Period $14.597
Number of Units Outstanding, End of Period 0
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.813
Accumulation Unit Value, End of Period $13.286
Number of Units Outstanding, End of Period 4,691
VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.161
Accumulation Unit Value, End of Period $10.359
Number of Units Outstanding, End of Period 689
VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.602
Accumulation Unit Value, End of Period $11.674
Number of Units Outstanding, End of Period 15,419
VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.198
Accumulation Unit Value, End of Period $10.582
Number of Units Outstanding, End of Period 8,064
FIDELITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.685
Accumulation Unit Value, End of Period $14.713
Number of Units Outstanding, End of Period 6,447
FIDELITY VIP II CONTRAFUND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.071
Accumulation Unit Value, End of Period $14.205
Number of Units Outstanding, End of Period 9,143
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.779
Accumulation Unit Value, End of Period $10.180
Number of Units Outstanding, End of Period 5,404
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.270
Number of Units Outstanding, End of Period 39,282
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.999
Accumulation Unit Value, End of Period $14.566
Number of Units Outstanding, End of Period 4,807
MFS NEW LIMITED MATURITY SERIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.269
Accumulation Unit Value, End of Period $10.298
Number of Units Outstanding, End of Period 1,019
* The AIM, Fidelity Equity Income, and Dreyfus Stock Index Variable Sub-Accounts
commenced operations on January 26, 1998. The other Variable Sub-Accounts
commenced operations on June 17, 1997, but had no material operations for the
year ended December 31, 1997. The Accumulation Unit Values in this table reflect
a mortality and expense risk charge of 1.25% and an administrative expense
charge of 0.10%.
<PAGE>
Accumulation Unit Values and Number of Accumulation Units
Outstanding for Each Variable Sub-Account Since Inception
Basic Policy plus Enhanced Death Benefit Rider
For the Years Beginning January 1* and Ending December 31 1998
----
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $12.344
Number of Units Outstanding, End of Period 12,737
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $10.121
Number of Units Outstanding, End of Period 9,218
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.433
Number of Units Outstanding, End of Period 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $10.858
Number of Units Outstanding, End of Period 9,206
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $13.477
Number of Units Outstanding, End of Period 16,048
AIM V.I. GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $12.885
Number of Units Outstanding, End of Period 53,289
AIM V.I. INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.434
Number of Units Outstanding, End of Period 5,259
AIM V.I. VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $13.287
Number of Units Outstanding, End of Period 56,599
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.025
Accumulation Unit Value, End of Period $11.734
Number of Units Outstanding, End of Period 5,202
<PAGE>
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.618
Accumulation Unit Value, End of Period $12.116
Number of Units Outstanding, End of Period 8,155
VIS DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.515
Accumulation Unit Value, End of Period $11.843
Number of Units Outstanding, End of Period 0
VIS EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.522
Accumulation Unit Value, End of Period $12.856
Number of Units Outstanding, End of Period 0
VIS QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.682
Accumulation Unit Value, End of Period $11.441
Number of Units Outstanding, End of Period 0
VIS UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.948
Accumulation Unit Value, End of Period $14.574
Number of Units Outstanding, End of Period 0
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.813
Accumulation Unit Value, End of Period $13.265
Number of Units Outstanding, End of Period 4,410
VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.161
Accumulation Unit Value, End of Period $10.343
Number of Units Outstanding, End of Period 5,589
VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.602
Accumulation Unit Value, End of Period $11.656
Number of Units Outstanding, End of Period 18,220
VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.198
Accumulation Unit Value, End of Period $10.566
Number of Units Outstanding, End of Period 8,481
FIDELITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.685
Accumulation Unit Value, End of Period $14.691
Number of Units Outstanding, End of Period 8,796
FIDELITY VIP II CONTRAFUND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $11.071
Accumulation Unit Value, End of Period $14.184
Number of Units Outstanding, End of Period 11,875
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.779
Accumulation Unit Value, End of Period $10.164
Number of Units Outstanding, End of Period 28,536
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000
Accumulation Unit Value, End of Period $11.259
Number of Units Outstanding, End of Period 76,641
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.999
Accumulation Unit Value, End of Period $14.544
Number of Units Outstanding, End of Period 6,169
MFS NEW LIMITED MATURITY SERIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.269
Accumulation Unit Value, End of Period $10.273
Number of Units Outstanding, End of Period 3,994
* The Enhanced Death Benefit Rider has been available since the contracts were
first offered. The Accumulation Unit Values in this table reflect a mortality
and expense risk charge of 1.35% and an administrative expense charge of 0.10%.
<PAGE>
APPENDIX B
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week
preceding the establishment of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week
preceding the receipt of the withdrawal, transfer, death benefit, or income
payment request. If a Note with a maturity of the original Guarantee Period is
not available, a weighted average will be used.
N = the number of whole and partial years from the date we receive the
withdrawal, transfer, or death benefit request, or from the Payout Start Date to
the end of the Guarantee Period.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported
in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment factor is determined from the following formula:
.9 x (I-J) x N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount transferred, withdrawn (in excess of the Free
Withdrawal Amount), paid as a death benefit, or applied to an Income Plan, out
of a Guarantee Period at any time other than during the 30 day period after such
Guarantee Period expires.
<PAGE>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Withdrawal: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
EXAMPLE 1: (Assumes Declining Interest Rates)
<TABLE>
<CAPTION>
<S> <C>
Step 1: Calculate Contract Value at End of Contract Year 3: = 10,000.00 x (1.045)3= $11,411.66
Step 2: Calculate the Free Withdrawal Amount: = .15 x (10,000.00) = $1,500.00
Step 3: Calculate the Withdrawal Charge: = .05 x (10,000.00 - 1,500.00) = $425.00
Step 4: Calculate the Market Value Adjustment:
I = 4.50%
J = 4.20%
N = 730 days = 2
365 days
Market Value Adjustment Factor: .9 x (I-J) x N
= .9 x (.045 - .042) x 2 = .0054
Market Value Adjustment = Market Value Adjustment
Factor x Amount Subject to Market Value Adjustment:
= .0054 x (11,411.66 - 1,500) = $53.52
Step 5: Calculate the amount received by Contract owner as a
result of full withdrawal at the end of Contract Year 3: = 11,411.66 - 425.00 + 53.52 = $11,040.18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE 2: (Assumes Rising Interest Rates)
<S> <C>
Step 1: Calculate Contract Value at End of Contract Year 3: = 10,000.00 x (1.045)3 = $11,411.66
Step 2: Calculate the Free Withdrawal Amount: = .15 x (10,000.00) = $1,500.00
Step 3: Calculate the Withdrawal Charge: = .05 x (10,000.00 - 1,500.00) = $425.00
Step 4: Calculate the Market Value Adjustment:
I = 4.50%
J = 4.80%
N = 730 days = 2
365 days
Market Value Adjustment Factor: .9 x (I-J) x N
= .9 x (.045 - .048) x (2) = -.0054
Market Value Adjustment = Market Value Adjustment
Factor x Amount Subject to Market Value Adjustment:
= -.0054 x (11,411.66 - 1,500) = -$53.52
Step 5: Calculate the amount received by Contract owner as a
result of full withdrawal at the end of Contract Year 3: = 11,411.66 - 425.00 - 53.52 = $10,933.14
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Description Page
Additions, Deletions or Substitutions of Investments
The Contract
Purchases
Tax-free Exchanges (1035 Exchanges, Rollovers and
Transfers)
Performance Information
Calculation of Accumulation Unit Values
Calculation of Variable Income Payments
General Matters
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Premium Taxes
Tax Reserves
Federal Tax Matters
Qualified Plans
Experts
Financial Statements
-----------------------------------------------
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
[back cover]
<PAGE>
THE GLENBROOK PROVIDER VARIABLE ANNUITY
Glenbrook Life and Annuity Company Prospectus dated
May 1, 1999
P.O. Box 94042
Palatine, IL 60094 or
Telephone Number: 1-800-755-5275
Glenbrook Life and Annuity Company ("Glenbrook") is offering the Glenbrook
Provider Variable Annuity, an individual flexible premium deferred variable
annuity contract ("Contract"). This prospectus contains information about the
Contract that you should know before investing. Please keep it for future
reference.
<TABLE>
<CAPTION>
The Contract currently offers 44 ("investment alternatives"). The investment
alternatives include 3 fixed account options ("Fixed Account Options") and 41
variable sub-accounts ("Variable Sub-Accounts") of the Glenbrook Life
Multi-Manager Variable Account ("Variable Account"). Each Variable Sub-Account
invests exclusively in shares of the following mutual funds ("Funds"):
<S> <C>
o AIM Variable Insurance Funds, Inc. o Fidelity Variable Insurance Products Fund II
o American Century Variable Funds (VP), Inc. (VIPII)
o Dreyfus Variable Investment Fund (VIF) o Goldman Sachs Variable Insurance Trust
o The Dreyfus Socially Responsible Growth, o Morgan Stanley Universal Funds, Inc.
Inc. o MFS(R) Variable Insurance TrustSM
o Dreyfus Stock Index Fund o Neuberger & Berman Advisers Management Trust
o Fidelity Variable Insurance Products Fund (VIP) o STI Classic Variable Trust
Products Fund (VIP)
</TABLE>
Each Fund has multiple investment portfolios ("Portfolios"). Not all of the
Funds and/or Portfolios, however, may be available with your Contract. You
should check with your representative for further information on the
availability of Funds and/or Portfolios. Your annuity application will list all
available Portfolios.
We (Glenbrook) have filed a Statement of Additional Information, dated May 1,
1999, with the Securities and Exchange Commission ("SEC"). It contains more
information about the Contract and is incorporated herein by reference, which
means it is legally a part of this prospectus. Its table of contents appears on
page __ of this prospectus. For a free copy, please write or call us at the
address or telephone number above, or go to the SEC's Web site
(http\\:www.gov.sec). You can find other information and documents about us,
including documents that are legally part of this prospectus, at the SEC's Web
site.
The Securities and Exchange Commission has not approved or
disapproved the securities described in this prospectus, nor
has it passed on the accuracy or the adequacy of this
prospectus. Anyone who tells you otherwise is committing a
federal crime.
IMPORTANT
NOTICES The Contracts may be distributed through broker-dealers that
have relationships with banks or other financial institutions
or by employees of such banks. However, the Contracts are not
deposits, or obligations of, or guaranteed by such institutions
or any federal regulatory agency. Investment in the Contracts
involves investment risks, including possible loss of
principal.
The Contracts are not FDIC insured.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C> <C>
Page
Important Terms......................................................
Overview The Contract At A Glance.............................................
How the Contract Works...............................................
Expense Table........................................................
Financial Information................................................
The Contract.........................................................
Purchases...............................................................
Contract Value.......................................................
Investment Alternatives..............................................
The Variable Sub-Accounts...................................
The Fixed Account Options...................................
Transfers...................................................
Contract Features Expenses.............................................................
Access To Your Money.................................................
Income Payments......................................................
Death Benefits.......................................................
More Information About:
Glenbrook...................................................
The Variable Account........................................
The Portfolios..............................................
Other Information The Contract................................................
Qualified Plans.............................................
Legal Matters...............................................
Year 2000...................................................
Taxes................................................................
Annual Reports and Other Documents...................................
Performance Information..............................................
Appendix A--Accumulation Unit Values.................................
Appendix B - Illustration of a Market Value
Adjustment ..........................................................
Statement of Additional Information Table of
Contents.............................................................
</TABLE>
<PAGE>
IMPORTANT TERMS
- --------------------------------------------------------------------------------
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
Page
Accumulation Phase................................................
Accumulation Unit ................................................
Accumulation Unit Value ..........................................
Anniversary Values................................................
Annuitant.........................................................
Automatic Additions Plan..........................................
Automatic Portfolio Rebalancing Program...........................
Beneficiary.......................................................
Cancellation Period...............................................
*Contract ........................................................
Contract Anniversary..............................................
Contract Owner ("You") ...........................................
Contract Value ...................................................
Contract Year....................................................
Death Benefit Anniversary ........................................
Dollar Cost Averaging Program.....................................
Due Proof of Death................................................
Enhanced Death Benefit Rider.....................................
Enhanced Death and Income Benefit Combination Rider...............
Fixed Account Options ............................................
Free Withdrawal Amount ...........................................
Portfolios........................................................
Glenbrook ("We")..................................................
Guarantee Periods................................................
Income Plan ......................................................
Investment Alternatives ..........................................
Issue Date .......................................................
Market Value Adjustment ..........................................
Payout Phase......................................................
Payout Start Date ...............................................
Portfolios........................................................
Qualified Contracts...............................................
SEC...............................................................
Settlement Value ................................................
Systematic Withdrawal Program.....................................
Valuation Date....................................................
Variable Account .................................................
Variable Sub-Account .............................................
*In certain states the Contract is available only as a group Contract. In
these states, we will issue you a certificate that represents your
ownership and that summarizes the provisions of the group Contract.
References to "Contract" in this prospectus include certificates, unless
the context requires otherwise.
<PAGE>
THE CONTRACT AT A GLANCE
- --------------------------------------------------------------------------------
The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
-------------------------------------------------------------------------------
Flexible Payments You can purchase a Contract with as little as $3,000
($2,000 for "Qualified Contracts," which are Contracts
issued with qualified plans. You can add to your
Contract as often and as much as you like, but each
payment must be at least $50. You must maintain a
minimum account size of $2,000.
-------------------------------------------------------------------------------
Right to Cancel You may cancel your Contract within 20 days of receipt
or any longer period as your state may require
("Cancellation Period"). Upon cancellation, we will
return your purchase payments adjusted, to the extent
state law permits, to reflect the investment experience
of any amounts allocated to the Variable Account.
