<PAGE>
As filed with the Securities and Exchange Commission on August 28, 1995
File No. 33-
811-
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
______________________________________________________________________________
GLENBROOK LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT A
(Exact Name of Registrant)
GLENBROOK LIFE AND ANNUITY COMPANY
3100 Sanders Road
Northbrook, Illinois 60062
(Name of Depositor)
Michael J. Velotta
Vice President, Secretary and General Counsel
Glenbrook Life and Annuity Company
3100 Sanders Road
Northbrook, Illinois 60062
708/402-2400
(Name and Complete Address of Agent for Service)
Copies to:
Mark J. Mackey, Esquire John R. Hedrick, Esquire
Routier, Mackey and Johnson, P.C. Allstate Life Financial Services, Inc.
1700 K. Street N. W., Suite 1003 3100 Sanders Road
Washington, D.C. 20006 Northbrook, IL 60062
Approximate date of proposed public offering:
As soon as practicable after the effective date of the Registration Statement
___________________________
CALCULATION OF REGISTRATION FEE
Title of Securities Amount Being Proposed Maximum Amount
Being Registered Registered Aggregate Offering of
Price Filing Fee
Flexible Premium Indefinite* Indefinite* $500
Variable Annuity
Contracts
- ---------------
* Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby declares it is registering an indefinite amount of
securities.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
CROSS REFERENCE SHEET
Showing Location in Part A (Prospectus) and Part B of Registration Statement
of Additional Information Required by Form N-4
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
- ---------------- ------------------
Part A: INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <C>
1. Cover Page.............................. Cover Page
2. Definitions............................. Glossary
3. Synopsis................................ Highlights; Summary of Variable
Account Expenses
4. Condensed Financial.................... ---
(a) Chart............................. Not Applicable
(b) MM Yield.......................... Not Applicable
(c) Location of Others................ Financial Statements
5. General................................. ---
(a) Depositor......................... Glenbrook Life and Annuity Company
(b) Registrant........................ The Variable Account
(c) Portfolio Company................. The Fund; AIM Variable Insurance Funds,
Inc.; Investment Advisors for the Fund
(d) Fund Prospectus................... AIM Variable Insurance Funds;
(e) Voting Rights..................... Voting Rights
(f) Administrators.................... Charges & Other Deductions
Contract Maintenance Charge
6. Deductions & Expenses................... Charges & Other Deductions
(a) General........................... Charges & Other Deductions
(b) Sales Load Percent................ Withdrawal Charge
(c) Special Purchase Plans............ Not Applicable
(d) Commissions....................... Distribution of the Contracts
(e) Expenses -- Registrant............ Charges & Other Deductions
(f) Fund Expenses..................... Summary of Variable Account Expenses;
Expenses of the Funds
(g) Organizational Expenses........... Not Applicable
7. Contracts............................... ---
(a) Persons with Rights............... Benefits under the Contract; Payout Start Date
for Income Payments; Voting Rights;
Assignments; Beneficiary
(b)(i) Allocation of Purchase Payments.. Allocation of Purchase Payments
(ii) Transfers........................ Transfers among portfolios
(iii) Exchanges........................ Not Applicable
(c) Changes.......................... Modification
(d) Inquiries........................ Customer Inquiries
8. Annuity Period.......................... Payout Start Date for Income Payments
(a) Material Factors.................. Amount of Variable Annuity Income
Payments
(b) Dates............................. Payout Start Date for Income Payments
(c) Frequency, duration & level....... Amount of Variable Annuity Income
Payments
(d) AIR............................... Amount of Variable Annuity Income
Payments
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(e) Minimum........................... Amount of Variable Annuity Income
Payments
(f) -- Change Options................. Transfers among Portfolios
-- Transfer....................... ---
9. Death Benefit........................... Death Benefit Payable; Death Benefit Amount;
Death Benefit Payment Provisions
10. Purchases & Contract Value............. ---
(a) Purchases......................... Purchase of the Contracts:
Crediting of Initial Purchase Payments
(b) Valuation......................... Accumulation Units; Accumulation Unit Value
(c) Daily Calculation................. Accumulation Units; Accumulation Unit Value;
Allocation of Purchase Payments
(d) Underwriter....................... Distribution of the Contracts
11. Redemptions............................. ---
(a) -- By Owners...................... Withdrawals
(b) -- By Annuitant................... Income Plans
(c) Texas ORP......................... Not Applicable
(d) Lapse............................. Not Applicable
(e) Free Look......................... Highlights
12. Taxes................................... Federal Tax Matters
13. Legal Proceedings....................... Not Applicable
14. SAI Table of Contents................... SAI Table of Contents
Part B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
15. Cover Page.............................. Cover Page
16. Table of Contents....................... Table of Contents
17. General Information & History........... ---
(a) Depositor's Name.................. Glenbrook Life and Annuity Company
(b) Assets of Sub-account............. The Variable Account
(c) Control of Depositor.............. Glenbrook Life and Annuity Company
18. Services................................ ---
(a) Fees & Expenses of Registrant..... Contract Maintenance Charge
(b) Management Contracts.............. Contract Maintenance Charge;
Distribution of the Contracts
(c) Custodian......................... SAI: Safekeeping of the Variable
Account's Assets
Independent Public Accountant..... Experts
(d) Assets of Registrant.............. SAI: Safekeeping of the Variable
Account Assets
(e) Affiliated Persons................ Not Applicable
(f) Principal Underwriter............. Distribution of the Contracts
19. Purchase of Securities Being Offered.... ---
(a) Offering.......................... SAI: Purchase of Contracts
(b) Sales load........................ Distribution of the Contracts
20. Underwriters............................ ---
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(a) Principal Underwriter............. Distribution of the Contracts
(b) Continuous offering............... SAI: Purchase of Contracts
(c) Commissions....................... Distribution of the Contracts
(d) Unaffiliated Underwriters......... N/A
21. Calculation of Performance Data......... SAI: Performance Data
22. Annuity Payments........................ Income Payments
23. Financial Statements.................... ---
(a) Financial Statements of Registrant.. SAI: Not Applicable
(b) Financial Statements of Depositor... Glenbrook Life and Annuity
Company Financial Statements
Part C: OTHER INFORMATION
24a. Financial Statements..................... Part C. Financial Statements
24b. Exhibits................................. Part C. Exhibits
25. Directors and Officers................... Part C. Directors & Officers of
Depositor
26. Persons Controlled By or Under Common
Control with Depositor or Registrant..... Part C. Persons Controlled by
or Under Common Control
with Depositor or
Registrant
27. Number of Contract Owners................ Part C. Number of Contract Owners
28. Indemnification.......................... Part C. Indemnification
29a. Relationship of Principal Underwriter to
Other Investment Companies............... Part C. Relationship of Principal
Underwriter to Other
Investment Companies
29b. Principal Underwriters................... Part C. Principal Underwriters
29c. Compensation of Underwriter.............. Part C. Compensation of Allstate Life
Financial Services, Inc.
30. Location of Accounts and Records......... Part C. Location of Accounts and
Records
31. Management Services...................... Part C. Management Services
32. Undertakings............................. Part C. Undertakings
</TABLE>
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT A
OFFERED BY
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
1-800/776-6978
INDIVIDUAL AND GROUP FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACTS
-----------------------
This prospectus describes the __________ Variable Annuity, a Flexible
Premium Deferred Variable Annuity Contract ("Contract") designed to aid you in
long-term financial planning and which can be used for retirement planning. The
Contracts are issued by Glenbrook Life and Annuity Company ("Company"), a wholly
owned subsidiary of Allstate Life Insurance Company. In certain states the
Contract is only available as a group Contract. In these states a Certificate
(hereinafter referred to as "Contract") is issued which summarizes the
provisions of the Master Group Policy. Purchase payments for the Contracts will
be allocated to a series of Variable Sub-accounts of the Glenbrook Life and
Annuity Company Separate Account A ("Variable Account") and/or to a Fixed
Account option(s) funded through the Company's general account.
The Variable Sub-accounts invest in shares of AIM Variable Insurance Funds,
Inc. (the "Fund Series"). Nine Funds are currently available for investment
within the Variable Account: (1) AIM V.I. Capital Appreciation Fund; (2) AIM
V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I.
Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and
Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I. Money Market
Fund; and (9) AIM V.I. Value Fund.
This prospectus presents information you should know before making a
decision to invest in the Contract and the available Investment Alternatives.
THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS WHICH HAVE
RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS OR BY EMPLOYEES OF SUCH
BANKS; HOWEVER, THE CONTRACTS AND THE INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS,
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK, AND THE FUNDS' SHARES
ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE CONTRACTS ARE NOT FDIC INSURED
The Company has prepared and filed a Statement of Additional Information
dated , 1995 with the U.S. Securities and Exchange Commission. If you
wish to receive the Statement of Additional Information, you may obtain a free
copy by calling or writing the Company at the address above. For your
convenience, an order form for the Statement of Additional Information may be
found on page __ of this prospectus. Before ordering, you may wish to review
the Table of Contents of the Statement of Additional Information on page __ of
this prospectus. The Statement of Additional Information has been incorporated
by reference into this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR AIM VARIABLE INSURANCE FUNDS, INC..
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
The Contract is not available in all states.
At least once each Contract year, the Company will send the Owner an annual
statement that contains certain information pertinent to the individual Owner's
Contract. The annual statement details values and specific Contract data that
applies to each particular Contract. The annual statement does not contain
financial statements of the Company. The Company, however, is subject to the
informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith files reports and other information with the Securities and
Exchange Commission. Reports and other information filed by the Company can be
inspected at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 at prescribed rates.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
TABLE OF CONTENTS
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF VARIABLE ACCOUNT EXPENSES
CONDENSED FINANCIAL INFORMATION
YIELD AND TOTAL RETURN DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GLENBROOK LIFE AND ANNUITY COMPANY AND THE VARIABLE ACCOUNT. . . . . . . . . . .
Glenbrook Life and Annuity Company. . . . . . . . . . . . . . . . . . . . .
The Variable Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FUND SERIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AIM Variable Insurance Funds, Inc.. . . . . . . . . . . . . . . . . . . . .
Investment Advisors for the Funds . . . . . . . . . . . . . . . . . . . . .
FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Example of Interest Crediting During the Guarantee Period . . . . . . . . .
Withdrawals or Transfers. . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASE OF THE CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Payment Limits . . . . . . . . . . . . . . . . . . . . . . . . . .
Free-Look Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Crediting of Initial Purchase Payment . . . . . . . . . . . . . . . . . . .
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . . . .
Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers Among Investment Alternatives . . . . . . . . . . . . . . . . . .
Dollar Cost Averaging . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automatic Fund Rebalancing. . . . . . . . . . . . . . . . . . . . . . . . .
BENEFITS UNDER THE CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payout Start Date for Income Payments . . . . . . . . . . . . . . . . . .
Variable Account Income Payments. . . . . . . . . . . . . . . . . . . . .
Fixed Amount Income Payments. . . . . . . . . . . . . . . . . . . . . . .
Income Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefit Payable . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefit Amount. . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefit Payment Provisions. . . . . . . . . . . . . . . . . . . . .
CHARGES AND OTHER DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .
2
<PAGE>
(Table of Contents Continued)
Page
Deductions from Purchase Payments . . . . . . . . . . . . . . . . . . . . .
Withdrawal Charge (Contingent Deferred Sales Charge). . . . . . . . . . . .
Contract Maintenance Charge . . . . . . . . . . . . . . . . . . . . . . . .
Administrative Expense Charge . . . . . . . . . . . . . . . . . . . . . . .
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delay of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer Inquiries. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEDERAL TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Annuities in General. . . . . . . . . . . . . . . . . . . . . .
Tax Deferral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-natural Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diversification Requirements. . . . . . . . . . . . . . . . . . . . . . .
Investor Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Partial and Full Withdrawals. . . . . . . . . . . . . . . . .
Taxation of Annuity Payments. . . . . . . . . . . . . . . . . . . . . . .