- --------------------------------------------------------------------------------
Expenses You will bear the following expenses:
o Total Variable Account annual fees equal to
1.15% of average daily net assets (1.37% if you
select the Enhanced Death Benefit Rider and
1.59% if you select the Enhanced Death and
Income Benefit Combination Rider)
o Annual contract maintenance charge of $35 (with
certain exceptions)
o Withdrawal charges ranging from 0% to 6% of
purchase payment withdrawn (with certain
exceptions)
o Transfer fee of $10 after 12th transfer in any
Contract Year (fee currently waived)
o State premium tax (if your state imposes one)
In addition, each Portfolio pays expenses that you will
bear indirectly if you invest in a Variable Sub-Account.
-------------------------------------------------------------------------------
Investment
Alternatives The Contract offers 44 investment alternatives
including:
o 3 Fixed Account Options (which credit interest
at rates we guarantee)
o 41 Variable Sub-Accounts investing in Portfolios
offering professional money management by these
investment advisers:
o A I M Advisors, Inc.
o American Century Investment Management, Inc.
o The Dreyfus Corporation
o Fidelity Management & Research Company
o Massachusetts Financial Services
o Goldman Sachs Asset Management
o Goldman Sachs Asset Management International
o Morgan Stanley Asset Management, Inc.
o Neuberger & Berman Management, Inc.
o STI Capital Management, N.A.
To find out current rates being paid on the Fixed
Account Options, or to find out how the Variable
Sub-Accounts have performed, please call us at
1-800-755-5275.
- --------------------------------------------------------------------------------
Special Services For your convenience, we offer these special services:
o Automatic Portfolio Rebalancing Program
o Automatic Additions Program
o Dollar Cost Averaging Program
o Systematic Withdrawal Program
- --------------------------------------------------------------------------------
Income Payments You can choose fixed income payments, variable income
payments, or a combination of the two. You can receive
your income payments in one of the following ways:
o life income with guaranteed payments
o a joint and survivor life income with guaranteed
payments
o guaranteed payments for a specified period (5 to
30 years)
- --------------------------------------------------------------------------------
Death Benefits If you or the Annuitant (if the Contract is owned by a
non-natural person) die before the Payout Start Date, we
will pay the death benefit described in the Contract. We
offer an Enhanced Death Benefit Rider and an Enhanced
Death and Income Benefit Combination Rider.
- --------------------------------------------------------------------------------
Transfers Before the Payout Start Date, you may transfer your
Contract value ("Contract Value") among the investment
alternatives, with certain restrictions. Transfers to a
Guarantee Period of the Fixed Account must be at least
$50.
We do not currently impose a fee upon transfers.
However, we reserve the right to charge $10 per transfer
after the 12th transfer in each "Contract Year," which
we measure from the date we issue your contract or a
Contract anniversary ("Contract Anniversary").
- --------------------------------------------------------------------------------
Withdrawals You may withdraw some or all of your Contract Value at
anytime prior to the Payout Start Date. In general, you
must withdraw at least $50 at a time. A 10% federal tax
penalty may apply if you withdraw before you are
591/2years old. A withdrawal charge and Market Value
Adjustment also may apply.
- --------------------------------------------------------------------------------
<PAGE>
HOW THE CONTRACT WORKS
- --------------------------------------------------------------------------------
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the Contract owner)
save for retirement because you can invest in up to 44 investment alternatives
and pay no federal income taxes on any earnings until you withdraw them. You do
this during what we call the "Accumulation Phase" of the Contract. The
Accumulation Phase begins on the date we issue your Contract (we call that date
the "Issue Date") and continues until the Payout Start Date, which is the date
we apply your money to provide income payments. During the Accumulation Phase,
you may allocate your purchase payments to any combination of the Variable
Sub-Accounts and/or Fixed Account Options. If you invest in any of the three
Fixed Account Options, you will earn a fixed rate of interest that we declare
periodically. If you invest in any of the Variable Sub-Accounts, your investment
return will vary up or down depending on the performance of the corresponding
Portfolios.
Second, the Contract can help you plan for retirement because you can use
it to receive retirement income for life and/or for a pre-set number of years,
by selecting one of the income payment options (we call these "Income Plans")
described on page __. You receive income payments during what we call the
"Payout Phase" of the Contract, which begins on the Payout Start Date and
continues until we make the last payment required by the Income Plan you select.
During the Payout Phase, if you select a fixed income payment option, we
guarantee the amount of your payments, which will remain fixed. If you select a
variable income payment option, based on one or more of the Variable
Sub-Accounts, the amount of your payments will vary up or down depending on the
performance of the corresponding Portfolios. The amount of money you accumulate
under your Contract during the Accumulation Phase and apply to an Income Plan
will determine the amount of your income payments during the Payout Phase.
<TABLE>
<CAPTION>
The timeline below illustrates how you might use your Contract.
<S> <C> <C> <C> <C>
Issue Payout Start
Date Accumulation Phase Date Payout Phase
- ------------------------------------------------------------------------------------------
| You save for retirement | | > ?
You buy You elect to receive You can Or you can
a Contract income payments or receive receive
receive a lump sum income income
payment payments for payments
a set period for life
</TABLE>
As the Contract owner, you exercise all of the rights and privileges
provided by the Contract. If you die, any surviving Contract owner or, if none,
the Beneficiary will exercise the rights and privileges provided by the
Contract. See "The Contract." In addition, if you die before the Payout Start
Date, we will pay a death benefit to any surviving Contract owner, or if there
is none, to your Beneficiary. See "Death Benefits."
Please call us at ________________ if you have any question about how the
Contract works.
<PAGE>
EXPENSE TABLE
- --------------------------------------------------------------------------------
The table below lists the expenses that you will bear directly or indirectly
when you buy a Contract. The table and the examples that follow do not reflect
premium taxes that may be imposed by the state where you reside. For more
information about Variable Account expenses, see "Expenses," below. For more
information about Portfolio expenses, please refer to the accompanying
prospectuses for the Funds.
---------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
Number of Complete Years
Since We Received the Purchase
Payment Being Withdrawn: 0 1 2 3 4 5 6+
Applicable Charge: 6% 6% 5% 5% 4% 3% 0%
Annual Contract Maintenance Charge......................$35.00**
Transfer Fee............................................$10.00***
-------------------
* Each Contract Year, you may withdraw up to 15% of your aggregate
purchase payments without incurring a withdrawal charge.
** We will waive this charge in certain cases. See "Expenses."
***Applies solely to the thirteenth and subsequent transfers within a
Contract Year, excluding transfers due to dollar cost averaging and
automatic portfolio rebalancing. We are currently waiving the transfer
fee.
---------------------------------------------------------------------
<PAGE>
---------------------------------------------------------------------
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily net asset value deducted from
each Variable Sub-Account)
Mortality and Expense Risk Charge...................1.05%*
Administrative Expense Charge.......................0.10%
Total Variable Account Annual Expenses....1.15%
-------------------
* If you select the Enhanced Death Benefit Rider, the mortality and
expense risk charge is 1.27%. If you select the Enhanced Death and Income
Benefit Combination Rider, the mortality and expense risk charge is 1.49%.
---------------------------------------------------------------------
PORTFOLIOANNUAL EXPENSES (After Voluntary Reductions and Reimbursements)
(as a percentage of Portfolio average daily net assets)
Total
Management Other Portfolio
Portfolio Fees Expenses Annual
Expenses
AIM V.I. Balanced Fund(1) 0.00% 1.18% 1.18%
AIM V.I. Capital Appreciation Fund 0.62% 0.05% 0.67%
AIM V.I. Diversified Income Fund 0.60% 0.17% 0.77%
AIM V.I. Global Utilities Fund 0.65% 0.46% 1.11%
AIM V.I. Government Securities Fund 0.50% 0.26% 0.76%
AIM V.I. Growth Fund 0.64% 0.08% 0.72%
AIM V.I. Growth and Income Fund 0.61% 0.04% 0.65%
AIM V.I. High Yield(1) 0.00% 1.13% 1.13%
AIM V.I. International Equity Fund 0.75% 0.16% 0.91%
AIM V.I. Value Fund 0.61% 0.05% 0.66%
American Century VP Balanced 0.97% 0.00% 0.97%
American Century VP International 1.47% 0.00% 1.47%
Dreyfus Socially Responsible Growth 0.75% 0.05% 0.80%
Dreyfus Stock Index Fund 0.25% 0.01% 0.26%
VIF Small Company Stock 0.75% 0.23% 0.98%
VIF Growth and Income 0.75% 0.03% 0.78%
VIF Money Market 0.50% 0.06% 0.56%
VIP Growth(2) 0.59% 0.07% 0.66%
VIP High Income 0.58% 0.12% 0.70%
VIP Equity-Income(2) 0.49% 0.08% 0.57%
VIP II Contrafund(2) 0.59% 0.07% 0.66%
Goldman Sachs Growth and Income Fund 0.75% 0.15% 0.90%
Goldman Sachs CORE U.S. Equity Fund 0.70% 0.10% 0.80%
Goldman Sachs CORE Large Cap Growth Fund 0.70% 0.10% 0.80%
Goldman Sachs CORE Small Cap Equity Fund 0.75% 0.15% 0.90%
Goldman Sachs Capital Growth Fund 0.75% 0.15% 0.90%
Goldman Sachs Mid Cap Equity Fund 0.80% 0.15% 0.95%
Goldman Sachs International Equity Fund 1.00% 0.25% 1.25%
Goldman Sachs Global Income Fund 0.90% 0.15% 1.05%
Morgan Stanley Fixed Income(1) 0.06% 0.64% 0.70%
Morgan Stanley Equity Growth(1) 0.09% 0.76% 0.85%
Morgan Stanley Value(1) 0.08% 0.77% 0.85%
Morgan Stanley Mid Cap Value(1) 0.23% 0.82% 1.05%
Morgan Stanley U.S. Real Estate(1) 0.17% 0.93% 1.10%
Morgan Stanley Global Equity(1) 0.32% 0.83% 1.15%
Morgan Stanley International Magnum(1) 0.15% 1.00% 1.15%
MFS Emerging Growth 0.75% 0.10% 0.85%
MFS Growth with Income 0.75% 0.13% 0.88%
MFS New Discovery(3) 0.90% 0.27% 1.17%
Neuberger & Berman AMT Guardian(4) 0.85% 0.15% 1.00%
Neuberger & Berman AMT Mid-Cap Growth(4) 0.85% 0.15% 1.00%
Neuberger & Berman AMT Partners 0.78% 0.06% 0.84%
STI Capital Appreciation Fund
STI Value Income Stock Fund
- -------------------
(1) Figures shown in the table are for the year ended December 31, 1998. Absent
voluntary reductions and reimbursements for certain Portfolios, management
fees, other expenses, and total Portfolio annual expenses expressed as a
percentage of average net assets of the Portfolios would have been as
follows:
AIM V.I. Balanced Fund 0.75% 2.08% 2.83%
AIM V.I. High Yield Fund 0.63% 1.87% 2.50%
Fixed Income 0.40% 0.64% 1.04%
Equity Growth 0.55% 0.76% 1.31%
Value 0.55% 0.77% 1.32%
Mid-Cap Value 0.75% 0.82% 1.57%
U.S. Real Estate 0.80% 0.93% 1.73%
Global Equity Portfolio 0.80% 0.83% 1.63%
International Magnum 0.80% 1.00% 1.80%
(2) Absent expense offset and other arrangements that reduce expenses, total
Portfolio annual expenses expressed as a percentage of average net assets of
the Portfolios would have been 0.68% for VIP Growth, 0.58% for VIP
Equity-Income, and 0.70% for VIP II Contrafund.
(3) The total Portfolio annual expenses shown do not reflect expense offset and
other arrangements, and are therefore higher than the actual expenses of the
Portfolio.
(4) Absent voluntary reductions and reimbursements, total Portfolio annual
expenses expressed as a percentage of average net assets of the Portfolios
would have been 1.14% for the Guardian Portfolio and 1.43% for the Mid-Cap
Growth Portfolio.
<PAGE>
EXAMPLE 1
The example below shows the dollar amount of expenses that you would bear
directly or indirectly if you:
o invested $1,000 in a Variable Sub-Account,
o earned a 5% annual return on your investment,
o surrendered your Contract, or you began receiving income payments for
a specified period of less than 120 months, at the end of each time
period, and
o elected the Enhanced Death and Income Benefit Combination Rider.