Taxation of Annuity Death Benefits. . . . . . . . . . . . . . . . . . . .
Penalty Tax on Premature Distributions. . . . . . . . . . . . . . . . . .
Aggregation of Annuity Contracts. . . . . . . . . . . . . . . . . . . . .
Tax Qualified Contracts . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions Under Section 403(b) Plans . . . . . . . . . . . . . . . . .
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF THE CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . .
FOR THE THREE PERIODS ENDED DECEMBER 31, 1994. . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . .
Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pending Accounting Standards. . . . . . . . . . . . . . . . . . . . . . . .
COMPETITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATE AND FEDERAL REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY. . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS . . . . . . . . . . . . .
ORDER FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A - Market Value Adjustment . . . . . . . . . . . . . . . . . . . . . .
3
<PAGE>
GLOSSARY
ACCUMULATION UNIT--A measure of your ownership interest in a Sub-account of the
Variable Account prior to the Payout Start Date. Analogous, though not
identical, to a share owned in a mutual fund.
ACCUMULATION UNIT VALUE--The value of each Accumulation Unit which is calculated
each Valuation Date. Each Sub-account of the Variable Account has its own
distinct Accumulation Unit Value. Analogous, though not identical, to the share
price (net asset value) of a mutual fund.
ANNUITANT(S)--The person or persons whose life determines the latest Payout
Start Date and the amount and duration of any income payments for Income Plan
options other than Guaranteed Payments for a Specified Period.
BENEFICIARY(IES)--The person(s) to whom any benefits are due when a death
benefit is payable and there is no surviving Owner.
COMPANY("We," "Us")--Glenbrook Life and Annuity Company.
CONTRACT--The Glenbrook Life and Annuity Company Flexible Premium Deferred
Variable Annuity Contract, known as the "________ Variable Annuity," that is
described in this prospectus.
CONTRACT ANNIVERSARY--An anniversary of the date that the Contract was issued.
CONTRACT VALUE--The value of all amounts accumulated under the Contract prior to
the Payout Start Date, equivalent to the Accumulation Units in each Sub-account
of the Variable Account multiplied by the respective Accumulation Unit Value,
plus the value in the Fixed Account.
CONTRACT YEAR--A period of 12 months starting with the issue date or any
Contract Anniversary.
DEATH BENEFIT ANNIVERSARY--Every seventh Contract Anniversary beginning on the
date that the Contract was issued. For example, the issue date, 7th and 14th
Contract Anniversaries are the first three Death Benefit Anniversaries.
FIXED ACCOUNT-- All of the assets of the Company that are not in separate
accounts.
FIXED SUB-ACCOUNTS--These Sub-accounts are distinguished by Guarantee Period(s)
and the dates the period(s) begin. The Fixed Sub-accounts are established when
purchase payments are allocated to the Fixed Account; when previous Sub-accounts
expire and a new Guarantee Period is selected; and when You transfer an amount
to the Fixed Account.
GUARANTEE PERIOD--A period of years for which a specified effective annual
interest rate is guaranteed by the Company.
INCOME PLAN--One of several ways in which a series of payments are made after
the Payout Start Date. Income payments are based on the Contract Value adjusted
by any applicable Market Value Adjustment and applicable taxes on the Payout
Start Date. Income payment amounts may vary based on any Sub-account of the
Variable Account and/or may be fixed for the duration of the Income Plan.
INVESTMENT ALTERNATIVES--The Sub-accounts of the Variable Account and the Fixed
Account.
MARKET VALUE ADJUSTMENT--The Market Value Adjustment is the adjustment made to
the money distributed from a Sub-account of the Fixed Account, prior to the end
of the Guarantee Period, to reflect the impact of changes in interest rates
between the time the Sub-account of the Fixed Account was established and the
time of distribution.
4
<PAGE>
OWNER(S)("You")--The person or persons designated as the Owner in the Contract.
PAYOUT START DATE--The date on which income payments begin.
VALUATION DATE--Each day that the New York Stock Exchange is open for business.
The Valuation Date does not include such Federal and non-Federal holidays as are
observed by the New York Stock Exchange.
VALUATION PERIOD--The period between successive Valuation Dates, commencing at
the close of regular trading on the New York Stock Exchange (which is normally
4:00pm Eastern Time) and ending as of the close of regular trading on the New
York Stock Exchange on the next succeeding Valuation Date.
VARIABLE ACCOUNT--Glenbrook Life and Annuity Company Separate Account A, a
separate investment account established by the Company to receive and invest
purchase payments paid under the Contracts.
VARIABLE SUB-ACCOUNT--A portion of the Variable Account invested in shares of a
corresponding Fund. The investment performance of each Variable Sub-account is
linked directly to the investment performance of its corresponding Fund.
5
<PAGE>
HIGHLIGHTS
THE CONTRACT
This Contract is designed for long-term financial planning and retirement
planning. Money can be allocated to any combination of Funds or the Fixed
Account. You have access to your funds either through withdrawals of Contract
Value or through periodic income payments.
You bear the entire investment risk for Contract Values and income payments
based upon the Variable Account, because values will vary depending on the
investment performance of the Fund(s) you select. See "Accumulation Unit
Value," page ___ and "Income Plans," page ___.
You will also bear the investment risk of adverse changes in interest rates
in the event amounts are prematurely withdrawn or transferred from Sub-accounts
of the Fixed Account. See "Fixed Account," page __.
FREE-LOOK
You may cancel the Contract any time within 20 days after receipt of the
Contract and receive a full refund of purchase payments allocated to the Fixed
Account. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation, unless a refund of purchase
payments is required by state or federal law. See "Free-Look Period," page __.
HOW TO INVEST
Your first purchase payment must be at least $5,000 (for qualified
contracts, $2,000). Subsequent purchase payments must be at least $500.
Purchase payments may also be made pursuant to an Automatic Addition program.
See "Purchase Payment Limits," page ___.
At the time of your application, you will allocate your purchase payment
among the Investment Alternatives. The allocation you specify on the
application will be effective immediately. All allocations must be in whole
percents from 0% to 100% (total allocation equals 100%) or in whole dollars.
Allocations may be changed by notifying the Company in writing. See "Allocation
of Purchase Payments," page ___.
INVESTMENT ALTERNATIVES
The Variable Account invests in shares of the AIM Variable Insurance Funds,
Inc. (the "Fund Series"). The Fund Series has a total of nine Funds available
under the Contract. The Funds include: (1) AIM V.I. Capital Appreciation Fund;
(2) AIM V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4)
AIM V.I. Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I.
Growth and Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I.
Money Market Fund; and (9) AIM V.I. Value Fund. The assets of each Fund are
held separately from the other Funds and each has distinct investment objectives
and policies which are described in the accompanying prospectus for the Fund
Series. In addition to the Variable Account, Owners can also allocate all or
part of their purchase payments to the Fixed Account. See "Fixed Account," on
page ___.
6
<PAGE>
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Payout Start Date, you may transfer amounts among the
Investment Alternatives. The Company reserves the right to assess a $10 charge
on each transfer in excess of twelve per Contract Year. The Company is
presently waiving this charge. Transfers to the Fixed Account must be at least
$500. Certain Fixed Account transfers may be restricted. See "Transfers Among
Investment Alternatives," page ___.
You may want to enroll in a Dollar Cost Averaging program or an Automatic
Fund Rebalancing Program. See "Dollar Cost Averaging," page ___, and "Automatic
Fund Rebalancing," page __.
CHARGES AND DEDUCTIONS
The costs of the Contract include: a contract maintenance charge ($35
annually), a mortality and expense risk charge (deducted daily, equal on an
annual basis to 1.35% of the Contract's daily net assets of the Variable
Account), and an administrative expense charge (deducted daily, equal on an
annual basis to .10% of the Contract's daily net assets of the Variable
Account). The Company reserves the right to assess a transfer charge ($10 on
each transfer in excess of twelve per Contract Year). Additional deductions may
be made for certain taxes. See "Contract Maintenance Charge," page ___,
"Mortality and Expense Risk Charge," page ___, "Administrative Expense Charge,"
page ___, "Transfer Charges," page ___, and "Taxes," page ___.
WITHDRAWALS
You may withdraw all or part of the Contract Value before the earliest of
the Payout Start Date, the death of any Owner or, if the Owner is not a natural
person, the death of the Annuitant. No withdrawal charges will be deducted on
amounts withdrawn up to 10% of the amount of purchase payments. Amounts
withdrawn in excess of the 10% may be subject to a withdrawal charge of 0% to 6%
depending on how long purchase payments have been invested in the Contract.
Amounts withdrawn from a Sub-account of the Fixed Account, except during the 30
day period after the Guarantee Period expires, will be subject to a Market Value
Adjustment. See "Withdrawals," page __, "Withdrawals or Transfers," page ___,
and "Taxation of Annuities in General," page ___.
DEATH BENEFIT
The Company will pay a death benefit prior to the Payout Start Date on the
death of any Owner or, if the Owner is not a natural person, the death of the
Annuitant. See "Death Benefit Amount," page ___.
INCOME PAYMENTS
You will receive periodic income payments beginning on the Payout Start
Date. You may choose among several Income Plans to fit your needs. Income
payments may be received for a specified period or for life (either single or
joint life), with or without a guaranteed number of payments. You can select
income payments that are fixed, variable or a combination of fixed and variable.
See "Income Payments," page ___.
7
<PAGE>
SUMMARY OF VARIABLE ACCOUNT EXPENSES
The following table illustrates all expenses and fees that you will incur.
The expenses and fees set forth in the table are based on charges under the
Contracts and on the expenses of the Variable Account and the underlying Fund
Series.
<TABLE>
<CAPTION>
OWNER TRANSACTION EXPENSES (ALL SUB-ACCOUNTS)
- ---------------------------------------------
<S> <C>
Sales Load Imposed on Purchases (as a percentage of purchase payments) . . None
Contingent Deferred Sales Charge (as a percentage of purchase payments). . *
Applicable Sales Charge
Number of Complete Years Since Purchase as a
Payment Being Withdrawn Was Made Percentage
- -------------------------------------------------------------------------------
0 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
1 year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
2 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
4 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
6 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
7 Years or more . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Transfer Fee . . . . . . . . . . . . . . . . . . . . . . . . . **
Annual Contract Fee. . . . . . . . . . . . . . . . . . . . $35***
Variable Account Annual Expenses (as a percentage of the Contract's average net
assets in the Variable Account)
- -------------------------------------------------------------------------------
Mortality and Expense Risk Charge. . . . . . . . . . . . . .1.35%
Administrative Expense Charge. . . . . . . . . . . . . . . . .10%
Total Variable Account Annual Expenses . . . . . . . . . . .1.45%
_________________________________________________________________
<FN>
* Each Contract Year up to 10% of the amount of purchase payments may be
withdrawn without a contingent deferred sales charge or a Market Value
Adjustment.
** No charges will be imposed on the first twelve transfers in any Contract
Year. The Company reserves the right to assess a $10 charge for each
transfer in excess of twelve in any Contract Year, excluding transfers due
to dollar cost averaging and Automatic Fund Rebalancing.
*** The annual Contract Fee will be waived if total purchase payments as of a
Contract Anniversary, or upon a full withdrawal, are $50,000 or if all
monies are allocated to the Fixed Account.
</TABLE>
8
<PAGE>
FUND EXPENSES
(AS A PERCENTAGE OF FUND ASSETS)
<TABLE>
<CAPTION>
Total Fund Annual
Fund Management Fees Other Expenses* Expenses
- ---- --------------- --------------- -----------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 0.65% .25% .90%
AIM V.I. Growth and Income Fund 0.00%** 1.00% 1.00%
AIM V.I. Global Utilities Fund 0.00%** 1.00% 1.00%
AIM V.I. Diversified Income Fund 0.65% 0.50% 1.15%
AIM V.I. Government Securities Fund 0.65% 0.58% 1.23%
AIM V.I. Growth Fund 0.65% 0.29% 0.94%
AIM V.I. International Equity Fund 0.75% 0.92% 1.67%
AIM V.I. Value Fund 0.65% 0.24% 0.89%
AIM V.I. Money Market Fund 0.40% 0.50% 0.90%
--------------------------------------------------------------------------------
<FN>
* "Other Expenses" listed for the AIM Variable Insurance Funds, Inc. are
estimates. Actual expenses may differ from amounts listed.