The example does not include any taxes or tax penalties you may be required to
pay if you surrender your Contract.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years
- -------------------- ------ ------- ------- --------
AIM V.I. Balanced $80 $132 $177 $319
AIM V.I. Capital Appreciation $75 $116 $151 $268
AIM V.I. Diversified Income $76 $119 $156 $278
AIM V.I. Global Utilities $79 $130 $174 $313
AIM V.I. Government Securities $76 $119 $156 $277
AIM V.I. Growth $75 $118 $154 $273
AIM V.I. Growth and Income $75 $115 $160 $266
AIM V.I. High Yield $80 $130 $175 $315
AIM V.I. International Equity $77 $123 $163 $293
AIM V.I. Value $75 $116 $151 $267
American Century VP Balanced $77 $123 $163 $292
American Century VP International $83 $141 $193 $350
Dreyfus Socially Responsible Growth $76 $120 $158 $282
Dreyfus Stock Index $71 $103 $130 $225
VIF Small Company Stock $78 $126 $167 $300
VIF Growth and Income $76 $119 $157 $279
VIF Money Market $74 $113 $146 $257
VIP Growth $75 $116 $152 $269
VIP High Income $75 $117 $153 $271
VIP Equity-Income $74 $113 $147 $259
VIP II Contrafund $75 $117 $153 $271
Goldman Sachs Growth and Income $77 $123 $163 $292
Goldman Sachs CORE U.S. Equity $76 $120 $158 $282
Goldman Sachs CORE Large Cap Growth $76 $120 $158 $282
Goldman Sachs CORE Small Cap Equity $77 $123 $163 $292
Goldman Sachs Capital Growth $77 $123 $163 $292
Goldman Sachs Mid Cap Equity $78 $125 $166 $297
Goldman Sachs International Equity $81 $134 $181 $326
Goldman Sachs Global Income $79 $128 $171 $307
Morgan Stanley Fixed Income $75 $117 $153 $271
Morgan Stanley Equity Growth $77 $122 $160 $287
Morgan Stanley Value $77 $122 $160 $287
Morgan Stanley Mid Cap Value $79 $128 $171 $307
Morgan Stanley U.S. Real Estate $79 $129 $173 $312
Morgan Stanley Global Equity $80 $131 $176 $317
Morgan Stanley International Magnum $80 $131 $176 $317
MFS Emerging Growth $77 $122 $160 $287
MFS Growth with Income $77 $122 $162 $290
MFS New Discovery $80 $131 $177 $318
Neuberger & Berman AMT Guardian $78 $126 $168 $302
Neuberger & Berman AMT Partners $77 $121 $160 $286
Neuberger & Berman AMT Mid-Cap Growth $78 $126 $168 $302
STI Capital Appreciation
STI Value Income Stock
EXAMPLE 2
Same assumptions as Example 1 above, except that you decided not to surrender
your Contract, or you began receiving income payments for a specified period of
at least 120 months, at the end of each period.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years
- -------------------- ------ ------- ------- --------
AIM V.I. Balanced $29 $89 $152 $319
AIM V.I. Capital Appreciation $24 $74 $126 $268
AIM V.I. Diversified Income $25 $77 $131 $278
AIM V.I. Global Utilities $28 $87 $148 $313
AIM V.I. Government Securities $25 $76 $130 $277
AIM V.I. Growth $24 $75 $128 $273
AIM V.I. Growth and Income $24 $73 $125 $266
AIM V.I. High Yield $29 $88 $149 $315
AIM V.I. International Equity $26 $81 $138 $293
AIM V.I. Value $24 $73 $125 $267
American Century VP International $32 $99 $168 $350
American Century VP Balanced $26 $81 $137 $292
Dreyfus Socially Responsible Growth $25 $78 $132 $282
Dreyfus Stock Index $20 $61 $104 $225
VIF Small Company Stock $27 $83 $142 $300
VIF Growth and Income $25 $77 $131 $279
VIF Money Market $23 $70 $120 $257
VIP Growth $24 $74 $126 $269
VIP High Income $24 $74 $127 $271
VIP Equity-Income $23 $71 $121 $259
VIP II Contrafund $24 $74 $127 $271
Goldman Sachs Growth and Income $26 $81 $137 $292
Goldman Sachs CORE U.S. Equity $25 $78 $132 $282
Goldman Sachs CORE Large Cap Growth $25 $78 $132 $282
Goldman Sachs CORE Small Cap Equity $26 $81 $137 $292
Goldman Sachs Capital Growth $26 $81 $137 $292
Goldman Sachs Mid Cap Equity $27 $82 $140 $297
Goldman Sachs International Equity $30 $91 $155 $326
Goldman Sachs Global Income $28 $85 $145 $307
Morgan Stanley Fixed Income $24 $74 $127 $271
Morgan Stanley Equity Growth $26 $79 $135 $287
Morgan Stanley Value $26 $79 $135 $287
Morgan Stanley Mid Cap Value $28 $85 $145 $307
Morgan Stanley U.S. Real Estate $28 $87 $148 $312
Morgan Stanley Global Equity $29 $88 $150 $317
Morgan Stanley International Magnum $29 $88 $150 $317
MFS Emerging Growth $26 $79 $135 $287
MFS Growth with Income $26 $80 $136 $290
MFS New Discovery $29 $89 $151 $318
Neuberger & Berman AMT Guardian $27 $84 $143 $302
Neuberger & Berman AMT Partners $26 $79 $134 $286
Neuberger & Berman AMT Mid-Cap Growth $27 $84 $143 $302
STI Capital Appreciation
STI Value Income Stock
Please remember that you are looking at examples and not a representation of
past or future earnings. Your actual expenses may be lower or greater than those
shown above. Similarly, your rate of return may be lower or greater than 5%,
which is not guaranteed. The above examples assume the election of the Enhanced
Death and Income Benefit Combination Rider with a mortality and expense risk
charge of 1.49%. If that Rider were not elected, the expense figures shown above
would be slightly lower. To reflect the contract maintenance charge in the
examples, we estimated an equivalent percentage charge, based on an assumed
average Contract size of $47,490.
<PAGE>
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
To measure the value of your investment in the Variable Sub-Accounts during the
Accumulation Phase, we use a unit of measure we call the "Accumulation Unit."
Each Variable Sub-Account has a separate value for its Accumulation Units we
call "Accumulation Unit Value." Accumulation Unit Value is analogous to, but not
the same as, the share price of a mutual fund.
Attached as Appendix A to this prospectus are tables showing the Accumulation
Unit Values of each Variable Sub-Account, other than the STI Variable
Sub-Accounts, since its inception. No information is shown for the STI Variable
Sub-Accounts, which commenced operations as of the date of this prospectus. To
obtain a fuller picture of each Variable Sub-Account's finances, please refer to
the Variable Account's financial statements contained in the Statement of
Additional Information. The financial statements of Glenbrook also appear in the
Statement of Additional Information.
<PAGE>
THE CONTRACT
- --------------------------------------------------------------------------------
CONTRACT OWNER
The Glenbrook Provider Variable Annuity is a contract between you, the Contract
owner, and Glenbrook, a life insurance company. As the Contract owner, you may
exercise all of the rights and privileges provided to you by the Contract. That
means it is up to you to select or change (to the extent permitted):
o the investment alternatives during the Accumulation and Payout Phases,
o the amount and timing of your purchase payments and withdrawals,
o the programs you want to use to invest or withdraw money,
o the income payment plan you want to use to receive retirement income,
o the Annuitant (either yourself or someone else) on whose life the
income payments will be based,
o the Beneficiary or Beneficiaries who will receive the benefits that
the Contract provides when you die, and
o any other rights that the Contract provides.
If you die, any surviving Contract owner, or , if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-natural person and a natural
person.
You can use the Contract with or without a qualified plan. A qualified plan is a
personal retirement savings plan, such as an IRA or tax-sheltered annuity, that
meets the requirements of the Internal Revenue Code. Qualified plans may limit
or modify your rights and privileges under the Contract. We use the term
"Qualified Contract" to refer to a Contract issued with a qualified plan. See
"Qualified Plans" on page __.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). You initially designate an Annuitant in your application. You
may change the Annuitant at any time prior to the Payout Start Date (only if the
Contract owner is a natural person). You may designate a joint Annuitant, who is
a second person on whose life income payments depend. We permit joint Annuitants
only on or after the Payout Start Date. If the Annuitant dies prior to the
Payout Start Date, the new Annuitant will be:
(i) the youngest Contract owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner if the sole surviving Contract owner dies before
the Payout Start Date. If the sole surviving Contract owner dies after the
Payout Start Date, the Beneficiary will receive any guaranteed income payments
scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly.
If you did not name a Beneficiary or, unless otherwise provided in the
Beneficiary designation, if a named Beneficiary is no longer living and there
are no other surviving Beneficiaries, the new Beneficiary will be:
o your spouse or, if he or she is no longer alive,
o your surviving children equally, or if you have no surviving children,
o your estate.
If more than one Beneficiary survives you (or survives the Annuitant, if the
Contract owner is not a natural person) we will divide the death benefit among
your Beneficiaries according to your most recent written instructions. If you
have not given us written instructions, we will pay the death benefit in equal
amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Glenbrook officer may approve a change in or waive any provision of the
Contract. Any change or waiver must be in writing. None of our agents has the
authority to change or waive the provisions of the Contract. We may not change
the terms of the Contract without your consent, except to conform the Contract
to applicable law or changes in the law. If a provision of the Contract is
inconsistent with state law, we will follow state law.
ASSIGNMENT
We will not honor an assignment of an interest in a Contract as collateral or
security for a loan. However, you may assign periodic income payments under the
Contract prior to the Payout Start Date. No Beneficiary may assign benefits
under the Contract until they are payable to the Beneficiary. We will not be
bound by any assignment until you sign it and file it with us. We are not
responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. You should consult with an
attorney before trying to assign your Contract.
<PAGE>
PURCHASES
- --------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified
Contract). All subsequent purchase payments must be $50 or more. You may make
purchase payments at any time prior to the Payout Start Date. We reserve the
right to limit the maximum amount of purchase payments we will accept.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account. Consult your sales representative for more detailed
information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your
purchase payments among the investment alternatives. The allocation you specify
on your application will be effective immediately. All allocations must be in
whole percents that total 100% or in whole dollars. You can change your
allocations by notifying us in writing.
We will allocate your purchase payments to the investment alternatives according
to your most recent instructions on file with us. Unless you notify us in
writing otherwise, we will allocate subsequent purchase payments according to
the allocation for the previous purchase payment. We will effect any change in
allocation instructions at the time we receive written notice of the change in
good order.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our home office. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
home office.
We are open for business each day Monday through Friday that the New York Stock
Exchange is open for business. We also refer to these days as "Valuation Dates."
Our business day closes when the New York Stock Exchange closes, usually 4 p.m.
Eastern Time (3 p.m. Central Time). If we receive your purchase payment after 3
p.m. Central Time on any Valuation Date, we will credit your purchase payment
using the Accumulation Unit Values computed on the next Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 20 day period after you receive the Contract, or such
longer period that your state may require. You may return it by delivering it or
mailing it to us. If you exercise this "Right to Cancel," the Contract
terminates and we will pay you the full amount of your purchase payments
allocated to the Fixed Account. We also will return your purchase payments
allocated to the Variable Account adjusted, to the extent state law permits, to
reflect investment gain or loss that occurred from the date of allocation
through the date of cancellation. Some states may require us to return a greater
amount to you.
In states where we are required to refund purchase payments, we reserve the
right during the Cancellation Period to invest any purchase payments you
allocated to a Variable Sub-Account to the Money Market Variable Sub-Account
available under the Contract. We will notify you if we do so. At the end of the
Cancellation Period, you may then allocate your money to other Variable
Sub-Accounts.
<PAGE>
CONTRACT VALUE
- --------------------------------------------------------------------------------
Your Contract Value at any time during the Accumulation Phase is equal to the
sum of the value of your Accumulation Units in the Variable Sub-Accounts you
have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to
credit to your Contract, we divide (i) the amount of the purchase payment you
have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of
that Variable Sub-Account next computed after we receive your payment. For
example, if we receive a $10,000 purchase payment allocated to a Variable
Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we
would credit 1,000 Accumulation Units of that Variable Sub-Account to your
Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account
will rise or fall to reflect:
o changes in the share price of the Portfolio in which the Variable
Sub-Account invests, and
o the deduction of amounts reflecting the mortality and expense risk
charge, administrative expense charge, and any provision for taxes
that have accrued since we last calculated the Accumulation Unit
Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees
(currently waived) separately for each Contract. They do not affect Accumulation
Unit Value. Instead, we obtain payment of those charges and fees by redeeming
Accumulation Units. For details on how we calculate Accumulation Unit Value,
please refer to the Statement of Additional Information.
We determine a separate Accumulation Unit Value for each Variable Sub-Account on
each Valuation Date. We also determine a separate set of Accumulation Unit
Values reflecting the cost of the Enhanced Death Benefit Rider and the Enhanced
Death and Income Benefit Combination Rider described on page __ below.
You should refer to the prospectuses for the Funds that accompany this
prospectus for a description of how the assets of each Portfolio are valued,
since that determination directly bears on the Accumulation Unit Value of the
corresponding Variable Sub-Account and, therefore, your Contract Value.
<PAGE>
INVESTMENT ALTERNATIVES: The Variable Sub-Accounts
- --------------------------------------------------------------------------------
You may allocate your purchase payments to up to 41 Variable Sub-Accounts. Each
Variable Sub-Account invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with the Portfolio, please refer to the accompanying prospectuses for
the Funds. You should carefully review the Fund prospectuses before allocating
amounts to the Variable Sub-Accounts.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Investment
Portfolio: Each Portfolio Seeks: Adviser:
- -------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Variable Insurance Funds, Inc.
- -------------------------------------------------------------------------------------------
AIM V.I. Balanced Fund As high a total return as possible,
consistent with preservation of
capital
A I M
Advisors, Inc.
- -------------------------------------------------------------------------------------------
AIM V.I. Capital Growth of capital
Appreciation Fund
- -------------------------------------------------------------------------------------------
AIM V.I. Diversified Income A high level of current income
Fund
- -------------------------------------------------------------------------------------------
AIM V.I. Global Utilities To achieve a high level of current
Fund income and, secondarily, capital
appreciation
- -------------------------------------------------------------------------------------------
AIM V.I. Government A high level of current income
Securities Fund consistent with reasonable concern
for safety of principal
- -------------------------------------------------------------------------------------------
AIM V.I. Growth Fund Growth of capital
- -------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Growth of capital, and secondarily,
Fund current income
- -------------------------------------------------------------------------------------------
AIM V.I. High Yield Fund A high level of current income
- -------------------------------------------------------------------------------------------
AIM V.I. International Long-term growth of capital
Equity Fund
- -------------------------------------------------------------------------------------------
AIM V.I. Value Fund Long-term growth of capital
- -------------------------------------------------------------------------------------------
American Century Variable Funds (VP), Inc.