** The management fees listed are reduced because the Investment Advisor for
the Funds, A.I.M. Advisors, Inc. is temporarily waiving the imposition of
certain management fees. If this notice were not in effect, the
management fees for the AIM V.I. Growth and Income Fund and the AIM V.I.
Global Utilities Fund, as a percentage of each Fund's average net assets
would be 0.65%.
</TABLE>
9
<PAGE>
EXAMPLE
You (the Owner) would pay the following cumulative expenses on a $1,000
investment, assuming a 5% annual return under the following circumstances:
If you terminate your Contract or annuitize for a specified period of less than
120 months at the end of the applicable time period:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years
- ---- ------ -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund $80 $126
AIM V.I. Growth and Income Fund $81 $129
AIM V.I. Global Utilities Fund $81 $129
AIM V.I. Diversified Income Fund $82 $134
AIM V.I. Government Securities Fund $83 $137
AIM V.I. Growth Fund $80 $127
AIM V.I. International Equity Fund $88 $151
AIM V.I. Value Fund $80 $126
AIM V.I. Money Market Fund $80 $126
If you do not terminate your Contract or if you annuitize for a specified period
of 120 months or more at the end of the applicable time period:
Fund 1 Year 3 Years
- ---- ------ -------
AIM V.I. Capital Appreciation Fund $26 $81
AIM V.I. Growth and Income Fund $27 $84
AIM V.I. Global Utilities Fund $27 $84
AIM V.I. Diversified Income Fund $28 $89
AIM V.I. Government Securities Fund $29 $92
AIM V.I. Growth Fund $26 $82
AIM V.I. International Equity Fund $34 $106
AIM V.I. Value Fund $26 $81
AIM V.I. Money Market Fund $26 $81
</TABLE>
__________________________________________________________________
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the example is to assist you in understanding the various costs and expenses
that you will bear directly or indirectly. Premium taxes, which vary from 0 -
3.5% depending on the state where the Contract is sold, are not reflected in the
example.
CONDENSED FINANCIAL INFORMATION
Condensed financial information for the Glenbrook Life and Annuity Company
Separate Account A is not included because, as of the date of this prospectus,
the Variable Account had not yet commenced operations and had no assets,
liabilities, or income.
10
<PAGE>
YIELD AND TOTAL RETURN DISCLOSURE
From time to time the Variable Account may advertise the yield and total
return investment performance of one or more Sub-accounts. Standardized yield
and total return advertisements include charges and expenses attributable to the
Contracts. Including these fees has the effect of decreasing the advertised
performance of a Sub-account, so that a Sub-account's investment performance
will not be directly comparable to that of an ordinary mutual fund.
When a Sub-account advertises its standardized total return it will usually
be calculated for one year, five years, and ten years or since inception if the
Sub-account has not been in existence for such periods. Total return is
measured by comparing the value of an investment in the Sub-account at the end
of the relevant period to the value of the investment at the beginning of the
period.
In addition to the standardized total return, the Sub-account may advertise
a non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the withdrawal charges under the Contract are not deducted.
Therefore, a non-standardized total return for a Sub-account can be higher than
a standardized total return for a Sub-account.
Certain Sub-accounts may advertise yield in addition to total return.
Except in the case of the AIM V.I. Money Market Sub-account, the yield will be
computed in the following manner: the net investment income per unit earned
during a recent one month period is divided by the unit value on the last day of
the period, and then annualized. This figure reflects the recurring charges at
the separate account level.
The AIM V.I. Money Market Sub-account may advertise, in addition to the
total return, either yield or the effective yield. The yield in this case
refers to the income generated by an investment in that Sub-account over a
seven-day period net of recurring charges at the separate account level. The
income is then annualized (i.e., the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment). The effective yield is
calculated similarly but when annualized, the income earned by an investment in
the AIM V.I. Money Market Sub-account is assumed to be reinvested at the end of
each seven-day period. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment during a
52-week period.
The Variable Account may also disclose yield, standard total return, and
non-standard total return for periods prior to the date that the Variable
Account commenced operations. For periods prior to the date the Variable
Account commenced operations, performance information for the Sub-accounts will
be calculated based on the performance of the underlying Funds and the
assumption that the Sub-accounts were in existence for the same periods as those
of the underlying Funds, with a level of charges equal to those currently
assessed against the Sub-accounts.
Please refer to the Statement of Additional Information for a further
description of the method used to calculate a Sub-account's yield and total
return.
FINANCIAL STATEMENTS
The financial statements of Glenbrook Life and Annuity Company are on page
__ of the prospectus. The financial statements of Glenbrook Life and Annuity
Company Separate Account A are not included because, as of the date of this
Prospectus, the Variable Account had not yet commenced operations and had no
assets, liabilities, or income.
11
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY AND THE VARIABLE ACCOUNT
GLENBROOK LIFE AND ANNUITY COMPANY
The Company is the issuer of the Contract. The Company is a stock life
insurance company which was organized under the insurance laws of the State of
Illinois in 1992. The Company was originally organized under the laws of the
State of Indiana in 1965. From 1965 to 1983 the Company was known as "United
Standard Life Assurance Company" and from 1983 to 1992 the Company was known as
"William Penn Life Assurance Company of America." As of the date of this
prospectus, the Company is licensed to operate in the District of Columbia and
all states except New Jersey and New York. The Company is currently pursuing a
license in New Jersey. The Company intends to market the Contract in those
jurisdictions in which it is licensed to operate. The Company's home office is
located at 3100 Sanders Road, Northbrook, Illinois 60062.
The Company is a wholly-owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the
insurance laws of the State of Illinois. Allstate Life is a wholly-owned
subsidiary of Allstate Insurance Company ("Allstate"), a stock property-
liability insurance company incorporated under the insurance laws of Illinois.
All of the outstanding capital stock of Allstate is owned by The Allstate
Corporation ("Corporation").
The Company and Allstate Life entered into a reinsurance agreement,
effective June 5, 1992, under which the Company reinsures all of its business
with Allstate Life. Under the reinsurance agreement, with the exception of
certain qualified Contracts, Fixed Account purchase payments are automatically
transferred to Allstate Life and become invested with the assets of Allstate
Life, and Allstate Life accepts 100% of the liability under such contracts.
Fixed Account purchase payments of qualified Contracts issued in conjunction
with a Section 401(a), 401(k) or 403(b) plan, will be invested in the general
account of the Company. The Company and Allstate Life have entered into a
modified coinsurance agreement under which Allstate Life will continue to
reinsure all of the Company's general account obligations under such qualified
Contracts.
THE VARIABLE ACCOUNT
Established on September 6, 1995, the Glenbrook Life and Annuity Company
Separate Account A is a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. However, such
registration does not signify that the Commission supervises the management or
investment practices or policies of the Variable Account. The investment
performance of the Variable Account is entirely independent of both the
investment performance of the Company's general account and the performance of
any other separate account.
The Variable Account has been divided into nine Sub-accounts, each of which
invests solely in its corresponding Fund of AIM Variable Insurance Funds, Inc.
Additional Variable Sub-accounts may be added at the discretion of the Company.
The assets of the Variable Account are held separately from the other
assets of the Company. They are not chargeable with liabilities incurred in the
Company's other business operations. Accordingly, the income, capital gains and
capital losses, realized or unrealized, incurred on the assets of the Variable
Account are credited to or charged against the assets of the Variable Account,
without regard to the income, capital gains or capital losses arising out of any
other business the Company may conduct. The Company's obligations arising under
the Contracts are general corporate obligations of the Company.
12
<PAGE>
THE FUND SERIES
The Variable Account will invest in shares of the AIM Variable Insurance
Fund, Inc. (the "Fund Series"). The Fund Series is registered with the
Securities and Exchange Commission as an open-end, series, management investment
company. Registration of the Fund Series does not involve supervision of its
management, investment practices or policies by the Securities and Exchange
Commission. The Funds are designed to provide investment vehicles for variable
insurance contracts of various insurance companies, in addition to the Variable
Account.
Shares of the Funds are not deposits, or obligations of, or guaranteed or
endorsed by any bank and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Variable Insurance Funds, Inc. offers nine Funds for use with this
Contract: (1) AIM V.I Capital Appreciation Fund; (2) AIM V.I Diversified Income
Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I. Government Securities
Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and Income Fund; (7) AIM
V.I. International Equity Fund; (8) AIM V.I. Money Market Fund; and (9) AIM V.I.
Value Fund. Each Fund has different investment objectives and policies and
operates as a separate investment fund. The following is a brief description of
the investment objectives of the Funds:
AIM V.I. CAPITAL APPRECIATION FUND ("CAPITAL APPRECIATION FUND") is a
diversified Fund which seeks to provide capital appreciation through investments
in common stocks, with emphasis on medium-sized and smaller emerging growth
companies.
AIM V.I. DIVERSIFIED INCOME FUND ("DIVERSIFIED INCOME FUND") is a
diversified Fund which seeks to achieve a high level of current income primarily
by investing in a diversified portfolio of foreign and U.S. government and
corporate debt securities, including lower rated high yield debt securities
(commonly known as "junk bonds").
AIM V.I. GLOBAL UTILITIES FUND ("GLOBAL UTILITIES FUND") is a non-
diversified Fund which seeks to achieve a high level of current income and, as a
secondary objective, to achieve capital appreciation, by investing primarily in
common and preferred stocks of public utility companies.
AIM V.I. GOVERNMENT SECURITIES FUND ("GOVERNMENT FUND") is a diversified
Fund which seeks to achieve a high level of current income consistent with
reasonable concern for safety of principal by investing in debt securities
issued, guaranteed or otherwise backed by the U.S. Government.
AIM V.I. GROWTH FUND ("GROWTH FUND") is a diversified Fund which seeks to
provide growth of capital through investments primarily in common stocks of
leading U.S. companies considered by AIM to have strong earnings momentum.
AIM V.I. GROWTH AND INCOME FUND ("GROWTH & INCOME FUND") is a diversified
Fund which seeks to provide growth of capital, with current income as a
secondary objective by investing primarily in dividend paying common stocks
which have prospects for both growth of capital and dividend income.
AIM V.I. INTERNATIONAL EQUITY FUND ("INTERNATIONAL FUND") is a diversified
Fund which seeks to provide long-term growth of capital by investing in
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.
13
<PAGE>
AIM V.I. MONEY MARKET FUND ("MONEY MARKET FUND") is a diversified Fund
which seeks to provide as high a level of current income as is consistent with
the preservation of capital and liquidity by investing in a diversified
portfolio of money market instruments.
AIM V.I. VALUE FUND ("VALUE FUND") is a diversified Fund which seeks to
achieve long-term growth of capital by investing primarily in equity securities
judged by AIM to be undervalued relative to the current or projected earnings of
the companies issuing the securities, or relative to current market values of
assets owned by the companies issuing the securities or relative to the equity
markets generally. Income is a secondary objective.
INVESTMENT ADVISOR FOR THE FUNDS
A.I.M. Advisors, Inc., ("AIM") serves as the investment advisor to each
Fund. AIM was organized in 1976 and, together with its affiliates, manages or
advises 38 investment company portfolios. AIM is a wholly owned subsidiary of
A.I.M. Management Group Inc.
There is no assurance that the Funds will attain their respective stated
objectives. Additional information concerning the investment objectives and
policies of the Funds can be found in the current prospectus for the Fund
Company accompanying this prospectus.
You will find more complete information about the Funds, including the
risks associated with each Fund, in the accompanying prospectus. You should
read the prospectus for the Fund Series in conjunction with this prospectus.
THE FUND SERIES PROSPECTUS SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO A PARTICULAR VARIABLE SUB-
ACCOUNT.
FIXED ACCOUNT
Purchase payments and transfers allocated to one or more of the Sub-
accounts of the Fixed Account become part of the general account of the Company.
Each Sub-account offers a separate interest rate Guarantee Period. Guarantee
Periods will be offered at the Company's discretion and may range from one to
ten years. Presently, the Company offers Guarantee Periods of one, three, five,
seven and ten years. The Owner must select the Sub-account(s) in which to
allocate each purchase payment and transfer. No less than $500 may be allocated
to any one Sub-account. The Company reserves the right to limit the number of
additional purchase payments.
Interest is credited daily to each Sub-account at a rate which compounds to
the effective annual interest rate declared for each Sub-account's Guarantee
Period that has been selected.
The following example illustrates how the Sub-account value for a Sub-
account of the Fixed Account would grow given an assumed purchase payment,
Guarantee Period, and effective annual interest rate:
14
<PAGE>
EXAMPLE OF INTEREST CREDITING DURING THE GUARANTEE PERIOD:
<TABLE>
<CAPTION>
<S> <C>
Purchase Payment: . . . . . . . . . . . . . . . . . . $10,000.00
Guarantee Period: . . . . . . . . . . . . . . . . . . 5 years
Effective Annual Rate: . . . . . . . . . . . . . . . . 5.50%
</TABLE>
<TABLE>
<CAPTION>
END OF CONTRACT YEAR:
Year 1 Year 2 Year 3 Year 4 Year 5
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beginning Sub-Account Value $10,000.00
X (1 + Effective Annual Rate) 1.055
----
$10,550.00
Sub-Account Value at end of Contract $10,550.00
year 1 X (1 + Effective Annual Rate) 1.055
----
$11,130.25
Sub-Account Value at end of Contract $11,130.25
year 2 X (1 + Effective Annual Rate) 1.055
----
$11,742.41
Sub-Account Value at end of Contract $11,742.41
year 3 X (1 + Effective Annual Rate) 1.055
----
$12,388.25
Sub-Account Value at end of Contract $12,388.25
year 4 X (1 + Effective Annual Rate) 1.055
-----
Sub-Account Value at end of Guarantee Period: $13,069.60
----------
----------
</TABLE>
TOTAL INTEREST CREDITED IN GUARANTEE PERIOD: $3,069.60 ($13,069.60 -$10,000.00)
NOTE: The above illustration assumes no withdrawals of any amount during the
entire five year period. A withdrawal charge and a Market Value Adjustment may
apply to any amount withdrawn in excess of 10% of the amount of purchase
payments. The hypothetical interest rate is for illustrative purposes only and
is not intended to predict future interest rates to be declared under the
Contract.
The Company has no specific formula for determining the rate of interest
that it will declare initially or in the future. Such interest rates will be
reflective of investment returns available at the time of the determination. In
addition, the management of the Company may also consider various other factors
in determining interest rates, including regulatory and tax requirements, sales
commissions and administrative expenses borne by the Company, general economic
trends, and competitive factors. The Company guarantees that the interest rates
will never be less that the minimum guaranteed rate shown in the Contract.
THE MANAGEMENT OF THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO THE
INTEREST RATES TO BE DECLARED. THE COMPANY CAN NEITHER PREDICT NOR GUARANTEE
FUTURE INTEREST RATES TO BE DECLARED.
Prior to the end of a Guarantee Period, a notice will be mailed to the
Owner outlining the options available at the end of a Guarantee Period. During
the 30 day period after a Guarantee Period expires the Owner may:
15
<PAGE>
- take no action and the Company will automatically renew the Sub-
account value to a Guarantee Period of the same duration to be
established on the day the previous Guaranteed Period expired; or
- notify the Company to apply the Sub-account value to a new Guarantee
Period or periods to be established on the day the previous Guarantee
Period expired; or
- notify the Company to apply the Sub-account value to any Sub-account
of the Variable Account on the day we receive the notification.
- receive a portion of the Sub-account value or the entire Sub-account
value through a partial or full withdrawal that is not subject to a
Market Value Adjustment. In this case, the amount withdrawn will be
deemed to have been withdrawn on the day the guarantee period expired.
The Automatic Laddering Program allows the Owner to choose, in advance, one
renewal Guarantee Period for all renewing Sub-accounts. The Owner can select the
Automatic Laddering Program at any time during the accumulation phase, including
on the issue date. The Automatic Laddering Program will continue until the
Owner gives written notice to the Company.
WITHDRAWALS OR TRANSFERS:
With the exception of transfers made automatically through dollar cost
averaging, all withdrawals and transfers, paid from a Sub-account of the Fixed
Account other than during the 30 day period after a Guarantee Period expires are
subject to a Market Value Adjustment.
The Market Value Adjustment reflects the relationship between (1) the
Treasury Rate for the time remaining in the Guarantee Period at the time of the
request for withdrawal or transfer, and (2) the Treasury Rate at the time the
Sub-account was established. As such, the Owner bears some investment risk
under the Contract. Treasury Rate means the U.S. Treasury Note Constant
Maturity yield for the preceding week as reported in Federal Reserve Bulletin
Release H.15.
Generally, if the Treasury Rate for the Guarantee Period is higher than the
applicable current Treasury Rate, then the Market Value Adjustment will result
in a higher amount payable to the Owner or transferred. Similarly, if the
Treasury Rate at the time the Sub-account was established is lower than the
applicable Treasury Rate (interest rate for a period equal to the time remaining
in the Sub-account), then the Market Value Adjustment will result in a lower
amount payable to the Owner or transferred.
For example, assume the Owner purchases a Contract and selects an initial
Guarantee Period of five years and the five year Treasury Rate for that duration
is 5.50%. Assume that at the end of 3 years, the Owner makes a partial
withdrawal. If, at that later time, the current two year Treasury Rate is 4.00%,
then the Market Value Adjustment will be positive, which will result in an
increase in the amount payable to the Owner. Similarly, if the current two year
Treasury Rate is 7.00%, then the Market Value Adjustment will be negative, which
will result in a decrease in the amount payable to the Owner.
The formula for calculating the Market Value Adjustment is set forth in
Appendix A to this prospectus which also contains additional illustrations of
the application of the Market Value Adjustment.
The amount received by the Owner under a withdrawal request equals the
amount requested, adjusted by any Market Value Adjustment, less a withdrawal
charge (if applicable), less premium taxes and withholding (if applicable).
16
<PAGE>
PURCHASE OF THE CONTRACTS
PURCHASE PAYMENT LIMITS
Your first purchase payment must be at least $5,000 unless the Contract is
a qualified contract, in which case the first purchase payment must be at least
$2,000. All subsequent purchase payments must be $500 or more and may be made
at any time prior to the Payout Start Date. Subsequent purchase payments may
also be made from your bank account through Automatic Additions. Under an
Automatic Additions program, the minimum purchase payment for allocation to the
Variable Account is $100 and for allocation to the Fixed Account the minimum
purchase payment is $500. Please consult with your sales representative for
detailed information about Automatic Additions.
We reserve the right to limit the amount of purchase payments we will
accept.
FREE-LOOK PERIOD
You may cancel the Contract any time within 20 days after receipt of the
Contract and receive a full refund of purchase payments allocated to the Fixed
Account. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation unless a refund of purchase
payments is required by state or federal law.
CREDITING OF INITIAL PURCHASE PAYMENT
The initial purchase payment accompanied by a duly completed application
will be credited to the Contract within two business days of receipt by us at
our home office. If an application is not duly completed, we will credit the
purchase payments to the Contract within five business days or return it at that
time unless you specifically consent to us holding the purchase payment until
the application is complete. We reserve the right to reject any application.
Subsequent purchase payments will be credited to the Contract at the close of
the Valuation Period in which the purchase payment is received by the Company at
its home office.
ALLOCATION OF PURCHASE PAYMENTS
On the application, you instruct us how to allocate the purchase payment
among the Investment Alternatives. Purchase payments may be allocated in whole
percents, from 0% to 100% (total allocation equals 100%) to any Investment
Alternative. Unless you notify us in writing otherwise, subsequent purchase
payments are allocated according to the allocation for the previous purchase
payment.
ACCUMULATION UNITS
Each purchase payment allocated to the Variable Account will be credited to
the Contract as Accumulation Units. For example, if a $10,000 purchase payment
is credited to the Contract when the Accumulation Unit value equals $10, then
1,000 Accumulation Units would be credited to the Contract. The Variable
Account, in turn, purchases shares of the corresponding Fund.
17
<PAGE>
ACCUMULATION UNIT VALUE
The Accumulation Units in each Sub-account of the Variable Account are
valued separately. The value of Accumulation Units will change each Valuation
Period according to the investment performance of the shares purchased by each
Variable Sub-account and the deduction of certain expenses and charges.
The value of an Accumulation Unit in a Variable Sub-account for any
Valuation Period equals the value of the Accumulation Unit as of the immediately
preceding Valuation Period, multiplied by the Net Investment Factor for that
Sub-account for the current Valuation Period. The Net Investment Factor for a
Valuation Period is a number representing the change, since the last Valuation
Date in the value of Sub-account assets per Accumulation Unit due to investment
income, realized or unrealized capital gain or loss, deductions for taxes, if
any, and deductions for the mortality and expense risk charge and administrative
expense charge.
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Payout Start Date, you may transfer amounts among Investment
Alternatives. The Company reserves the right to assess a $10 charge on each
transfer in excess of twelve per Contract Year. The Company is presently
waiving this charge. Transfers among Investment Alternatives before the Payout
Start Date may be made at any time. See "Transfers and Withdrawals," page ___
for the requirements on transfers from the Fixed Account.
After the Payout Start Date, transfers among Sub-accounts of the Variable
Account or from a variable amount income payment to a fixed amount income
payment may be made only once every six months and may not be made during the
first six months folowing the Payout Start Date. After the Payout Start Date,
transfers from a fixed amount income payment are not allowed.
Telephone transfer requests will be accepted by the Company if received at
1-800/776-6978 by 3:00 p.m., Central Time. Telephone transfer requests received
at any other telephone number or after 3:00 p.m., Central Time will not be
accepted by the Company. Telephone transfer requests received before 3:00 p.m.,
Central Time are effected at the next computed value. The Company utilizes
procedures which the Company believes will provide reasonable assurance that
telephone authorized transfers are genuine. Such procedures include taping of
telephone conversations with persons purporting to authorize such transfers and
requesting identifying information from such persons. Accordingly, the Company
disclaims any liability for losses resulting from such transfers by reason of
their allegedly not having been properly authorized. However, if the Company
does not take reasonable steps to help ensure that such authorizations are
valid, the Company may be liable for such losses.
The minimum amount that may be transferred into a Sub-account of the Fixed
Account is $500. Any transfer from a Sub-account of the Fixed Account at a time
other than during the 30 day period after a Guarantee Period expires will be
subject to a Market Value Adjustment. If any transfer reduces the value of a
Sub-account of the Fixed Account to less than $500, the Company will treat the
request as a transfer of the entire Sub-account value.
The Company reserves the right to waive transfer restrictions.
DOLLAR COST AVERAGING
Transfers may be made automatically through Dollar Cost Averaging prior to
the Payout Start Date. Dollar Cost Averaging permits the Owner to transfer a
specified amount every month from the one year Guarantee Period Sub-account of
the Fixed Account, to any Sub-account of the Variable Account. Transfers made
through Dollar Cost Averaging must be $50 or more. Dollar Cost Averaging cannot
be used to transfer amounts to the Fixed Account. Transfers made through Dollar
Cost Averaging are not subject to a Market Value Adjustment. In
18
<PAGE>
addition, such transfers are not assessed a $10 charge and are not included in
the twelve free transfers per Contract Year.
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 the Dollar Cost Averaging program does not assure you
of a greater profit from your purchases under the program; nor will it prevent
or alleviate losses in a declining market.