- -------------------------------------------------------------------------------------------
American Century VP Balanced Capital growth and income over time American
Century
Investment
Management,
Inc.
- -------------------------------------------------------------------------------------------
American Century VP Long-term capital growth around the
International world
- -------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund (VIF)
- -------------------------------------------------------------------------------------------
VIF Growth and Income Portfolio Long-term capital growth, current
income and growth of income,
consistent with reasonable investment
risk
The
Dreyfus
Corporation
- -------------------------------------------------------------------------------------------
VIF Money Market Portfolio Current income as is consistent
with the preservation of capital and
the maintenance of liquidity
- -------------------------------------------------------------------------------------------
VIF Small Company Stock Investment results that are greater
Portfolio than the total performance of the
Russell 2500-TM- Index
- -------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund, Inc.
- -------------------------------------------------------------------------------------------
Capital growth and, secondarily,
current income
- -------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund
- -------------------------------------------------------------------------------------------
Investment results that correspond to
the price and yield performance of the
Standard & Poor's 500 Composite Stock
Index
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investment
Portfolio: Each Portfolio Seeks: Adviser:
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Fidelity Variable Insurance Products Fund II (VIPII)
- -------------------------------------------------------------------------------------------
VIP II Contrafund Portfolio Capital appreciation Fidelity
Management &
Research
Company
- -------------------------------------------------------------------------------------------
VIP Growth Portfolio Capital appreciation
- -------------------------------------------------------------------------------------------
VIP High Income Portfolio High current income
- -------------------------------------------------------------------------------------------
VIP Equity Income Portfolio Reasonable income
- -------------------------------------------------------------------------------------------
MFS(R) Variable Insurance Trust SM*
- -------------------------------------------------------------------------------------------
MFS Emerging Growth Series Long-term growth of capital Massachusetts
Financial
Services
- -------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and
Series long-term growth of capital and income
- -------------------------------------------------------------------------------------------
MFS New Discovery Series Capital appreciation
- -------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
- -------------------------------------------------------------------------------------------
Growth and Income Fund Long-term growth of capital and growth Goldman
of income Sachs
Asset
Management
- -------------------------------------------------------------------------------------------
CORE U.S. Equity Fund Long-term growth of capital and
dividend income
- -------------------------------------------------------------------------------------------
CORE Large Cap Growth Fund Long-term growth of capital
- -------------------------------------------------------------------------------------------
CORE Small Cap Equity Fund Long-term growth of capital
- -------------------------------------------------------------------------------------------
Capital Growth Fund Long-term growth of capital
- -------------------------------------------------------------------------------------------
Mid Cap Equity Fund Long-term capital appreciation
- -------------------------------------------------------------------------------------------
International Equity Fund Long-term capital appreciation Goldman
Sachs
Asset
Management
International
- -------------------------------------------------------------------------------------------
Global Income Fund A high total return, emphasizing
current income and, to a lesser extent,
capital appreciation
- -------------------------------------------------------------------------------------------
Morgan Stanley Universal Funds, Inc.
- -------------------------------------------------------------------------------------------
Fixed Income Above-average total return
Morgan
Stanley
Asset
Management Inc.
- -------------------------------------------------------------------------------------------
Equity Growth Long-term capital appreciation
- -------------------------------------------------------------------------------------------
Value Above-average total return over a
market cycle of 3 to 5 years
- -------------------------------------------------------------------------------------------
Mid Cap Value Above-average total return over a
market cycle of 3 to 5 years
- -------------------------------------------------------------------------------------------
U.S. Real Estate Above-average current income and
long-term capital appreciation
- -------------------------------------------------------------------------------------------
Global Equity Long-term capital appreciation
- -------------------------------------------------------------------------------------------
International Magnum Long-term capital appreciation
- -------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
- -------------------------------------------------------------------------------------------
Partners Capital growth Neuberger &
Berman
Management Inc.
- -------------------------------------------------------------------------------------------
Guardian Capital appreciation and,
secondarily, current income
- -------------------------------------------------------------------------------------------
Mid-Cap Growth Capital appreciation
- -------------------------------------------------------------------------------------------
STI Classic Variable Trust
- -------------------------------------------------------------------------------------------
STI Capital Appreciation Fund Capital appreciation STI Capital
Management,
N.A.
- ------------------------------------------------------------------------------
STI Value Income Stock Fund Current income with the secondary goal
of achieving capital appreciation
- -------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1, 1999, the MFS Variable Sub-Accounts were closed to new
investment (including transfers).
Amounts you allocate to Variable Sub-Accounts may grow in value, decline in
value, or grow less than you expect, depending on the investment performance of
the Portfolios in which those Variable Sub-Accounts invest. You bear the
investment risk that the Portfolios might not meet their investment objectives.
Shares of the Portfolios are not deposits, or obligations of, or guaranteed or
endorsed by any bank and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
<PAGE>
INVESTMENT ALTERNATIVES : The Fixed Account Options
- --------------------------------------------------------------------------------
You may allocate all or a portion of your purchase payments to the Fixed
Account. You may choose from among 3 Fixed Account Options including 2 dollar
cost averaging options and the option to invest in one or more Guarantee
Periods. The Fixed Account Options may not be available in all states. Please
consult with your sales representative for current information. The Fixed
Account supports our insurance and annuity obligations. The Fixed Account
consists of our general assets other than those in segregated asset accounts. We
have sole discretion to invest the assets of the Fixed Account, subject to
applicable law. Any money you allocate to a Fixed Account Option does not
entitle you to share in the investment experience of the Fixed Account.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
Dollar Cost Averaging Fixed Account Option. Purchase payments that you allocate
to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option")
will earn interest for a one year period at the current rate in effect at the
time of allocation. We will credit interest daily at a rate that will compound
over the year to the annual interest rate we guaranteed at the time of
allocation. After the one year period, we will declare a renewal rate which we
guarantee for a full year. Subsequent renewal dates will be every twelve months
for each payment or transfer.
We will follow your instructions in transferring amounts monthly from the DCA
Fixed Account Option. However, you may not choose less than 3 or more than 36
monthly installments. Further, you must transfer each purchase payment and all
its earnings out of this Option by means of dollar cost averaging within 36
months of payment. At the end of 36 months, we will transfer the remaining
payment and associated earnings to the Money Market Variable Sub-Account. No
transfers are permitted into the Dollar Cost Averaging Fixed Account.
Short Term Dollar Cost Averaging Fixed Account Option. You may establish a Short
Term Dollar Cost Averaging Program by allocating purchase payments to the Short
Term Dollar Cost Averaging Fixed Account Option ("Short Term DCA Fixed Account
Option"). We will credit interest to purchase payments you allocate to this
Option for up to one year at the current rate in effect at the time of
allocation. Each purchase payment you allocate to the Short Term DCA Fixed
Account Option must be at least $5,000. We reserve the right to reduce the
minimum allocation amount.
We will follow your instructions in transferring amounts monthly from the Short
Term DCA Fixed Account Option. However, you may not choose less than 3 or more
than 12 monthly installments. Further, you must transfer each purchase payment
and all its earnings out of this Option by means of dollar cost averaging within
12 months. If you discontinue the Dollar Cost Averaging Program before the end
of the transfer period, we will transfer the remaining balance in this Option to
the Money Market Variable Sub-Account unless you request a different investment
alternative. No transfers are permitted into the Short Term Dollar Cost
Averaging Fixed Account.
We bear the investment risk for all amounts allocated to the DCA Fixed Account
Option and the Short Term DCA Fixed Account Option. That is because we guarantee
the current and renewal interest rates we credit to the amounts you allocate to
either of these Options, which will never be less than the minimum guaranteed
rate in the Contract. Currently, we determine, in our sole discretion, the
amount of interest credited in excess of the guaranteed rate.
We may declare more than one interest rate for different monies based upon the
date of allocation to the DCA Fixed Account Option and the Short Term DCA Fixed
Account Option. For current interest rate information, please contact your sales
representative or our customer support unit at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years. We are currently offering Guarantee Periods of 3, 5,
7, and ten years in length. In the future we may offer Guarantee Periods of
different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not
select a Guarantee Period, we will assign the same period(s) you selected for
your most recent purchase payments.
Each payment or transfer allocated to a Guarantee Period must be at least $50.
We reserve the right to limit the number of additional purchase payments that
you may allocate to this Option.
Interest Rates. We will tell you what interest rates and Guarantee Periods we
are offering at a particular time. We will not change the interest rate that we
credit to a particular allocation until the end of the relevant Guarantee
Period. We may declare different interest rates for Guarantee Periods of the
same length that begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, our sales commission and administrative
expenses, general economic trends, and competitive factors. We determine the
interest rates to be declared in our sole discretion. We can neither predict nor
guarantee what those rates will be in the future. For current interest rate
information, please contact your sales representative or Glenbrook at
1-800-755-5275.
How We Credit Interest. We will credit interest daily to each amount allocated
to a Guarantee Period at a rate that compounds to the annual interest rate that
we declared at the beginning of the applicable Guarantee Period. The following
example illustrates how a purchase payment allocated to a Guaranteed Period
would grow, given an assumed Guarantee Period and annual interest rate:
Purchase Payment...............$10,000
Guarantee Period...............5 years
Annual Interest Rate...........4.50%
<TABLE>
<CAPTION>
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Beginning Contract Value $10,000.00
X (1 + Annual Interest Rate) X1.045
$10,450.00
Contract Value at end of Contract Year $10,450.00
X (1 + Annual Interest Rate) X1.045
$10,920.25
Contract Value at end of Contract Year $10,920.25
X (1 + Annual Interest Rate) X1.045
$11,411.66
Contract Value at end of Contract Year $11,411.66
X (1 + Annual Interest Rate) X1.045
$11,925.19
Contract Value at end of Contract Year $11,925.19
X (1 + Annual Interest Rate) X1.045
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82 -$10,000)
</TABLE>
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. The hypothetical interest rate
is for illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for any
given Guarantee Period may be more or less than shown above.
Renewals. Prior to the end of each Guarantee Period, we will mail you a notice
asking you what to do with your money, including the accrued interest. During
the 30-day period after the end of the Guarantee Period, you may:
1) take no action. We will automatically apply your money to a new Guarantee
Period of the same length as the expiring Guarantee Period. The new
Guarantee Period will begin on the day the previous Guarantee Period ends.
The new interest rate will be our then current declared rate for a
Guarantee Period of that length; or
2) instruct us to apply your money to one or more new Guarantee Periods of
your choice. The new Guarantee Period(s) will begin on the day the
previous Guarantee Period ends. The new interest rate will be our then
current declared rate for those Guarantee Periods; or
3) instruct us to transfer all or a portion of your money to one or more
Variable Sub-Accounts of the Variable Account. We will effect the transfer
on the day we receive your instructions. We will not adjust the amount
transferred to include a Market Value Adjustment; or
4) withdraw all or a portion of your money. You may be required to pay a
withdrawal charge, but we will not adjust the amount withdrawn to include
a Market Value Adjustment. You may also be required to pay premium taxes
and withholding, if applicable. We will pay interest from the day the
Guarantee Period expired until the date of withdrawal. The interest will
be the rate for the shortest Guarantee Period then being offered. Amounts
not withdrawn will be applied to a new Guarantee Period of the same length
as the previous Guarantee Period. The new Guarantee Period will begin on
the day the previous Guarantee Period ends.
Under our Automatic Laddering Program, you may choose, in advance, to use
Guarantee Periods of the same length for all renewals. You can select this
Program at any time during the Accumulation Phase, including on the Issue Date.
We will apply renewals to Guarantee Periods of the selected length until you
direct us in writing to stop. We may stop offering this Program at any time. For
additional information on the Automatic Laddering Program, please call our
Customer Service unit at 1-800-755-5275.
Market Value Adjustment. All withdrawals and transfers from a Guarantee Period,
other than those taken during the 30 day period after such Guarantee Period
expires, are subject to a Market Value Adjustment. A Market Value Adjustment
also may apply upon payment of a death benefit and when you apply amounts
currently invested in a Guarantee Period to an Income Plan (unless paid or
applied during the 30-day period after such Guarantee Period expires). We also
will not apply a Market Value Adjustment to a withdrawal you make:
o within the Free Withdrawal Amount as described on page __, or
o to satisfy the IRS minimum distribution rules for the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the Treasury Rate for a period equal to the Guarantee Period at its
inception to the Treasury Rate for a period equal to the Guarantee Period when
you remove your money. "Treasury Rate" means the U.S. Treasury Note Constant
Maturity Yield as reported in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly, the Market Value
Adjustment and any withdrawal charge, premium taxes, and income tax withholding
(if applicable) could reduce the amount you receive upon full withdrawal from a
Guaranteed Period to an amount that is less than the purchase payment applied to
that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a
Guarantee Period is higher than the applicable current Treasury Rate for a
period equal to the Guarantee Period, then the Market Value Adjustment will
result in a higher amount payable to you, transferred or applied to an Income
Plan. Conversely, if the Treasury Rate at the time you allocate money to a
Guarantee Period is lower than the applicable Treasury Rate for a period equal
to the Guarantee Period, then the Market Value Adjustment will result in a lower
amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial
Guarantee Period of 5 years and the 5 year Treasury Rate for that duration is
4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at
that later time, the current 5 year Treasury Rate is 4.20%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current 5 year Treasury Rate is 4.80%,
then the Market Value Adjustment will be negative, which will result in a
decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
<PAGE>
INVESTMENT ALTERNATIVES: Transfers
- --------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives. You may not transfer Contract Value to the Short-Term
Dollar Cost Averaging Fixed Account Option. You may request transfers in writing
on a form that we provided or by telephone according to the procedure described
below. The minimum amount that you may transfer into a Guarantee Period is $50.
We currently do not assess, but reserve the right to assess, a $10 charge on
each transfer in excess of 12 per Contract Year. We treat transfers to or from
more than one Portfolio on the same day as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time
on any Valuation Date using the Accumulation Unit Values for that Date. We will
process requests completed after 3:00 p.m. on any Valuation Date using the
Accumulation Unit Values for the next Valuation Date. The Contract permits us to
defer transfers from the Fixed Account for up to six months from the date we
receive your request. If we decide to postpone transfers for 30 days or more, we
will pay interest as required by applicable law. Any interest would be payable
from the date we receive the transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30 day
period after such Guarantee Period expires, we will increase or decrease the
amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts
so as to change the relative weighting of the Variable Sub-Accounts on which
your variable income payments will be based. In addition, you will have a
limited ability to make transfers from the Variable Sub-Accounts to increase the
proportion of your income payments consisting of fixed income payments. You may
not, however, convert any portion of your right to receive fixed income payments
into variable income payments.
If you choose an Income Plan that depends on any person's life, you may not make
any transfers for the first 6 months after the Payout Start Date. Thereafter,
you may make transfers among the Variable Sub-Accounts or make transfers from
the Variable Sub-Accounts to increase the proportion of your income payments
consisting of fixed income payments. Your transfers must be at least 6 months
apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275 if you first send
us a completed authorization form. The cut off time for telephone transfer
requests is 3:00 p.m. Central time. In the event that the New York Stock
Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that
the Exchange closes early for a period of time but then reopens for trading on
the same day, we will process telephone transfer requests as of the close of the
Exchange on that particular day. We will not accept telephone requests received
at any telephone number other than the number that appears in this paragraph or
received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege at any time
without notice.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a
fixed dollar amount every month during the Accumulation Phase from the Short
Term Dollar Cost Averaging Fixed Account or the Dollar Cost Averaging Fixed
Account, to any Variable Sub-Account. You may not use the Dollar Cost Averaging
Program to transfer amounts to the Guarantee Periods.
We will not charge a transfer fee for transfers made under this Program, nor
will such transfer count against the 12 transfers you can make each Contract
Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this Program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the
performance of each Sub-Account may cause a shift in the percentage you
allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing
Program, we will automatically rebalance the Contract Value in each Variable
Sub-Account and return it to the desired percentage allocations. We will not
include money you allocate to the Fixed Account Options in the Automatic
Portfolio Rebalancing Program.
We will rebalance your account each quarter according to your instructions. We
will transfer amounts among the Variable Sub-Accounts to achieve the percentage
allocations you specify. You can change your allocations at any time by
contacting us in writing or by telephone. The new allocation will be effective
with the first rebalancing that occurs after we receive your request. We are not
responsible for rebalancing that occurs prior to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable
Sub-Accounts. You want 40% to be in the AIM V.I. High Yield Variable
Sub-Account and 60% to be in the AIM V.I. Growth Variable Sub-Account.
Over the next 2 months the bond market does very well while the stock
market performs poorly. At the end of the first quarter, the AIM V.I. High
Yield Variable Sub-Account now represents 50% of your holdings because of
its increase in value. If you choose to have your holdings rebalanced
quarterly, on the first day of the next quarter, we would sell some of
your units in the AIM V.I. High Yield Variable Sub-Account and use the
money to buy more units in the AIM V.I. Growth Variable Sub-Account so
that the percentage allocations would again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the
Accumulation Phase. The transfers made under the Program do not count towards
the 12 transfers you can make without paying a transfer fee, and are not subject
to a transfer fee. Portfolio rebalancing is consistent with maintaining your
allocation of investments among market segments, although it is accomplished by
reducing your Contract Value allocated to the better performing segments.
<PAGE>
EXPENSES
- --------------------------------------------------------------------------------
As a Contract owner, you will bear, directly or indirectly, the charges and
expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a
$35 contract maintenance charge from your Contract Value invested in each
Variable Sub-Account in proportion to the amount invested. If you surrender your
Contract, we will deduct the contract maintenance charge pro rated for the part
of the Contract Year elapsed, unless your Contract qualifies for a waiver,
described below.
The charge is to compensate us for the cost of administering the Contracts and
the Variable Account. Maintenance costs include expenses we incur in billing and
collecting purchase payments; keeping records; processing death claims, cash
withdrawals, and policy changes; proxy statements; calculating Accumulation Unit
Values and income payments; and issuing reports to Contract owners and
regulatory agencies. We cannot increase the charge. We will waive this charge
if, as of the Contract Anniversary or upon full surrender:
o total purchase payments equal $50,000 or more, or
o all money is allocated to the Fixed Account.
In addition, we will waive the Contract Maintenance Charge if total purchase
payments are $50,000 or more as of the Payout Start Date.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.05%
of the daily net assets you have invested in the Variable Sub-Accounts (1.27% if
you select the Enhanced Death Benefit Rider, and 1.49% if you select the
Enhanced Death and Income Benefit Combination Rider). The mortality and expense
risk charge is for all the insurance benefits available with your Contract
(including our guarantee of annuity rates and the death benefits), for certain
expenses of the Contract, and for assuming the risk (expense risk) that the
current charges will be sufficient in the future to cover the cost of
administering the Contract. If the charges under the Contract are not
sufficient, then we will bear the loss. We charge an additional amount for the
Enhanced Death Benefit Rider and the Enhanced Death and Income Benefit
Combination Rider to compensate us for the additional risk that we accept by
providing these options.
We guarantee the mortality and expense risk charge and we cannot increase it. We
assess the mortality and expense risk charge during both during the Accumulation
Phase and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of
the average daily net assets you have invested in the Variable Sub-Accounts. We
intend this charge to cover actual administrative expenses that exceed the
revenues from the contract maintenance charge. There is no necessary
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributed to that Contract. We
assess this charge each day during the Accumulation Phase and the Payout Phase.
We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment
alternatives. However, we reserve the right to charge $10 per transfer after the
12th transfer in each Contract Year. We will not charge a transfer fee on
transfers that are part of a Dollar Cost Averaging or Automatic Portfolio
Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 6% of the purchase payment(s) you
withdraw. The charge declines to 0% over a 6 year period that begins on the day
we receive your payment. A schedule showing how the charge declines is shown on
page ___, above. During each Contract Year, you can withdraw up to 15% of the
aggregate amount of your purchase payments without paying the charge. Unused
portions of this "Free Withdrawal Amount" are not carried forward to future
Contract Years. We will deduct withdrawal charges, if applicable, from the
amount paid.
For purposes of the withdrawal charge, we will treat withdrawals as coming from
the oldest purchase payments first. However, for federal income tax purposes,
please note that withdrawals are considered to have come first from earnings,
which means you pay taxes on the earnings portion of your withdrawal.
We do not apply a withdrawal charge in the following situations:
o on the Payout Start Date (a withdrawal charge may apply if you
terminate income payments to be received for a specified period;
o the death of the Contract owner (Annuitant if Contract owner is not a
natural person);
o withdrawals taken to satisfy IRS minimum distribution rules for the
Contract; or
o withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts. To the extent that the withdrawal charge does not cover all sales
commissions and other promotional or distribution expenses, we may use any of
our corporate assets, including potential profit which may arise from the
mortality and expense risk charge or any other charges or fee described above,
to make up any difference.
Withdrawals also may be subject to tax penalties or income tax and a Market
Value Adjustment. You should consult your own tax counsel or other tax advisers
regarding any withdrawals.
Confinement Waiver. We will waive the withdrawal charge and any Market Value
Adjustment on all withdrawals taken prior to the Payout Start Date under your
Contract if the following conditions are satisfied:
1) You or the Annuitant, if the Contract owner are not a natural person,
are confined to a long term care facility or a hospital for at least
90 consecutive days. You or the Annuitant must enter the long term
care facility or hospital at least 30 days after the Issue Date;
2) You request the withdrawal and provide written proof of the stay no
later than 90 days following the end of your or the Annuitant's stay
at the long term care facility or hospital; and
3) A physician must have prescribed the stay and the stay must be
medically necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the
Annuitant's immediate family, is the physician prescribing your or the
Annuitant's stay in a long term care facility.
Terminal Illness Waiver. We will waive the withdrawal charge and any Market
Value Adjustment on all withdrawals taken prior to the Payout Start Date under
your Contract if:
1) you or the Annuitant (if the Contract owner is not a natural person)
are first diagnosed with a terminal illness at least 30 days after the
Issue Date; and
2) you claim this benefit and deliver adequate proof of diagnosis to us.
Unemployment Waiver. We will waive the withdrawal charge and any Market Value
Adjustment on one partial or a full withdrawal taken prior to the Payout Start
Date under your Contract, if you meet the following requirements:
1) you or the Annuitant, if the Contract owner is not a natural person,,
become unemployed at least one year after the Issue Date;
2) you or the Annuitant, if the Contract owner is not a natural person,
receive unemployment compensation as defined in the Contract for at
least 30 days as a result of that unemployment; and
3) you or the Annuitant, if the Contract owner is not a natural person,
claim this benefit within 180 days of your or the Annuitant's initial
receipt of unemployment compensation.
You may exercise this benefit once during the life of your Contract.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waivers. You should
consult your Contract for further details on these variations. Also, even if you
do not need to pay our withdrawal charge or a Market Value Adjustment because of
these waivers, you still may be required to pay taxes or tax penalties on the
amount withdrawn. You should consult your tax adviser to determine the effect of
a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may discontinue this practice some time in the future and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the charge for premium taxes from each
investment alternative in the proportion that the Contract owner's value in the
investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however,
we may establish a provision for taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any taxes we incur as a result of the operation of the
Variable Account, whether or not we previously made a provision for taxes and
whether or not it was sufficient. Our status under the Internal Revenue Code is
briefly described in the Statement of Additional Information.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Sub-Accounts. These fees and expenses are described in the
accompanying prospectuses for the Funds. For a summary of current estimates of
those charges and expenses, see pages ___ above. We may receive compensation
from the investment advisers or administrators of the Portfolios in connection
with the administrative services we provide to the Portfolios.
<PAGE>
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date.
The amount payable upon withdrawal is the Contract Value next computed after we
receive the request for a withdrawal at our home office, adjusted by any Market
Value Adjustment, less any withdrawal charges, contract maintenance charges,
income tax withholding, penalty tax, and any premium taxes. We will pay
withdrawals from the Variable Account within 7 days of receipt of the request,
subject to postponement in certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account Options.
To complete a partial withdrawal from the Variable Account, we will cancel
Accumulation Units in an amount equal to the withdrawal and any applicable
withdrawal charge and premium taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is named, then the withdrawal request is incomplete and
cannot be honored.
In general, you must withdraw at least $50 at a time. You also may withdraw a
lesser amount if you are withdrawing your entire interest in a Variable
Sub-Account.
If you request a total withdrawal, we may require you to return your Contract to
us.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
1) The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2) An emergency exists as defined by the SEC; or
3) The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options
for up to 6 months or shorter period if required by law. If we delay payment for
30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $50. At our
discretion, systematic withdrawals may not be offered in conjunction with the
Dollar Cost Averaging Program or Automatic Portfolio Rebalancing Program.
Depending on fluctuations in the net asset value of the Variable Sub-Accounts
and the value of the Fixed Account Options, systematic withdrawals may reduce or
even exhaust the Contract Value. Income taxes may apply to systematic
withdrawals. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. We
may modify or suspend the Systematic Withdrawal Program and charge a processing
fee for the service. If we modify or suspend the Systematic Withdrawal Program,
existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to
less than $2,000, we may treat it as a request to withdraw your entire Contract
Value. Your Contract will terminate if you withdraw all of your Contract Value.
We will, however, ask you to confirm your withdrawal request before terminating
your Contract. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges, and premium taxes.
<PAGE>
INCOME PAYMENTS
- --------------------------------------------------------------------------------
PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that money is applied to an Income Plan. The Payout Start Date must be:
o at least 30 days after the Issue Date; and
o no later than the day the Annuitant reaches age 90, or the 10th
Contract Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years.
Three Income Plans are available under the Contract. Each is available to
provide:
o fixed income payments;
o variable income payments; or
o a combination of the two.
The three Income Plans are:
Income Plan 1 -- Life Income with Guaranteed Payments. Under this plan, we
make periodic income payments for at least as long as the Annuitant lives.
If the Annuitant dies before we have made all of the guaranteed income
payments, we will continue to pay the remainder of the guaranteed income
payments as required by the Contract.
Income Plan 2 -- Joint and Survivor Life Income with Guaranteed Payments.
Under this plan, we make periodic income payments for at least as long as
either the Annuitant or the joint Annuitant is alive. If both the
Annuitant and the joint Annuitant die before we have made all of the
guaranteed income payments, we will continue to pay the remainder of the
guaranteed income payments as required by the Contract.
Income Plan 3 -- Guaranteed Payments for a Specified Period (5 Years to 30
Years). Under this plan, we make periodic income payments for the period
you have chosen. These payments do not depend on the Annuitant's life. You
may elect to receive guaranteed payments for periods ranging from 5 to 30
years. Income payments for less than 120 months may be subject to a
withdrawal charge. We will deduct the mortality and expense risk charge
from variable income payments even though we may not bear any mortality
risk.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant are alive
before we make each payment. Please note that under such Income Plans, if you
elect to take no minimum guaranteed payments, it is possible that the payee
could receive only 1 income payment if the Annuitant and any joint Annuitant
both die before the second income payment, or only 2 income payments if they die
before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One
exception to this rule applies if you are receiving variable income payments
that do not depend on the life of the Annuitant (such as under Income Plan 3).