AUTOMATIC FUND REBALANCING
Transfers may be made automatically through Automatic Fund Rebalancing
prior to the Payout Start Date. By electing Automatic Fund Rebalancing, all of
the money allocated to Sub-accounts of the Variable Account will be rebalanced
to the desired allocation on a quarterly basis, determined from the first date
that you decide to rebalance. Each quarter, money will be transferred among
Sub-accounts of the Variable Account to achieve the desired allocation.
The desired allocation will be the allocation initially selected, unless
subsequently changed. You may change the allocation at any time by giving us
written notice. The new allocation will be effective with the first rebalancing
that occurs after we receive the written request. We are not responsible for
rebalancing that occurs prior to receipt of the written request.
Transfers made through Automatic Fund Rebalancing are not assessed a $10
charge and are not included in the twelve free transfers per Contract Year.
Any money allocated to the Fixed Account will not be included in the
rebalancing.
BENEFITS UNDER THE CONTRACT
WITHDRAWALS
You may withdraw all or part of the Contract Value at any time prior to the
earlier of the death of the Owner (or the Annuitant if the Owner is not a
natural person) or the Payout Start Date. The amount available for withdrawal
is the Contract Value next computed after the Company receives the request for a
withdrawal at its home office, adjusted by any applicable Market Value
Adjustment, less any withdrawal charges, contract maintenance charges and any
premium taxes. Withdrawals from the Variable Account will be paid within seven
days of receipt of the request, subject to postponement in certain
circumstances. See "Delay of Payments," page ___.
Money can be withdrawn from the Variable Account or the Fixed Account. To
complete the partial withdrawal from the Variable Account, the Company will
redeem Accumulation Units in an amount equal to the withdrawal and any
applicable withdrawal charge and premium taxes. The Owner must name the
Investment Alternative from which the withdrawal is to be made. If none is
named, then the withdrawal request is incomplete and cannot be honored.
The minimum partial withdrawal is $50. If any withdrawal reduces the value
of any Sub-account of the Fixed Account to less than $500, we will treat the
request as a withdrawal of the entire Sub-account value. If the Contract Value
after a partial withdrawal would be less than $1,000, then the Company will
treat the request as one for termination of the Contract and the entire Contract
Value, adjusted by any Market Value Adjustment, less any charges and premium
taxes, will be paid out.
19
<PAGE>
Partial withdrawals may also be taken automatically through Systematic
Withdrawals on a monthly, quarterly, semi-annual or annual basis. Systematic
Withdrawals of $50 or more may be requested at any time prior to the Payout
Start Date. At the Company's discretion, Systematic Withdrawals may not be
offered in conjunction with Dollar Cost Averaging or Automatic Fund Rebalancing.
Partial and full withdrawals may be subject to income tax and a 10% tax
penalty. This tax and penalty are explained in "Federal Tax Matters," on page
___.
After the Payout Start Date, withdrawals are only permitted when you are
receiving payments from the Variable Account under Income Plan 3, Guaranteed
Payments for a Specified Period. 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, less any
applicable withdrawal charge.
INCOME PAYMENTS
PAYOUT START DATE FOR INCOME PAYMENTS
The Payout Start Date is the day that income payments will start under the
Contract. You may change the Payout Start Date at any time by notifying the
Company in writing of the change at least 30 days before the scheduled Payout
Start Date. The Payout Start Date must be (a) at least one month after the
Issue Date; and (b) no later than the day the Annuitant reaches age 90, or the
10th anniversary of the issue date, if later.
VARIABLE ACCOUNT INCOME PAYMENTS
The amount of Variable Account income payments depends upon the investment
experience of the Sub-accounts selected by the Owner and any premium taxes, the
age and sex of the Annuitant, and the Income Plan chosen. The Company
guarantees that the amount of the income payment will not be affected by (1)
actual mortality experience and (2) the amount of the Company's administration
expenses.
The Contracts offered by this prospectus contain income payment tables that
provide for different benefit payments to men and women of the same age (except
in states which require unisex annuity tables). Nevertheless, in accordance
with the U.S. Supreme Court's decision in ARIZONA GOVERNING COMMITTEE V. NORRIS,
in certain employment-related situations, annuity tables that do not vary on the
basis of sex may be used. Accordingly, if the Contract is to be used in
connection with an employment-related retirement or benefit plan, consideration
should be given, in consultation with legal counsel, to the impact of NORRIS on
any such plan before making any contributions under these Contracts.
The total income payments received may be more or less than the total
purchase payments made because (a) Variable Account income payments vary with
the investment results of the underlying Funds, and (b) Annuitants may not live
as long as expected.
The Income Plan option selected will affect the dollar amount of each
income payment. For example, if an Income Plan for a Life Income is chosen, the
income payments will be greater than income payments under an Income Plan for a
Life Income with Guaranteed Payments.
If the actual net investment experience of the Variable Account is less
than the assumed investment rate, then the dollar amount of the income payments
will decrease. The dollar amount of the income payments will stay level if the
net investment experience equals the assumed investment rate and the dollar
amount of the income payments will increase if the net investment experience
exceeds the assumed investment rate. For purposes of the Variable Account
income payments, the assumed investment rate is 3 percent. For more detailed
information as to how Variable Account income payments are determined see the
Statement of Additional Information.
20
<PAGE>
FIXED AMOUNT INCOME PAYMENTS
Income payment amounts derived from any monies allocated to Sub-accounts of
the Fixed Account during the accumulation phase are fixed for the duration of
the Income Plan. The fixed amount income payment amount is calculated by
applying the portion of the Contract Value in the Fixed Account on the Payout
Start Date, adjusted by any Market Value Adjustment and less any applicable
premium tax, to the greater of the appropriate value from the income payment
table selected or such other value as we are offering at that time.
INCOME PLANS
The Income Plans include:
INCOME PLAN 1 -- LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as the Annuitant lives. If the
Annuitant dies before the selected number of guaranteed payments have been
made, the Company will continue to pay the remainder of the guaranteed
payments.
INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as either the Annuitant or Joint
Annuitant, named at the time of Income Plan selection, is living. If both
the Annuitant and the Joint Annuitant die before the selected number of
guaranteed payments have been made, the Company will continue to pay the
remainder of the guaranteed payments.
INCOME PLAN 3 -- GUARANTEED NUMBER OF PAYMENTS
The Company will make payments for a specified number of months beginning
on the Payout Start Date. These payments do not depend on the Annuitant's
life. The number of months guaranteed may be from 60 to 360. The
mortality and expense risk charge will be deducted from Variable Account
assets supporting these payments even though the Company does not bear any
mortality risk.
The Owner may change the Income Plan until 30 days before the Payout Start
Date. If an Income Plan is chosen which depends on the Annuitant or Joint
Annuitant's life, proof of age will be required before income payments begin.
Applicable premium taxes will be assessed.
If Income Plan 3 is chosen and the proceeds are derived from the Variable
Account, you may terminate the income payments being made from the Variable
Account at any time and withdraw their value, subject to withdrawal charges.
In the event that an Income Plan is not selected, the Company will make
income payments in accordance with Income Plan 1 with Guaranteed Payments for
120 Months. At the Company's discretion, other Income Plans may be available
upon request. The Company currently uses sex-distinct annuity tables. However,
if legislation is passed by Congress or the states, the Company reserves the
right to use income payment tables which do not distinguish on the basis of sex.
Special rules and limitations may apply to certain qualified contracts.
If the Contract Value to be applied to an Income Plan is less than $2,000,
or if the monthly payments determined under the Income Plan are less than $20,
the Company may pay the Contract Value adjusted by any Market Value Adjustment
and less any applicable taxes, in a lump sum or change the payment frequency to
an interval which results in income payments of at least $20.
21
<PAGE>
DEATH BENEFITS
DEATH BENEFIT PAYABLE
We will pay a death benefit prior to the Payout Start Date on the death of
any Owner or, if the Owner is not a natural person, the death of the Annuitant.
The death benefit is paid to the Owner. This would be a surviving joint Owner
or, if none, the Beneficiary.
If the Annuitant and Joint Annuitant, if applicable, die after the Payout
Start Date, the Company will continue to pay the remainder of any guaranteed
payments to the Owner.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest
of:
(a) the Contract Value on the date the Company receives a complete request
for payment of the death benefit; or
(b) the amount that would have been payable in the event of a full
withdrawal of the Contract Value on the date the Company receives a
complete request for payment of the death benefit; or
(c) the Contract Value on the Death Benefit Anniversary immediately
preceding the date the Company determines the death benefit adjusted by any
purchase payments, withdrawals and charges made between such Death Benefit
Anniversary and the date the Company determines the death benefit. 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 three Death Benefit Anniversaries. The death
benefit will never be less than the sum of all purchase payments less any
amounts previously withdrawn (including income tax withholding).
In addition to the above options, upon purchase of the Contract, the Owner
can select one of the following enhanced death benefit options:
(A) 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 the amount of any partial withdrawals since that
anniversary. Anniversary values will be calculated for each Contract
Anniversary prior to the earlier of: (i) the date we determine the death
benefit, or (ii) the deceased's attained age 75 or 5 years after the date
the Contract was established, if later; or
(B) total purchase payments minus the sum of all partial withdrawals. Each
purchase payment and each partial withdrawal will accumulate daily at rate
equivalent to 5% per year until the earlier of: (i) the date we determine
the death benefit, or (ii) the first day of the month following the
deceased's 75th birthday or 5 years after the issue date, if later.
If neither option is selected by the Owner, the Contract will automatically
include option (A).
The value of the death benefit will be determined at the end of the
Valuation Period during which the Company receives a complete request for
payment of the death benefit, which includes due proof of death.
The Company will not settle any death claim until it receives due proof of
death.
22
<PAGE>
DEATH BENEFIT PAYMENT PROVISIONS
The Owner eligible to receive death benefits has the following options:
1. If the Owner eligible to receive the death benefit is not a
natural person, then the Owner must receive the death benefit in
a lump sum within five years of the Date of Death.
2. Otherwise, within 60 days of the date when the death benefit is
calculated, the Owner may elect to receive the death benefit
under an Income Plan or in a lump sum.
(a) Payments from the Income Plan must begin within one-year of
the Date of Death and must be payable throughout:
- the life of the Owner; or
- a period not to exceed the life expectancy of the
Owner; or
- the life of the Owner with payments guaranteed for a
period not to exceed the life expectancy of the Owner.
(b) Any death benefit payable in a lump sum must be paid within
five years of the date of death. If no election is made,
funds will be distributed at the end of the five year
period.
3. If the surviving spouse of the deceased Owner is the new 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.
CHARGES AND OTHER DEDUCTIONS
DEDUCTIONS FROM PURCHASE PAYMENTS
No deductions are made from purchase payments. Therefore, the full amount
of every purchase payment is invested in the Investment Alternative(s).
WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)
You may withdraw the Contract Value at any time before the earliest of the
Payout Start Date, the death of any Owner or, if the Owner is not a natural
person, the death of the Annuitant.
There are no withdrawal charges on amounts withdrawn up to 10% of the
amount of purchase payments. Amounts withdrawn in excess of this may be subject
to a withdrawal charge. Amounts not subject to a withdrawal charge and not
withdrawn in a Contract Year are not carried over to later Contract Years.
Withdrawal charges, if applicable, will be deducted from the amount paid.
For purposes of calculating the amount of the withdrawal charge,
withdrawals are assumed to come from purchase payments first, beginning with the
oldest payment. Withdrawals made after all purchase payments have been
withdrawn, will not be subject to a withdrawal charge. For partial withdrawals,
the amount of payment
23
<PAGE>
received by the Owner, any withdrawal charge, any applicable taxes and any
Market Value Adjustment, will be deducted from the Contract Value.