In that case you may terminate the Variable Account portion of the income
payments at any time and receive a lump sum equal to the commuted balance of the
remaining variable payments due. A withdrawal charge may apply. We also assess
applicable premium taxes against all income payments.
We may make other Income Plans available. You may obtain information about them
by writing or calling us.
If you elected the Enhanced Death and Income Benefit Combination Option, you may
be able to apply an amount greater than your Contract Value to an Income Plan.
You must apply at least the Contract Value in the Fixed Account on the Payout
Start Date to fixed income payments. If you wish to apply any portion of your
Fixed Account balance to provide variable income payments, you should plan ahead
and transfer that amount to the Variable Sub-Accounts prior to the Payout Start
Date. If you do not tell us how to allocate your Contract Value among fixed and
variable income payments, we will apply your Contract Value in the Variable
Account to variable income payments and your Contract Value in the Fixed Account
to fixed income payments.
We will apply your Contract Value, adjusted by a Market Value Adjustment, less
applicable taxes to your Income Plan on the Payout Start Date. If the amount
available to apply under an Income Plan is less than $2,000, or not enough to
provide an initial payment of at least $20, and state law permits, we may:
o pay you the Contract Value, adjusted by any Market Value Adjustment
and less any applicable taxes, in a lump sum instead of the periodic
payments you have chosen; or
o reduce the frequency of your payments so that each payment will be at
least $20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Sub-Accounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) actual mortality experience and (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your
variable income payments may be more or less than your total purchase payments
because (a) variable income payments vary with the investment results of the
underlying Portfolios; and (b) the Annuitant could live longer or shorter than
we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the
Contract, we assumed an annual investment rate of 3%. If the actual net
investment return of the Variable Sub-Accounts you choose is less than this
assumed investment rate, then the dollar amount of your variable income payments
will decrease. The dollar amount of your variable income payments will increase,
however, if the actual net investment return exceeds the assumed investment
rate. The dollar amount of the variable income payments stays level if the net
investment return equals the assumed investment rate. Please refer to the
Statement of Additional Information for more detailed information as to how we
determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for
the duration of the Income Plan. We calculate the fixed income payments by:
1) adjusting the portion of the Contract Value in any Fixed Account
Option on the Payout Start Date by any applicable Market Value
Adjustment;
2) deducting any applicable premium tax; and
3) applying the resulting amount to the greater of (a) the appropriate
value from the income payment table in your Contract or (b) such other
value as we are offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any
shorter time state law may require. If we defer payments for 30 days or more, we
will pay interest as required by law from the date we receive the withdrawal
request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is to be used in connection with an employment-related retirement
or benefit plan and we do not offer unisex annuity tables in your state, you
should consult with legal counsel as to whether the purchase of a Contract is
appropriate.
<PAGE>
DEATH BENEFITS
- --------------------------------------------------------------------------------
We will pay a death benefit prior to the Payout Start Date on:
1) the death of any Contract owner or,
2) the death of the Annuitant, if the Contract is owned by a non-natural
person.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary.
A claim for a distribution on death must include Due Proof of Death. We will
accept the following documentation as "Due Proof of Death":
o a certified copy of a death certificate,
o a certified copy of a decree of a court of competent jurisdiction as
to the funding of death, or
o any other proof acceptable to us.
Death Benefit Amount
Prior to the Payout Start Date, the death benefit is equal to the greatest of:
1) the Contract Value as of the date we determine the value of the death
benefit, or
2) the Settlement Value (that is, the amount payable on a full withdrawal
of Contract Value) on the date we determine the value of the death
benefit, or
3) the Contract Value on each Death Benefit Anniversary prior to the date
we determine the death benefit, increased by purchase payments made
since that Death Benefit Anniversary and reduced by an adjustment for
any partial withdrawals since that Death Benefit Anniversary. A "Death
Benefit Anniversary" is every seventh Contract Anniversary beginning
with the Issue Date. For example, the Issue Date, 7th and 14th
Contract Anniversaries are the first 3 Death Benefit Anniversaries.
The withdrawal adjustment is equal to (a) divided by (b), with the result
multiplied by (c), where:
(a) is the withdrawal amount;
(b) is the Contract Value immediately prior to the withdrawal; and
(c) is the Contract value on the Death Benefit Anniversary adjusted by any
prior purchase payments or withdrawals made since that Anniversary.
Enhanced Death Benefit RIDER
If the Contract owner is a living individual, the enhanced death benefit applies
only for the death of the Contract owner. If the Contract owner is not a living
individual, the enhanced death benefit applies only for the death of the
Annuitant. For Contracts with the Enhanced Death Benefit Rider, the death
benefit will be the greatest of (1) through (3) above, or (4) the enhanced death
benefit. The enhanced death benefit is equal to the greater of the Enhanced
Death Benefit A or Enhanced Death Benefit B. Enhanced Death Benefit B may not be
available in all states.
That enhanced death benefit will never be greater than the maximum death benefit
allowed by any nonforfeiture laws that govern the Contract.
Enhanced Death Benefit A. At issue, Enhanced Death Benefit A is equal to the
initial purchase payment. After issue, Enhanced Death Benefit A is the greatest
of the Anniversary Values as of the date we determine the death benefit. The
"Anniversary Value" is equal to the Contract Value on a Contract Anniversary,
increased by purchase payments made since that Anniversary and reduced by an
adjustment for any partial withdrawals since that Anniversary. The adjustment is
equal to (a) divided by (b), and the result multiplied by (c) where:
(a) is the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the Contract Value on that Contract Anniversary adjusted by
any prior purchase payments and withdrawals since that Contract
Anniversary.
We will calculate Anniversary Values for each Contract Anniversary prior to the
oldest Contract owner's or the Annuitant's, if the Contract owner is not a
natural person, 80th birthday.
Enhanced Death Benefit B. The Enhanced Death Benefit B is equal to total
purchase payments made reduced by a withdrawal adjustment, as defined below.
Each purchase payment and each withdrawal adjustment will accumulate daily at a
rate equivalent to 5% per year until the earlier of:
o the date we determine the death benefit, or
o the first day of the month following the oldest Contract owner's or,
if the Contract owner is not a natural person, the Annuitant's, 85th
birthday.
The adjustment is equal to (a) divided by (b), and the result
multiplied by (c) where:
(a) the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the most recently calculated enhanced death benefit.
Enhanced Death and Income Benefit Combination RIDER
You may elect not to choose the Enhanced Death Benefit Rider and may instead
choose the Enhanced Death and Income Benefit Combination Rider.
The enhanced death benefit portion of the Enhanced Death and Income Benefit
Combination Rider is as described above under "Enhanced Death Benefit Rider
Enhanced Death Benefit B."
The enhanced income benefit defines a minimum amount applied to the Payout
Phase. This minimum amount is equal to the value the enhanced death benefit
would be on the Payout Start Date.
The enhanced income benefit will apply if the Contract owner elects a Payout
Start Date that:
o is on or after the tenth Contract Anniversary, and
o is prior to the Annuitant's age 90.
On the Payout Start Date, you may apply the greater of the Contract Value or the
enhanced income benefit to the Payout Phase of the Contract. No Market Value
Adjustment will be applied to the enhanced income benefit amount. The enhanced
income benefit will only apply if the Income Plan selected provides payments
guaranteed for either a single or joint lives with a period certain of at least:
o 10 years, if the youngest Annuitant's age is 80 or less on the date
the amount is applied; or
o 5 years, if the youngest Annuitant's age is greater than 80 on the
date the amount is applied.
If, however, you apply the Contract Value and not the enhanced income benefit to
the Income Plan, then you may select any Income Plan we offer at that time.
Death Benefit Payments
A death benefit will be paid:
1) if the Contract owner elects to receive the death benefit distributed
in a single payment within 180 days of the date of death, and
2) if the death benefit is paid as of the day the value of the death
benefit is determined. Otherwise, the Settlement Value will be paid.
We are currently waiving the 180 day limit, but we reserve the right
to enforce the limitation in the future.
In any event, the entire value of the Contract must be distributed within 5
years after the date of death unless an Income Plan is elected or a surviving
spouse continues the Contract in accordance with the provisions described below.
If the Contract owner eligible to receive the distribution upon death is not a
natural person, the Contract owner may elect to receive the distribution upon
death in one or more distributions.
If the Contract owner is a natural person, the Contract owner may elect to
receive the distribution upon death either in one or more distributions or by
periodic payments through an Income Plan. Payments from the Income Plan must
begin within one year of the date of death and must be payable throughout:
o the life of the Contract owner; or
o a period not to exceed the life expectancy of the Contract owner; or
o the life of the Contract owner with payments guaranteed to a period
not to exceed the life expectancy of the Contract owner.
If the surviving spouse of the deceased Contract owner is the new Contract
owner, then the spouse may elect one of the options listed above or may continue
the Contract in the Accumulation Phase as if the death had not occurred. If the
Contract is continued in the Accumulation Phase, the surviving spouse may make a
single withdrawal of any amount within 1 year of the date of death without
incurring a withdrawal charge or Market Value Adjustment.
<PAGE>
MORE INFORMATION
- --------------------------------------------------------------------------------
GLENBROOK
Glenbrook is the issuer of the Contract. Glenbrook is a stock life insurance
company organized under the laws of the State of Arizona in 1998. Previously,
Glenbrook was organized under the laws of the State of Illinois in 1992.
Glenbrook was originally organized under the laws of the State of Indiana in
1965. From 1965 to 1983 Glenbrook was known as "United Standard Life Assurance
Company" and from 1983 to 1992 as "William Penn Life Assurance Company of
America."
Glenbrook is currently licensed to operate in the District of Columbia and all
states except New York. We intend to offer the Contract in those jurisdictions
in which we are licensed. Our home office is located at 3100 Sanders Road,
Northbrook, Illinois, 60062.
Glenbrook is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate
Insurance Company, a stock property-liability insurance company incorporated
under the laws of Illinois. All of the outstanding capital stock of Allstate
Insurance Company is owned by The Allstate Corporation.
Glenbrook and Allstate Life entered into a reinsurance agreement effective June
5, 1992. Under the reinsurance agreement, Allstate Life reinsures substantially
all of Glenbrook's liabilities under its various insurance contracts. The
reinsurance agreement provides us with financial backing from Allstate Life.
However, it does not create a direct contractual relationship between Allstate
Life and you. In other words, the obligations of Allstate Life under the
reinsurance agreement are to Glenbrook; Glenbrook remains the sole obligor under
the Contract to you.
Several independent rating agencies regularly evaluate life insurers'
claims-paying ability, quality of investments, and overall stability. A.M. Best
Company assigns A+ (Superior) to Allstate Life which automatically reinsures all
net business of Glenbrook. A.M. Best Company also assigns Glenbrook the rating
of A+(r) because Glenbrook automatically reinsures all net business with
Allstate Life. Standard & Poor's Insurance Rating Services assigns an AA+ (Very
Strong) financial strength rating and Moody's assigns an Aa2 (Excellent)
financial strength rating to Glenbrook. Glenbrook shares the same ratings of its
parent, Allstate Life. These ratings do not reflect the investment performance
of the Variable Account. We may from time to time advertise these ratings in our
sales literature.
THE VARIABLE ACCOUNT
Glenbrook established the Glenbrook Life Multi-Manager Variable Account on
January 15, 1996. We have registered the Variable Account with the SEC as a unit
investment trust. The SEC does not supervise the management of the Variable
Account or Glenbrook.
We own the assets of the Variable Account. The Variable Account is a segregated
asset account under Arizona law. That means we account for the Variable
Account's income, gains and losses separately from the results of our other
operations. It also means that only the assets of the Variable Account that are
in excess of the reserves and other Contract liabilities with respect to the
Variable Account are subject to liabilities relating to our other operations.
Our obligations arising under the Contracts are general corporate obligations of
Glenbrook.
The Variable Account consists of 44 Variable Sub-Accounts, of which 41 are
currently available for investment. Each Variable Sub-Account invests in a
corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one
or more of them, if we believe marketing, tax, or investment conditions so
warrant. We may also add other Variable Sub-Accounts that may be available under
other variable annuity contracts. We do not guarantee the investment performance
of the Variable Account, its Sub-Accounts or the Portfolios. We may use the
Variable Account to fund our other annuity contracts. We will account separately
for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
Dividends and Capital Gain Distributions. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolio at their net asset value.
Voting Privileges. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Sub-Accounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Sub-Account by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable Variable
Sub-Account by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted upon on a pro-rata basis to reduce the votes
eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi-annual financial report we send to you.
Changes in Portfolios. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment fund. Any substitution of securities will comply with the
requirements of the Investment Company Act of 1940. We also may add new Variable
Sub-Accounts that invest in additional mutual funds. We will notify you in
advance of any change.
Conflicts of Interest. Certain of the Portfolios sell their shares to separate
accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the same Portfolio. The boards of directors of these Portfolios monitor for
possible conflicts among separate accounts buying shares of the Portfolios.
Conflicts could develop for a variety of reasons. For example, differences in
treatment under tax and other laws or the failure by a separate account to
comply with such laws could cause a conflict. To eliminate a conflict, a
Portfolio's board of directors may require a separate account to withdraw its
participation in a Portfolio. A Portfolio's net asset value could decrease if it
had to sell investment securities to pay redemption proceeds to a separate
account withdrawing because of a conflict.