Withdrawals in excess of the Free Withdrawal Amount will be subject to a
withdrawal charge as set forth below:
<TABLE>
<CAPTION>
COMPLETE YEARS SINCE
PURCHASE PAYMENT BEING APPLICABLE WITHDRAWAL
WITHDRAWN WAS MADE CHARGE PERCENTAGE
---------------------------------------------------------------------
<S> <C>
0 YEARS.................................... 6%
1 YEAR..................................... 6%
2 YEARS.................................... 5%
3 YEARS.................................... 5%
4 YEARS.................................... 4%
5 YEARS.................................... 4%
6 YEARS.................................... 3%
7 YEARS OR MORE............................ 0%
</TABLE>
Withdrawal charges will be used to pay sales commissions and other
promotional or distribution expenses associated with the marketing of the
Contracts. The Company does not anticipate that the withdrawal charges will
cover all distribution expenses in connection with the Contract.
In addition, federal and state income tax may be withheld from withdrawal
amounts. Certain terminations may also be subject to a federal tax penalty.
See "Federal Tax Matters," page .
---
The Company reserves the right to waive the withdrawal charge with respect
to Contracts issued to employees and registered representatives of any broker-
dealer that has entered into a sales agreement with Allstate Life Financial
Services, Inc. ("ALFS") to sell the Contracts and all wholesalers and their
employees that are under agreement with ALFS to wholesale the Contract. In
addition, the Company will waive any withdrawal charge prior to the Payout Start
Date if at least 30 days after the Contract Date any Owner (or Annuitant if the
Owner is not a natural person) is first confined to a long term care facility or
hospital for at least 90 consecutive days, confinement is prescribed by a
physician and is medically necessary, and the request for a withdrawal and
adequate written proof of confinement are received by us no later than 90 days
after discharge. The withdrawal charge will also be waived on withdrawals taken
to satisfy IRS required minimum distribution rules for this Contract.
CONTRACT MAINTENANCE CHARGE
A contract maintenance charge is deducted annually from the Contract Value
to reimburse the Company for its actual costs in maintaining each Contract and
the Variable Account. The Company guarantees that the amount of this charge
will not exceed $35 per Contract Year over the life of the Contract. This
charge will be waived if the total purchase payments are $50,000 or more on a
Contract Anniversary or if all money is allocated to the Fixed Account on the
Contract Anniversary.
Maintenance costs include but are not limited to expenses incurred in
billing and collecting purchase payments; keeping records; processing death
claims, cash withdrawals, and policy changes; proxy statements; calculating
Accumulation Unit and Annuity Unit values; and issuing reports to Owners and
regulatory agencies. The Company does not expect to realize a profit from this
charge.
On each Contract Anniversary prior to the payout start date, the contract
maintenance charge will be deducted from Sub-accounts of the Variable Account in
the same proportion that the Owner's value in each bears
24
<PAGE>
to the total value in all Sub-accounts of the Variable Account. After the
Payout Start Date, a pro rata share of the annual contract maintenance charge
will be deducted from each income payment. For example, 1/12 of the $35, or
$2.92, will be deducted if there are twelve income payments during the Contract
Year. A full contract maintenance charge will be deducted if the Contract is
terminated on any date other than a Contract Anniversary.
ADMINISTRATIVE EXPENSE CHARGE
The Company will deduct an administrative expense charge which is equal, on
an annual basis, to .10% of the daily net assets you have allocated to the Sub-
accounts of the Variable Account. This charge is designed to cover actual
administrative expenses which exceed the revenues from the contract maintenance
charge. The Company does not intend to profit from this charge. The Company
believes that the administrative expense charge and contract maintenance charge
have been set at a level that will recover no more than the actual costs
associated with administering the Contracts. There is no necessary relationship
between the amount of administrative charge imposed on a given Contract and the
amount of expenses that may be attributable to that Contract.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct a mortality and expense risk charge which is equal,
on an annual basis, to 1.35% of the daily net assets you have allocated to the
Sub-accounts of the Variable Account. The Company estimates that .95% is
attributable to the assumption of mortality risks and .40% is attributable to
the assumption of expense risks. The Company guarantees that the amount of this
charge will not increase over the life of the Contract.
The mortality risk arises from the Company's guarantee to cover all death
benefits and to make income payments in accordance with the Income Plan selected
and the Income Payment Tables.
The expense risk arises from the possibility that the contract maintenance
and administrative expense charge, both of which are guaranteed not to increase,
will be insufficient to cover actual administrative expenses.
If the mortality and expense risk charge is insufficient to cover the
Company's mortality costs and excess expenses, the Company will bear the loss.
If the charge is more than sufficient, the Company will retain the balance as
profit. The Company currently expects a profit from this charge. Any such
profit, as well as any other profit realized by the Company and held in its
general account (which supports insurance and annuity obligations), would be
available for any proper corporate purpose, including, but not limited to,
payment of distribution expenses.
TAXES
The Company will deduct applicable state premium taxes or other similar
policyholder taxes relative to the Contract (collectively referred to as
"premium taxes") either at the Payout Start Date, or when a total withdrawal
occurs. Current premium tax rates range from 0 to 3.5%. The Company reserves
the right to deduct premium taxes from the purchase payments.
At the Payout Start Date, the charge for premium taxes will be deducted
from each Investment Alternative in the proportion that the Owner's value in the
Investment Alternative bears to the total Contract Value.
25
<PAGE>
TRANSFER CHARGES
The Company reserves the right to assess a $10 charge on each transfer in
excess of twelve per Contract Year, excluding transfers through Dollar Cost
Averaging and Automatic Fund Rebalancing. The Company is presently waiving this
charge.
FUND EXPENSES
A complete description of the expenses and deductions from the Funds is
found in the prospectus for the Fund Series. This prospectus is accompanied by
the prospectus for the Fund Series.
GENERAL MATTERS
BENEFICIARY
Subject to the terms of any irrevocable Beneficiary designation, the Owner
may change the Beneficiary at any time by notifying the Company in writing. Any
change will be effective at the time it is signed by the Owner, whether or not
the Annuitant is living when the change is received by the Company. The Company
will not, however, be liable as to any payment or settlement made prior to
receiving the written notice.
Unless otherwise provided in the Beneficiary designation, if any
Beneficiary predeceases the Owner, the new Beneficiary will be: the Owner's
spouse if living; otherwise, the Owner's children, equally, if living;
otherwise, the Owner's estate. Multiple Beneficiaries may be named. Unless
otherwise provided in the Beneficiary designation, if more than one Beneficiary
survives the Owner, the surviving Beneficiaries will share equally in any
amounts due.
ASSIGNMENTS
The Company will not honor an assignment of an interest in a Contract as
collateral or security for a loan. Otherwise, the Owner may assign benefits
under the Contract prior to the Payout Start Date. No Beneficiary may assign
benefits under the Contract until they are due. No assignment will bind the
Company unless it is signed by the Owner and filed with the Company. The
Company is not responsible for the validity of an 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.
DELAY OF PAYMENTS
Payment of any amounts due from the Variable Account under the Contract
will occur within seven days, unless:
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 Securities and Exchange
Commission; or
26
<PAGE>
3. The Securities and Exchange Commission permits delay for the protection
of the Owners.
Payments or transfers from the Fixed Account may be delayed for up to 6
months.
MODIFICATION
The Company may not modify the Contract without the consent of the Owner
except to make the Contract meet the requirements of the Investment Company Act
of 1940, or to make the Contract comply with any changes in the Internal Revenue
Code or to make any changes required by the Code or by any other applicable law.
CUSTOMER INQUIRIES
The Owner or any persons interested in the Contract may make inquiries
regarding the Contract by calling or writing your representative or:
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
1-800/776-6978
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. THE
COMPANY 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 the individual circumstances of each person. 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, an annuity contract owner is not taxed on increases in the
Contract Value until a distribution occurs. This rule applies only where (1)
the owner is a natural person, and (2) the issuing insurance company, instead of
the annuity owner, is considered the owner for federal income tax purposes of
any separate account assets funding the contract.
NON-NATURAL OWNERS
As a general rule, annuity contracts owned by non-natural persons are not
treated as annuity contracts for federal income tax purposes and the income on
such contracts is taxed as ordinary income received or accrued by the owner
during the taxable year. There are several exceptions to the general rule for
contracts owned by non-natural persons which are discussed in the Statement of
Additional Information.
27
<PAGE>
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" in
accordance with the standards provided in the Treasury regulations. If the
investments in the Variable Account are not adequately diversified, then the
Contract will not be treated as an annuity contract for federal income tax
purposes and the Owner will be taxed on the excess of the Contract Value over
the investment in the Contract. Although the Company does not have control over
the Funds or their investments, the Company expects the Funds to meet the
diversification requirements.
INVESTOR CONTROL
In connection with the issuance of the regulations on the adequate
diversification standards, the Department of the Treasury announced that the
regulations do not provide guidance concerning the extent to which contract
owners may direct their investments among Sub-accounts of a variable account.
The Internal Revenue Service has previously stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the owner possesses 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, Treasury announced that guidance would
be issued in the future regarding the extent that owners could direct their
investments among Sub-accounts without being treated as owners of the underlying
assets of the Variable Account. It is possible that Treasury's position, when
announced, may adversely affect the tax treatment of existing contracts. The
Company, therefore, reserves the right to modify the Contract as necessary to
attempt to prevent the Owner from being considered the federal tax owner of the
assets of the Variable Account.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal under a non-qualified contract, amounts
received are taxable to the extent the contract value before the withdrawal
exceeds the investment in the contract. In the case of 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, can be excluded from income. In the case of 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. If an
individual transfers an annuity contract without full and adequate consideration
to a person other than the individual's spouse (or to a former spouse incident
to a divorce), the owner will be taxed on the difference between the contract
value and the investment in the contract at the time of transfer. Other than in
the case of certain qualified contracts, any amount received 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 payments received from an
annuity contract provides for the return of the owner's investment in the
contract in equal tax-free amounts over the payment period. The balance of each
payment received is taxable. In the case of 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. In the case of 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.
TAXATION OF ANNUITY DEATH BENEFITS
Amounts may be distributed from an annuity contract because of the death of
an owner or annuitant. Generally, such amounts are includible 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.
28
<PAGE>
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any premature
distribution from a non-qualified annuity contract. The penalty tax generally
applies to any distribution made prior to the owner attaining age 59 1/2.
However, there should be no penalty tax on distributions to owners (1) made on
or after the owner attains age 59 1/2; (2) made as a result of the owner's death
or disability; (3) made in substantially equal periodic payments over life or
life expectancy; or (4) made under an immediate annuity. Similar rules apply
for distributions under certain qualified contracts. Please see the Statement
of Additional Information for a discussion of other situations in which the
penalty tax may not apply.
AGGREGATION OF ANNUITY CONTRACTS
All non-qualified annuity contracts issued by the Company (or its
affiliates) to the same 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
Annuity contracts may be used as investments with certain tax qualified
plans such as: (1) Individual Retirement Annuities under Section 408(b) of the
Code; (2) Simplified Employee Pension Plans under Section 408(k) of the Code;
(3) Tax Sheltered Annuities under Section 403(b) of the Code; (4) Corporate and
Self Employed Pension and Profit Sharing Plans; and (5) State and Local
Government and Tax-Exempt Organization Deferred Compensation Plans. In the case
of certain tax 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 Code provides for tax-deferred retirement savings
plans for employees of certain non-profit and educational organizations. In
accordance with the requirements of Section 403(b), any annuity 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 after the employee attains age 59 1/2,
separates from service, dies, becomes disabled or on account of hardship
(earnings on salary reduction contributions may not be distributed on the
account of hardship).
INCOME TAX WITHHOLDING
The Company is required to withhold federal income tax at a rate of 20% on
all "eligible rollover distributions" unless an individual elects to make a
"direct rollover" of such amounts to another qualified plan or Individual
Retirement Account or Annuity (IRA). 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 the life (joint lives) of the participant (and beneficiary). For any
distributions from non-qualified annuity contracts, or distributions from
qualified contracts which are not considered eligible rollover distributions,
the Company may be required to withhold federal and state income taxes unless
the recipient elects not to have taxes withheld and properly notifies the
Company of such election.