THE CONTRACT
Distribution. Allstate Life Financial Services ("ALFS"), located at 3100 Sanders
Road, Northbrook, IL 60062-7154, serves as distributor of the Contracts. ALFS is
a wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a
registered broker dealer under the Securities and Exchange Act of 1934, as
amended ("Exchange Act"), and is a member of the National Association of
Securities Dealers, Inc. ALFS also is registered as an investment adviser under
the Investment Advisers Act, as amended.
We will pay commissions to broker-dealers who sell the contracts. Commissions
paid may vary, but we estimate that the total commissions paid on all Contract
sales will not exceed 8% of all purchase payments. These commissions are
intended to cover distribution expenses. Sometimes, we also pay the
broker-dealer a persistency bonus in addition to the standard commissions. A
persistency bonus is not expected to exceed 0.25%, on an annual basis, of the
Contract Values considered in connection with the bonus. In some states,
Contracts may be sold by representatives or employees of banks which may be
acting as broker-dealers without separate registration under the Securities
Exchange Act of 1934, pursuant to legal and regulatory exceptions.
Glenbrook does not pay ALFS a commission for distribution of the Contracts. The
underwriting agreement with ALFS provides that we will reimburse ALFS for any
liability to Contract owners arising out of services rendered or Contracts
issued.
Administration. We have primary responsibility for all administration of the
Contracts and the Variable Account.
We provide the following administrative services, among others:
o issuance of the Contracts;
o maintenance of Contract owner records;
o Contract owner services;
o calculation of unit values;
o maintenance of the Variable Account; and
o preparation of Contract owner reports.
We will send you Contract statements at least annually. You should notify us
promptly in writing of any address change. You should read your statements and
confirmations carefully and verify their accuracy. You should contact us
promptly if you have a question about a periodic statement. We will investigate
all complaints and make any necessary adjustments retroactively, but you must
notify us of a potential error within a reasonable time after the date of the
questioned statement. If you wait too long, we reserve the right to make the
adjustment as of the date that we receive notice of the potential error.
We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
QUALIFIED PLANS
If you use the Contract with a qualified plan, the plan may impose different or
additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Glenbrook on
certain federal securities law matters. All matters of state insurance law
pertaining to the Contracts, including the validity of the Contracts and
Glenbrook's right to issue such Contracts under state insurance law, have been
passed upon by Michael J. Velotta, General Counsel of Glenbrook.
YEAR 2000
Glenbrook is heavily dependent upon complex computer systems for all phases of
its operations, including customer service, and policy and contract
administration. Since many of Glenbrook's older computer software programs
recognize only the last two digits of the year in any date, some software may
fail to operate properly in or after the year 1999, if the software is not
reprogrammed or replaced ("Year 2000 Issue"). Glenbrook believes that many of
its counterparties and suppliers also have Year 2000 Issues which could affect
Glenbrook. In 1995, Allstate Insurance Company commenced a plan intended to
mitigate and/or prevent the adverse effects of Year 2000 Issues. These
strategies include normal development and enhancement of new and existing
systems, upgrades to operating systems already covered by maintenance agreements
and modifications to existing systems to make them Year 2000 compliant. The plan
also includes Glenbrook actively working with its major external counterparties
and suppliers to assess their compliance efforts and Glenbrook's exposure to
them. Glenbrook presently believes that it will resolve the Year 2000 Issue in a
timely manner, and the financial impact will not materially affect its results
of operations, liquidity or financial position.
Year 2000 costs are and will be expensed as incurred.
<PAGE>
TAXES
- --------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice. Glenbrook
makes no guarantee regarding the tax treatment of any Contract or transaction
involving a Contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
Taxation of Annuities in General
Tax Deferral. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
1) the Contract owner is a natural person,
2) the investments of the Variable Account are "adequately diversified"
according to Treasury Department regulations, and
3) Glenbrook is considered the owner of the Variable Account assets for
federal income tax purposes.
Non-natural Owners. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
is taxed as ordinary income received or accrued by the owner during the taxable
year. Please see the Statement of Additional Information for a discussion of
several exceptions to the general rule for Contracts owned by non-natural
persons.
Diversification Requirements. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the Contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the Contract owner during the taxable
year. Although Glenbrook does not have control over the Portfolios or their
investments, we expect the Portfolios to meet the diversification requirements.
Ownership Treatment. The IRS has stated that you will be considered the owner of
Variable Account assets if you possess incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. At the time
the diversification regulations were issued, the Treasury Department announced
that the regulations do not provide guidance concerning circumstances in which
investor control of separate account investments may cause an investor to be
treated as the owner of the separate account. The Treasury Department also
stated that future guidance would be issued regarding the extent that owners
could direct sub-account investments without being treated as owners of the
underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in
rulings in which it found that contract owners were not owners of separate
account assets. For example, you have the choice to allocate premiums and
Contract Values among more investment alternatives. Also, you may be able to
transfer among investment alternatives more frequently than in such rulings.
These differences could result in you being treated as the owner of the Variable
Account. If this occurs, income and gain from the Variable Account assets would
be includible in your gross income. Glenbrook does not know what standards will
be set forth in any regulations or rulings which the Treasury Department may
issue. It is possible that future standards announced by the Treasury Department
could adversely affect the tax treatment of your Contract. We reserve the right
to modify the Contract as necessary to attempt to prevent you from being
considered the federal tax owner of the assets of the Variable Account. However,
we make no guarantee that such modification to the Contract will be successful.
Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
Contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a partial withdrawal
under a Qualified Contract, the portion of the payment that bears the same ratio
to the total payment that the investment in the Contract (i.e., nondeductible
IRA contributions, after tax contributions to qualified plans) bears to the
Contract Value, is excluded from your income. If you make a full withdrawal
under a non-Qualified Contract or a Qualified Contract, the amount received will
be taxable only to the extent it exceeds the investment in the Contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. "Qualified distributions" from Roth IRAs are
not included in gross income. "Qualified distributions" are any distributions
made more than 5 taxable years after the taxable year of the first contribution
to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2,
o made to a beneficiary after the Contract owner's death,
o attributable to the Contract owner being disabled, or
o for a first time home purchase (first time home purchases are subject
to a lifetime limit of $10,000).
If you transfer a non-Qualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Contract Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Contract Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the Contract. If you elect variable annuity payments, the amount excluded from
taxable income is determined by dividing the investment in the Contract by the
total number of expected payments. The annuity payments will be fully taxable
after the total amount of the investment in the Contract is excluded using these
ratios. If you die, and annuity payments cease before the total amount of the
investment in the Contract is recovered, the unrecovered amount will be allowed
as a deduction for your last taxable year.
Taxation of Annuity Death Benefits. Death of a Contract owner, or death of the
Annuitant if the Contract is owned by a non-natural person, will cause a
distribution of death benefits from a Contract. Generally, such amounts are
included in income as follows:
1) if distributed in a lump sum, the amounts are taxed in the same manner
as a full withdrawal, or
2) if distributed under an annuity option, the amounts are taxed in the
same manner as an annuity payment. Please see the Statement of
Additional Information for more detail on distribution at death
requirements.
Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
1) made on or after the date the Contract owner attains age 59 1/2;
2) made as a result of the Contract owner's death or disability;
3) made in substantially equal periodic payments over the Contract
owner's life or life expectancy,
4) made under an immediate annuity, or 5) attributable to investment in
the Contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts
issued by Glenbrook (or its affiliates) to the same Contract owner during any
calendar year will be aggregated and treated as one annuity contract for
purposes of determining the taxable amount of a distribution.
Tax Qualified Contracts
Contracts may be used as investments with certain qualified plans such as:
o Individual Retirement Annuities or Accounts (IRAs) under Section 408
of the Code;
o Roth IRAs under Section 408A of the Code;
o Simplified Employee Pension Plans under Section 408(k) of the Code;
o Savings Incentive Match Plans for Employees (SIMPLE) Plans under
Section 408(p) of the Code;
o Tax Sheltered Annuities under Section 403(b) of the Code;
o Corporate and Self Employed Pension and Profit Sharing Plans; and
o State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans.
In the case of certain qualified plans, the terms of the plans may govern the
right to benefits, regardless of the terms of the Contract.
Restrictions Under Section 403(b) Plans. Section 403(b) of the Tax Code provides
tax-deferred retirement savings plans for employees of certain non-profit and
educational organizations. Under Section 403(b), any Contract used for a 403(b)
plan must provide that distributions attributable to salary reduction
contributions made after 12/31/88, and all earnings on salary reduction
contributions, may be made only:
1) on or after the date of employee
o attains age 59 1/2,
o separates from service,
o dies,
o becomes disabled, or
2) on account of hardship (earnings on salary reduction contributions may
not be distributed on the account of hardship).
These limitations do not apply to withdrawals where Glenbrook is directed to
transfer some or all of the Contract Value to another 403(b) plan.
Income Tax Withholding
Glenbrook is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
1) required minimum distributions, or
2) a series of substantially equal periodic payments made over a period of
at least 10 years, or,
3) over the life (joint lives) of the participant (and beneficiary).
Glenbrook may be required to withhold federal and state income taxes on any
distributions from non-Qualified Contracts or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election to not
have taxes withheld.
<PAGE>
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
Glenbrook's annual report on Form 10-K for the year ended December 31, 1998 is
incorporated herein by reference, which means that it is legally a part of this
prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act are also incorporated herein by reference, which means
that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0001007285. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of SEC's Public Reference Room,
call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents) , please
write or call us at or P.O. Box 94042, Palatine, IL 60094 (telephone :
1-800-755-5275).
EXPERTS
The financial statements and financial statement schedules of Glenbrook at
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 included in Glenbrook's Annual Report on Form 10-K, which is
incorporated herein by reference, have been examined by Deloitte & Touche LLP,
independent accountants, whose reports thereon also are incorporated herein by
reference. Such financial statements and financial statement schedules have been
incorporated herein by reference in reliance upon the reports of Deloitte &
Touche LLP given upon their authority as experts in accounting and auditing.
<PAGE>
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
We may advertise the performance of the Variable Sub-Accounts, including yield
and total return information. Total return represents the change, over a
specified period of time, in the value of an investment in a Variable
Sub-Account after reinvesting all income distributions. Yield refers to the
income generated by an investment in a Variable Sub-Account over a specified
period.
All performance advertisements will include, as applicable, standardized yield
and total return figures that reflect the deduction of insurance charges, the
contract maintenance charge, and withdrawal charge. Performance advertisements
also may include total return figures that reflect the deduction of insurance
charges, but not the contract maintenance or withdrawal charges. The deduction
of such charges would reduce the performance shown. In addition, performance
advertisements may include aggregate average, year-by-year, or other types of
total return figures.
Performance information for periods prior to the inception date of the Variable
Sub-Accounts will be based on the historical performance of the corresponding
Portfolios for the periods beginning with the inception dates of the Portfolios
and adjusted to reflect current Contract expenses. You should not interpret
these figures to reflect actual historical performance of the Variable Account.
We may include in advertising and sales materials tax deferred compounding
charts and other hypothetical illustrations that compare currently taxable and
tax deferred investment programs based on selected tax brackets. Our
advertisements also may compare the performance of our Variable Sub-Accounts
with: (a) certain unmanaged market indices, including but not limited to the Dow
Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman
Bond Index; and/or (b) other management investment companies with investment
objectives similar to the underlying funds being compared. In addition, our
advertisements may include the performance ranking assigned by various
publications, including the Wall Street Journal, Forbes, Fortune, Money,
Barron's, Business Week, USA Today, and statistical services, including Lipper
Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, and SEI.