DISTRIBUTION OF THE CONTRACTS
Allstate Life Financial Services, Inc. ("ALFS"), 3100 Sanders Road,
Northbrook Illinois, a wholly owned subsidiary of Allstate Life, acts as the
principal underwriter of the Contracts. ALFS is registered as a broker-dealer
29
<PAGE>
under the Securities Exchange Act of 1934 and became a member of the National
Association of Securities Dealers, Inc. on June 30, 1993. Contracts are sold
by registered representatives of broker-dealers or bank employees who are
licensed insurance agents appointed by the Company, either individually or
through an incorporated insurance agency. 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.
Commissions paid may vary, but in aggregate are not anticipated to exceed
6.75% of any purchase payment. In addition, under certain circumstances,
certain sellers of the Contracts may be paid persistency bonuses which will take
into account, among other things, the length of time purchase payments have been
held under a Contract, and Contract Values. A persistency bonus is not expected
to exceed 1.00%, on an annual basis, of the Contract Values considered in
connection with the bonus. These commissions are intended to cover distribution
expenses.
The underwriting agreement with ALFS provides for indemnification of ALFS
by the Company for liability to Owners arising out of services rendered or
Contracts issued.
VOTING RIGHTS
The Owner or anyone with a voting interest in the Sub-account of the
Variable Account may instruct the Company on how to vote at shareholder meetings
of the Fund Series. The Company will solicit and cast each vote according to the
procedures set up by the Fund Series and to the extent required by law. The
Company reserves the right to vote the eligible shares in its own right, if
subsequently permitted by the Investment Company Act of 1940, its regulations or
interpretations thereof.
Fund shares as to which no timely instructions are received will be voted
in proportion to the voting instructions which are received with respect to all
Contracts participating in that Sub-account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro-rata basis to reduce the
votes eligible to be cast.
Before the Payout Start Date, the Owner holds the voting interest in the
Sub-account of the Variable Account (The number of votes for the Owner will be
determined by dividing the Contract Value attributable to a Sub-account by the
net asset value per share of the applicable eligible Fund.)
After the Payout Start Date, the person receiving income payments has the
voting interest. After the Payout Start Date, the votes decrease as income
payments are made and as the reserves for the Contract decrease. That person's
number of votes will be determined by dividing the reserve for such Contract
allocated to the applicable Sub-account by the net asset value per share of the
corresponding eligible Fund.
30
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the Company should be read in
conjunction with the financial statements and notes thereto included in this
Prospectus beginning on page .
--
GLENBROOK LIFE AND ANNUITY COMPANY
SELECTED FINANCIAL DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year-End Financial Data 1994 1993 1992*
- ----------------------- -------- -------- -------
<S> <C> <C> <C>
For The Years Ended December 31:
Income Before Taxes. . . . . . . . . . $ 2,017 $ 836 $ 337
Net Income . . . . . . . . . . . . . . 1,294 529 212
As of December 31:
Total Assets(1). . . . . . . . . . . . 751,680 169,361 12,183
<FN>
(1)The Company adopted SFAS No. 115, "Accounting for Certain Instruments in
Debt and Equity Securities" on December 31, 1993. See Note 3 to the
Financial Statements.
* For the period from April 1, 1992 (date of acquisition) to December 31,
1992.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
AND FOR THE PERIOD FROM APRIL 1, 1992
(DATE OF ACQUISITION) TO DECEMBER 31, 1992
GENERAL
Glenbrook Life and Annuity Company (the "Company") is wholly owned by
Allstate Life Insurance Company ("Allstate Life"), which is wholly owned by
Allstate Insurance Company, a wholly-owned subsidiary of The Allstate
Corporation (the "Corporation").
The Company issues single and flexible premium fixed annuity contracts. In
addition the Company issues flexible premium deferred variable annuity
contracts.
Effective December 31, 1993, the Company entered into an assumption
reinsurance treaty with an affiliate, Glenbrook Life Insurance Company, to
reinsure certain annuity contracts. Per the terms of the agreement, the Company
assumed all of Glenbrook Life Insurance Company's liability under such
contracts.
The Company reinsures all of its insurance in force, including the business
assumed from Glenbrook Life Insurance Company, with Allstate Life. Accordingly,
the results of operations with respect to applications received and contracts
issued by the Company are not reflected in the Company's financial statements.
The amounts reflected in the Company's financial statements relate only to the
investment of those assets of the Company that are not transferred to Allstate
Life under the reinsurance agreement.
31
<PAGE>
RESULTS OF OPERATIONS
Net investment income was $2.0 million in 1994 compared with $836 thousand
and $405 thousand in 1993 and 1992, respectively. Invested assets grew $38.5
million in 1994 due entirely to a capital contribution from Allstate Life during
the third quarter of 1994.
Net income was $1.3 million compared to $529 thousand in 1993 and $212
thousand in 1992. The increase in 1994 is due to the increase in investment
income.
LIQUIDITY AND CAPITAL RESOURCES
Under the terms of intercompany reinsurance agreements, assets of the
Company that relate to insurance in-force, except in the case of certain
qualified annuity contracts, are transferred to Allstate Life. Therefore, the
funds necessary to support the operations of the Company are generally provided
by Allstate Life and the invested assets supporting contract liabilities are,
with the same exception, held by Allstate Life.
During the third quarter of 1994, the Company received a capital
contribution of $40 million from Allstate Life.
SEGMENT INFORMATION
The Company's operations consist of one business segment which is the
issuance of insurance and annuity products.
RESERVES
Under the Company's reinsurance agreement with Allstate Life, the Company
reinsures all reserve liabilities with Allstate Life except for the variable
portion of variable contracts and certain qualified annuity contracts. The
Company's variable contract assets and liabilities are held in a legally
segregated unitized separate account and are retained by the Company. The
transactions related to variable contracts such as expenses and benefits are
transferred to Allstate Life.
INVESTMENTS
The Company generally holds its fixed income securities for the long term,
but has classified them as "available for sale" and carries them in the
statement of financial position at fair value, to allow maximum flexibility in
portfolio management.
PENDING ACCOUNTING STANDARDS
In May, 1993, the Financial Accounting Standards Board ("FASB") issued FASB
No. 114, "Accounting by Creditors for Impairment of a Loan." The statement,
which must be adopted by 1995, requires that impairment loans be measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate. The impact on net income and financial condition of
adopting this statement is not expected to be significant.
32
<PAGE>
COMPETITION
The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other entities
competing in the sale of insurance and annuities. There are approximately 2,000
stock, mutual and other types of insurers in business in the United States. A.M.
Best Company assigns A+ (Superior) to Allstate Life which automatically
reinsures all net business of the Company. A.M. Best Company also assigns the
Company the rating of A+(r) because the Company automatically reinsures all
business with Allstate Life. Standard & Poor's Insurance Rating Services
assigns AA+ (Excellent) to Glenbrook Life's claims-paying ability and Moody's
assigns an Aa3 (Excellent) financial stability rating to Glenbrook Life.
EMPLOYEES
As of December 31, 1994, Allstate Life has approximately 31 employees at
its home office in Northbrook, Illinois who work primarily on the Company's
matters.
PROPERTIES
The Company occupies office space provided by its parent, Allstate Life, in
Northbrook, Illinois. Expenses associated with these offices are allocated on a
direct and indirect basis to the Company.
STATE AND FEDERAL REGULATION
The insurance business of the Company is subject to comprehensive and
detailed regulation and supervision throughout the United States.
The laws of the various jurisdictions establish supervisory agencies with
broad administrative powers with respect to licensing to transact business,
overseeing trade practices, licensing agents, approving policy forms,
establishing reserve requirements, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender values,
prescribing the form and content of required financial statements and regulating
the type and amounts of investments permitted. Each insurance company is
required to file detailed annual reports with supervisory agencies in each of
the jurisdictions in which it does business and its operations and accounts are
subject to examination by such agencies at regular intervals.
Under insurance guaranty fund law, in most states, insurers doing business
therein can be assessed up to prescribed limits for contract owner losses
incurred as a result of company insolvencies. The amount of any future
assessments on the Company under these laws cannot be reasonably estimated. Most
of these laws do provide, however, that an assessment may be excused or deferred
if it would threaten an insurer's own financial strength.
In addition, several states, including Illinois, regulate affiliated groups
of insurers, such as the Company and its affiliates, under insurance holding
company legislation. Under such laws, intercompany transfers of assets and
dividend payments from insurance subsidiaries may be subject to prior notice or
approval, depending on the size of such transfers and payments in relation to
the financial positions of the companies.
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit regulation,
controls on medical
33
<PAGE>
care costs, removal of barriers preventing banks from engaging in the securities
and insurance business, tax law changes affecting the taxation of insurance
companies, the tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles, and proposed
legislation to prohibit the use of gender in determining insurance and pension
rates and benefits.
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The directors and executive officers are listed below, together with
information as to their ages, dates of election and principal business
occupations during the last five years (if other than their present business
occupations).
LOUIS G. LOWER, II, 50, Chief Executive Officer (1995)* and Chairman of the
Board (1992)*
He is also President and Chairman of the Board of Directors of Allstate
Life Insurance Company, Northbrook Life Insurance Company, Glenbrook Life
Insurance Company, The Northbrook Corporation and Allstate Life Insurance
Company of New York; Chairman of the Board of Directors and Chief Executive
Officer of Surety Life Insurance Company and Lincoln Benefit Life Company;
Chairman of the Board of Directors of Allstate Settlement Corporation; Director
and Senior Vice President of Allstate Insurance Company; Vice President of the
Allstate Foundation; and Director of Allstate Life Financial Services, Inc.,
Allstate Indemnity Company, Allstate Property and Casualty Insurance Company,
Deerbrook Insurance Company, Northbrook Indemnity Company, Northbrook National
Insurance Company, Northbrook Property and Casualty Insurance Company, Allstate
International, Inc. and Saison Life Insurance Company, Ltd. Prior to 1990,
he was Executive Vice President of Allstate Life Insurance Company. From
1992 to 1995, in addition to his position as Chairman of the Board, he was
also President of the Company.
MARLA G. FRIEDMAN, 41, President, Chief Operating Officer (1995)* and Director
(1992)*
She is also Vice President and Director of Allstate Life Insurance Company,
Northbrook Life Insurance Company, Glenbrook Life Insurance Company and The
Northbrook Corporation; and Director of Allstate Settlement Corporation and
Allstate Life Financial Services, Inc. Prior to 1995, she was Vice President
and Director of Glenbrook Life and Annuity Company and prior to 1992, she was
Vice President and Director of Allstate Life Insurance Company and Northbrook
Life Insurance Company. Prior to 1995, she was also Vice President of the
Company.
MICHAEL J. VELOTTA, 49, Vice President, Secretary, General Counsel, and Director
(1993)*
He is also Vice President, Secretary, General Counsel and Director of
Allstate Life Insurance Company, Northbrook Life Insurance Company, Glenbrook
Life Insurance Company and Allstate Life Insurance Company of New York;
Secretary and Director of Allstate Settlement Corporation, Allstate Life
Financial Services, Inc. and The Northbrook Corporation; and Director of Surety
Life Insurance Company and Lincoln Benefit Life Company. Prior to 1993, he was
Vice President and Assistant General Counsel of Allstate Insurance Company.