<PAGE>
APPENDIX A
Accumulation Unit Value and Number of Accumulation Units
Outstanding for Each Variable Sub-Account Since Inception
<TABLE>
<CAPTION>
With With Enhanced
Enhanced Death and
Death Income Benefit
For the Years Beginning January 1* and Ended Basic Benefit Combination
December 31, 1998 Policy Rider Rider
------ ----- ---------------
<S> <C> <C> <C>
AIM V.I. BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.736 $10.733 $10.730
Number of Units Outstanding, End of Period 0 0 403
AIM V.I. CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.397 $11.394 $11.390
Number of Units Outstanding, End of Period 0 369 1458
AIM V.I. DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.224 $10.220 $10.217
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. GLOBAL UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.730 $10.726 $10.723
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.387 $10.384 $10.381
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.833 $11.829 $11.825
Number of Units Outstanding, End of Period 0 0 383
AIM V.I. GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.368 $11.365 $11.361
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.318 $10.315 $10.311
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.688 $10.684 $10.681
Number of Units Outstanding, End of Period 0 0 0
AIM V.I. VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.526 $11.522 $11.519
Number of Units Outstanding, End of Period 0 0 0
AMERICAN CENTURY VP INTERNATIONAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.978 $10.974 $10.971
Number of Units Outstanding, End of Period 0 0 0
AMERICAN CENTURY VP BALANCED SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.607 $10.604 $10.600
Number of Units Outstanding, End of Period 0 0 0
DREYFUS STOCK INDEX SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.878 $10.875 $10.871
Number of Units Outstanding, End of Period 0 0 402
DREYFUS SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.793 $10.789 $10.786
Number of Units Outstanding, End of Period 0 0 0
VIF SMALL COMPANY STOCK SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.665 $10.661 $10.658
Number of Units Outstanding, End of Period 0 238 477
VIF GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.652 $10.649 $10.645
Number of Units Outstanding, End of Period 0 0 0
VIF MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.051 $10.048 $10.045
Number of Units Outstanding, End of Period 0 0 0
FIDELITY VIP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.205 $11.201 $11.198
Number of Units Outstanding, End of Period 228 83 0
FIDELITY VIP II CONTRAFUND SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.664 $11.660 $11.656
Number of Units Outstanding, End of Period 0 0 384
FIDELITY VIP HIGH INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.436 $10.433 $10.430
Number of Units Outstanding, End of Period 0 0 0
FIDELITY VIP EQUITY-INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.483 $10.479 $10.476
Number of Units Outstanding, End of Period 0 0 0
GOLDMAN SACHS GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $ 9.946 $ 9.942 $ 9.939
Number of Units Outstanding, End of Period 0 0 419
GOLDMAN SACHS CORE U.S. EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.900 $10.897 $10.893
Number of Units Outstanding, End of Period 0 0 402
GOLDMAN-SACHS CORE LARGE CAP GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.299 $11.296 $11.292
Number of Units Outstanding, End of Period 0 0 0
GOLDMAN SACHS CORE SMALL CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.605 $10.602 $10.599
Number of Units Outstanding, End of Period 0 0 0
GOLDMAN SACHS CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.103 $11.099 $11.096
Number of Units Outstanding, End of Period 0 0 0
GOLDMAN SACHS MID CAP EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $ 9.984 $ 9.980 $ 9.977
Number of Units Outstanding, End of Period 0 508 0
GOLDMAN SACHS INTERNATIONAL EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.849 $10.846 $10.842
Number of Units Outstanding, End of Period 0 0 0
GOLDMAN SACHS GLOBAL INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $ 9.674 $ 9.671 $ 9.668
Number of Units Outstanding, End of Period 0 0 0
MORGAN STANLEY FIXED INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.158 $10.155 $10.152
Number of Units Outstanding, End of Period 0 0 0
MORGAN STANLEY EQUITY GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.948 $10.945 $10.941
Number of Units Outstanding, End of Period 0 0 404
MORGAN STANLEY VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $ 9.957 $ 9.954 $ 9. 951
Number of Units Outstanding, End of Period 0 0 0
MORGAN STANLEY MID CAP VALUE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.967 $10.964 $10.960
Number of Units Outstanding, End of Period 0 0 397
MORGAN STANLEY U.S. REAL ESTATE SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.181 $10.177 $10.174
Number of Units Outstanding, End of Period 0 0 0
MORGAN STANLEY GLOBAL SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.436 $10.433 $10.429
Number of Units Outstanding, End of Period 0 244 0
MORGAN STANLEY INTERNATIONAL MAGNUM SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.390 $10.387 $10.383
Number of Units Outstanding, End of Period 0 0 0
MFS EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.955 $11.951 $11.947
Number of Units Outstanding, End of Period 0 0 374
MFS GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.817 $10.814 $10.811
Number of Units Outstanding, End of Period 0 0 0
MFS NEW DISCOVERY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $11.388 $11.384 $11.381
Number of Units Outstanding, End of Period 0 0 0
NEUBERGER & BERMAN AMT GUARDIAN SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.812 $10.808 $10.805
Number of Units Outstanding, End of Period 0 0 0
NEUBERGER & BERMAN AMT PARTNERS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $10.310 $10.307 $10.304
Number of Units Outstanding, End of Period 0 0 0
NEUBERGER & BERMAN AMT MID-CAP GROWTH
SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period $10.000 $10.000 $10.000
Accumulation Unit Value, End of Period $12.130 $12.126 $12.122
Number of Units Outstanding, End of Period 0 0 0
</TABLE>
* All Variable Sub-Accounts commenced operations on November 10, 1998. The
Enhanced Death Benefit Rider and Enhanced Death and Income Benefit Combination
Rider have been available since the Contracts were first offered. The
Accumulation Unit Values in the first, second and third columns reflect
mortality and expense risk charges of 1.05%, 1.27%, and 1.49% respectively, and,
in each case, an administrative expense charge of 0.10%.
<PAGE>
APPENDIX B
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for the week
preceding the establishment of the Guarantee Period.
N = the number of whole and partial years from the date we receive the
withdrawal, transfer, or death benefit request, or from the Payout Start Date to
the end of the Guarantee Period.
J = the Treasury Rate for a maturity equal to the Guarantee Period for the week
preceding the receipt of the withdrawal, transfer, death benefit, or income
payment request. If a Note with a maturity of the original Guarantee Period is
not available, we will use a weighted average.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported
in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment factor is determined from the following formula:
.9 x (I-J) x N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount transferred, withdrawn (in excess of the Free
Withdrawal Amount), paid as a death benefit, or applied to an Income Plan from a
Guarantee Period at any time other than during the 30 day period after such
Guarantee Period expires.
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Withdrawal: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
EXAMPLE 1: (Assumes Declining Interest Rates)
<S> <C>
Step 1: Calculate Contract Value at End of = 10,000.00 x (1.045)3= $11,411.66
Contract Year 3:
Step 2: Calculate the Free Withdrawal Amount: = .15 x (10,000.00) = $1,500.00
Step 3: Calculate the Withdrawal Charge: = .05 x (10,000.00 - 1,500.00) =
$425.00
Step 4: Calculate the Market Value
Adjustment: I = 4.50%
J = 4.20%
N = 730 days = 2
---
365 days
Market Value Adjustment Factor: .9 x (I-J) x N
= .9 x (.045 - .042) x 2 = .0054
Market Value Adjustment = Market
Value Adjustment Factor x Amount
Subject to Market Value Adjustment:
= .0054 x (11,411.66 - 1,500) = $53.52
Step 5: Calculate the amount received by
Contract owner as a result of full
withdrawal at the end of Contract Year 3: = 11,411.66 - 425.00 + 53.52 = $11,040.18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE 2: (Assumes Rising Interest Rates)
<S> <C>
Step 1: Calculate Contract Value at End of = 10,000.00 x (1.045)3 = $11,411.66
Contract Year 3:
Step 2: Calculate the Free Withdrawal Amount: = .15 x (10,000.00) = $1,500.00
Step 3: Calculate the Withdrawal Charge: = .05 x (10,000.00 - 1,500.00) = $425.00
Step 4: Calculate the Market Value
Adjustment: I = 4.50%
J = 4.80%
N = 730 days = 2
365 days
Market Value Adjustment Factor: .9 x (I-J) x N
= .9 x (.045 - .048) x (2) = -.0054
Market Value Adjustment = Market
Value Adjustment Factor x Amount
Subject to Market Value Adjustment:
= -.0054 x (11,411.66 - 1,500) = -$53.52
Step 5: Calculate the amount received by
Contract owner as a result of full
withdrawal at the end of Contract Year 3: = 11,411.66 - 425.00 - 53.52 = $10,933.14
</TABLE>
<PAGE>
TABLE OF CONTENTS
Description Page
Additions, Deletions or Substitutions of
Investments
The Contract
Purchases
Tax-free Exchanges (1035 Exchanges,
Rollovers and
Transfers)
Performance Information
Calculation of Accumulation Unit Values
Calculation of Variable Income Payments
General Matters
Incontestability
Settlements
Safekeeping of the Variable Account's
Assets
Premium Taxes
Tax Reserves
Federal Tax Matters
Qualified Plans
Experts
Financial Statements
-----------------------------------------------
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. We do not authorize anyone to provide
any information or representations regarding the offering described in this
prospectus other than as contained in this prospectus.
[back cover]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Glenbrook Life and Annuity Company ("Registrant") provide
that Registrant will indemnify its officers and directors for certain damages
and expenses that may be incurred in the performance of their duty to
Registrant. No indemnification is provided, however, when such person is
adjudged to be liable for negligence or misconduct in the performance of his or
her duty, unless indemnification is deemed appropriate by the court upon
application.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description
(1) Form of Underwriting Agreement (Incorporated herein by reference to
Pre-Effective Amendment No. 2 to the Form N-4 Registration Statement of the
Glenbrook Life Multi-Manager Variable Account of Glenbrook Life and Annuity
Company (File No. 333-00999) dated August 23, 1996)
(2) None
(4)(a) Contract and Application (Incorporated herein by reference to the
Pre-Effective Amendment No. 2 to the Form N-4 Registration Statement of the
Glenbrook Life Multi-Manager Valuable Account of Glenbrook Life and Annuity
Company (File No. 333-00999) dated August 23, 1996)
(4)(b) Contract Endorsement (Incorporated herein by reference to Post-Effective
Amendment No. 4 to the Form N-4 Registration Statement of the Glenbrook
Life Multi-Manager Variable Account of Glenbrook Life and Annuity Company
(File No. 333-00999) dated September 30, 1998)
(5)(a) Opinion of General Counsel re: Legality (Previously filed in
Pre-Effective Amendment No. 2 to this Registration Statement (File No.
333-00987) dated August 23, 1996)
(5)(b) Opinion of General Counsel re: Legality
(8) None
(11) None
(12) None
(15) None
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24)(a) Powers of Attorney (Previously filed in Pre-Effective Amendment No. 1 to
this Registration Statement (File No. 333-00987) dated February 16, 1996)
(24)(b) Powers of Attorney for John R. Hunter and Kevin R. Slawin (Previously
filed in Pre-Effective Amendment No. 2 to this Registration Statement (File
No. 333-0987) dated August 23, 1996)
(24)(c) Power of Attorney for Keith A. Hauschildt (Previously filed in
Post-Effective Amendment No. 1 to Registrant's Form S-1 Registration
Statement (File No. 333-0987) dated April 1, 1997)
(24)(d) Power of Attorney for Thomas J. Wilson, II
(25) None
(26) None
(27) Not applicable.
(99) Form of Resolution of Board of Directors (Incorporated herein by reference
to Post-Effective Amendment No. 1 to Registrant's Registration Statement
(File No. 033-92842) dated April 9, 1996)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii)to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof ) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Glenbrook Life and Annuity Company, pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it will meet all of the
requirements for filing on Form S-3 and has duly caused this amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, and its seal to be hereunto affixed and attested, in the
Township of Northfield, State of Illinois on the 27th day of April, 1999.
GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
(SEAL)
Attest: /s/BRENDA D. SNEED By: /s/MICHAEL J. VELOTTA
------------------ ----------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary Vice President, Secretary and
and Assistant General Counsel General Counsel
Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed by the following persons in the
capacities indicated and on the 27th day of April, 1999.
*/LOUIS G. LOWER, II Chairman of the Board, Chief
Louis G. Lower, II Executive Officer and Director
(Principal Executive Officer)
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
Michael J. Velotta Counsel and Director
*/THOMAS J. WILSON, II Vice Chairman and Director
Thomas J. Wilson, II (Principal Operating Officer)
*/PETER H. HECKMAN President, Chief Operating Officer
Peter H. Heckman and Director
*/JOHN R. HUNTER Director
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
Kevin R. Slawin (Principal Financial Officer)
*/G. CRAIG WHITEHEAD Vice President and Director
G. Craig Whitehead
*/KEITH A. HAUSCHILDT Assistant Vice President and Controller
Keith A. Hauschildt (Principal Accounting Officer)
*/ By Michael J. Velotta, pursuant to Powers of Attorney previously filed or
filed herewith.
<PAGE>
EXHIBIT LIST
The following exhibits are filed herewith:
Exhibit No. Description
(5)(b) Opinion of General Counsel re: Legality
(23)(a) Independent Auditors' Consent
(23)(b) Consent of Freedman, Levy, Kroll & Simonds
(24)(d) Power of Attorney for Thomas J. Wilson, II
GLENBROOK LIFE AND ANNUITY COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, J5B
Northbrook, Illinois 60062
Direct Dial Number 847-402-2400
Facsimile 847-402-4371
Michael J. Velotta Please direct reply to:
Vice President, Secretary Post Office Box 3005
and General Counsel Northbrook, Illinois 60065-3005
April 14, 1999
TO: GLENBROOK LIFE AND ANNUITY COMPANY
NORTHBROOK, ILLINOIS 60062
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 333-00987
With reference to the Registration Statement on Form S-3 filed by
Glenbrook Life and Annuity Company (the "Company") with the Securities and
Exchange Commission covering the Flexible Premium Deferred Variable Annuity
Contracts, I have examined such documents and such law as I have considered
necessary and appropriate, and on the basis of such examination, it is my
opinion that as of December 28, 1998:
1. The Company is duly organized and existing under the laws of the State
of Arizona and has been duly authorized to do business by the Director
of Insurance of the State of Arizona.
2. The securities registered by the above Registration Statement when
issued will be valid, legal and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the
above referenced Registration Statement and to the use of my name under the
caption "Legal Matters" in the Prospectus constituting a part of the
Registration Statement.
Sincerely,
/s/ MICHAEL J. VELOTTA
- -------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 4 to Registration Statement No. 333-00987 of Glenbrook Life and Annuity
Company to Form S-1 on Form S-3 of our report dated February 19, 1999, appearing
in the Annual Report on Form 10-K of Glenbrook Life and Annuity Company for the
year ended December 31, 1998, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
April 26, 1999
Freedman, Levy, Kroll & Simonds
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 4 to Form
S-1 on the Form S-3 Registration Statement of Glenbrook Life and Annuity Company
(File No. 333-00987).
/s/FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 26, 1999
POWER OF ATTORNEY
WITH RESPECT TO
GLENBROOK LIFE AND ANNUITY COMPANY
Know all men by these presents that Thomas J. Wilson, II, whose
signature appears below, constitutes and appoints Louis G. Lower, II and Michael
J. Velotta, each acting individually, his attorney-in-fact, with power of
substitution and in any and all capacities, to sign any registration statements
and amendments thereto for the Glenbrook Life and Annuity Company and related
Contracts and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 23, 1999
Date
/s/Thomas J. Wilson, II
Thomas J. Wilson, II
Vice Chairman and Director