MYRON J. RESNICK, 63, Treasurer and Director (1992)*
He is also Senior Vice President, Chief Investment Officer and Director of
Allstate Indemnity Company, Allstate Insurance Company, Allstate Property and
Casualty Insurance Company, Deerbrook Insurance Company, First Assurance
Company, Northbrook Indemnity Company, Northbrook National Insurance Company,
Northbrook Property and Casualty Insurance Company; Director, Senior Vice
President and Treasurer of AEI Group, Inc., Allstate International Inc.,
Allstate Motor Club, Inc., Direct Marketing Center Inc., Enterprises Services
Corporation and Forestview Mortgage Insurance Company; Trustee, Vice President
and Treasurer of The Allstate Foundation; Vice President, Treasurer and Director
of Allstate Insurance Company of Canada and Allstate Life Insurance Company of
Canada; Vice President and Treasurer of the Allstate Corporation and Allstate
Texas Lloyd's, Inc.; Treasurer and Secretary of General Underwriters Agency,
Inc.; Treasurer and Director of Allstate Life Insurance Company and Northbrook
Life Insurance
34
<PAGE>
Company; Treasurer of Tech-Cor, Inc., Allstate Life Insurance Company of New
York, Glenbrook Life Insurance Company, Allstate Life Financial Services, Inc.
and The Northbrook Corporation; and a Director of Allstate Investment Management
Company, American Pioneer Title Insurance Company, PMI Group, Inc., Allstate
Automobile and Fire Insurance Company, Ltd., Allstate Reinsurance Co., Limited,
and Saison Life Insurance Co., Ltd. Prior to 1992, he held all of the above
listed positions except the current position with the Company.
PETER H. HECKMAN, 49, Vice President and Director (1992)*
He is also Vice President and Director of Allstate Life Insurance Company,
Northbrook Life Insurance Company, Glenbrook Life Insurance Company, Allstate
Settlement Corporation and Allstate Life Insurance Company of New York; Vice
President and Controller of The Northbrook Corporation; and Director of Surety
Life Insurance Company and Lincoln Benefit Life Company. Prior to 1992, he was
Vice President and Director of Allstate Life Insurance Company, Northbrook Life
Insurance Company, Glenbrook Life Insurance Company and Allstate Life Insurance
Company of New York.
G. CRAIG WHITEHEAD, 49, Assistant Vice President (1992)* and Director (1995)*
He is also Assistant Vice President and Director of Glenbrook Life
Insurance Company and Assistant Vice President of Allstate Life Insurance
Company. Prior to 1992, he was an Assistant Vice President of Glenbrook Life
Insurance Company and Allstate Life Insurance Company and prior to 1991, he was
a director in the strategic planning area of Allstate Insurance Company.
BARRY S. PAUL, 40, Assistant Vice President and Controller (1992)*
He is also Assistant Vice President and Controller of Allstate Life
Insurance Company, Northbrook Life Insurance Company, Allstate Life Insurance
Company of New York and Glenbrook Life Insurance Company. Prior to 1991, he was
Assistant Vice President of Allstate Life Insurance Company, Northbrook Life
Insurance Company and Allstate Life Insurance Company of New York.
* Date elected/appointed to current office.
EXECUTIVE COMPENSATION
Executive officers of the Company also serve as officers of Allstate Life
and receive no compensation directly from the Company. Some of the officers also
serve as officers of other companies affiliated with the Company. Allocations
have been made as to each individual's time devoted to his or her duties as an
executive officer of the Company. However, no officer's compensation allocated
to the Company exceeded $100,000 in 1994. The allocated cash compensation of all
officers of the Company as a group for services rendered in all capacities to
the Company during 1994 totalled $9,216.31. Directors of the Company receive no
compensation in addition to their compensation as employees of the Company.
35
<PAGE>
SUMMARY COMPENSATION TABLE
(Allstate Life Insurance Co.)
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------ -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Underlying LTIP All Other
Compensation Stock Options/ Payouts
Compensation
Name and Principal Position Year Salary($) Bonus($) $ Award(s) SARs(#) ($) ($)
- ------------------------------ ---- -------- -------- -------- -------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louis G. Lower, II . . . . . . 1994 $389,050 $ 26,950 $ 25,889 $170,660 N/A 0 $ 1,890(1)
President and Chairman 1993 $374,200 $294,683 $ 52,443 $318,625 N/A $ 13,451 $ 6,296(1)
of the Board of Directors 1992 $356,625 0 $ 11,981 $206,388 N/A $ 173,561 $ 2,095(1)
<FN>
(1) Amount received by Mr. Lower which represents the value allocated to his
account from employer contributions under The Savings and Profit Sharing
Fund of Sears employees.
</TABLE>
Shares of the Company and Allstate Life are not directly owned by any
director or officer of the Company. The percentage of shares of The Allstate
Corporation beneficially owned by any director, and by all directors and
officers of the Company as a group, does not exceed one percent of the class
outstanding.
LEGAL PROCEEDINGS
From time to time the Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary
damages are asserted. Management, after consultation with legal counsel, does
not anticipate the ultimate liability arising from such pending or threatened
litigation to have a material effect on the financial condition of the Company.
EXPERTS
The financial statements and financial statement schedule of the Company
included in this prospectus have been audited by Deloitte & Touche LLP, Two
Prudential Plaza, 180 North Stetson Avenue, Chicago, Illinois, 60601-6779
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the federal securities laws applicable to
the issue and sale of the Contracts have been passed upon by Routier, Mackey and
Johnson, P.C., of Washington, D.C. All matters of Illinois law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue such Contracts under Illinois insurance law, have been passed upon by
Michael J. Velotta, General Counsel of the Company.
36
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS
Page
----
Additions, Deletions or Substitutions of Investments . . . . . . . . . . . . . .
Reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers) . . . . . . . .
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation of Annuity Unit Values . . . . . . . . . . . . . . . . . . . . .
General Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Safekeeping of the Variable Account's Assets . . . . . . . . . . . . . . . .
Reinsurance Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Glenbrook Life and Annuity Company . . . . . . . . . . . . . . .
Exceptions to the Non-Natural Owner Rule . . . . . . . . . . . . . . . . . .
Penalty Tax on Premature Distributions . . . . . . . . . . . . . . . . . . .
IRS Required Distribution at Death Rules . . . . . . . . . . . . . . . . . .
Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Types of Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable Account Financial Statements. . . . . . . . . . . . . . . . . . . . . .
<PAGE>
ORDER FORM
Please send me a copy of the most recent Statement of Additional Information for
the Glenbrook Life and Annuity Company Separate Account A.
- ----------- -----------------------------------
(Date) (Name)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
Send to:
Glenbrook Life and Annuity Company
Post Office Box 94042
Palatine, Illinois 60094
Attention: VA Customer Service Unit
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Sub-account's Guarantee
Period for the week preceding the establishment of the Sub-account.
N = the number of whole and partial years from the date we receive the
withdrawal, or death benefit request, or from the Payout Start Date to the
end of the Sub-account's Guarantee Period.
J = the Treasury Rate for a maturity of length N for the week preceding the
receipt of the withdrawal request, death benefit request, or income payment
request. If a Note with a maturity of length N is not available, a
weighted average will be used. If N is one year or less, J will be the 1-
year Treasury Rate.
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 * (I--J) * N
Any transfer, withdrawal, or death benefit paid from a Sub-account of the Fixed
Account will be multiplied by the Market Value Adjustment factor to determine
the Market Value Adjustment.
ILLUSTRATION
EXAMPLE OF MARKET VALUE ADJUSTMENT
<TABLE>
<S> <C>
Purchase Payment: $10,000
Guarantee Period: 5 years
Interest Rate: 5.50%
Full Withdrawal: End of Contract Year 3
</TABLE>
NOTE: This illustration assumes that premium taxes were not applicable.
EXAMPLE 1: (ASSUMES DECLINING INTEREST RATES)
Step 1: Calculate Account Value at End of Contract Year 3:
= 10,000.00 * (1.055)(3) = $11,742.41
Step 2: Calculate the Withdrawal Charge:
= .05 * (10,000.00) = $500.00
<PAGE>
Step 3: Calculate the Market Value Adjustment:
I= 5.50%
J= 5.00%
N = 730 DAYS = 2
--------
365 days
Market Value Adjustment Factor: .9 * (I--J) * N
= .9 * (.055 - .05) * 2 = .009
Market Value Adjustment = Factor * Amount Subject to Market Value Adjustment:
= .009 * (11,742.41 - 10% (10,000.00) = $96.68
Step 4: Calculate The Amount Received by Customers as a Result of Full
Withdrawal at the end of Contract Year 3:
= 11,742.41 - 500.00 + 96.68 = $11,339.09
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1: Calculate Account Value at End of Contract Year 3:
= 10,000.00 * (1.055)(3) = $11,742.41
Step 2: Calculate the Withdrawal Charge:
= .05 * (10,000.00) = $500.00
Step 3: Calculate the Market Value Adjustment:
I= 5.50%
J= 6.00%
N = 730 DAYS =2
--------
365 days
Market Value Adjustment Factor: .9 * (I--J) * N
= .9 * (.055 - .06) * (2) = -.009
Market Value Adjustment = Factor * Amount Subject to Market Value Adjustment
= -.009 * ($11,742.41 - 10% (10,000.00)) = -96.68
Step 4: Calculate The Net Withdrawal Value at End of Contract Year 3:
= 11,742.41 - 500.00 - 96.68 = $11,145.73
<PAGE>
Registration No. 33-
STATEMENT OF ADDITIONAL INFORMATION
GLENBROOK LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT A
OFFERED BY
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, IL 60062
1-800/776-6978
INDIVIDUAL AND GROUP FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACTS
This Statement of Additional Information supplements the information in the
prospectus for the Individual and Group Flexible Premium Deferred Variable
Annuity Contract offered by Glenbrook Life and Annuity Company ("Company"), a
wholly owned subsidiary of Allstate Life Insurance Company. The Contract is
primarily designed to aid individuals in long-term financial planning and it can
be used for retirement planning regardless of whether the plan qualifies for
special federal income tax treatment. The prospectus may be obtained from
Glenbrook Life and Annuity Company by writing or calling the address or
telephone number listed above.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT
The prospectus, dated , 1995, has been filed with the
United States Securities and Exchange Commission
DATED , 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additions, Deletions or Substitutions of Investments . . . . . . . . . . . . . .
Reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers). . . . . . . .
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation of Annuity Unit Values. . . . . . . . . . . . . . . . . . . . .
General Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Safekeeping of the Variable Account's Assets. . . . . . . . . . . . . . . .
Federal Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Glenbrook Life and Annuity Company. . . . . . . . . . . . . . .
Exceptions to the Non-Natural Owner Rule. . . . . . . . . . . . . . . . . .
Penalty Tax on Premature Distributions . . . . . . . . . . . . . . . . . .
IRS Required Distribution at Death Rules. . . . . . . . . . . . . . . . . .
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Types of Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . .
Variable Account Financial Statements. . . . . . . . . . . . . . . . . . . . . .
</TABLE>
2
<PAGE>
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
The Company retains the right, subject to any applicable law, to make
additions to, deletions from or substitutions for the Fund shares held by any
Sub-account of the Variable Account. The Company reserves the right to
eliminate the shares of any of the Funds and to substitute shares of another
Fund of the Fund Series, or of another open-end, registered investment company,
if the shares of the Fund are no longer available for investment, or if, in the
Company's judgment, investment in any Fund would become inappropriate in view of
the purposes of the Variable Account. Substitutions of shares attributable to
an Owner's interest in a Sub-account will not be made until the Owner has been
notified of the change, and until the Securities and Exchange Commission has
approved the change, to the extent such notification and approval is required by
the Investment Company Act of 1940. Nothing contained in this Statement of
Additional Information shall prevent the Variable Account from purchasing other
securities for other series or classes of contracts, or from effecting a
conversion between series or classes of contracts on the basis of requests made
by Owners.
The Company may also establish additional Sub-accounts or series of Sub-
accounts of the Variable Account. Each additional Sub-account would purchase
shares in a new Fund of the Fund Series or in another mutual fund. New Sub-
accounts may be established when, in the sole discretion of the Company,
marketing needs or investment conditions warrant. Any new Sub-accounts offered
in conjunction with the Contract will be made available to existing Owners on a
basis to be determined by the Company. The Company may also eliminate one or
more Sub-accounts if, in its sole discretion, marketing, tax or investment
conditions so warrant.
In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in the Contract as may be necessary
or appropriate to reflect such substitution or change. If deemed to be in the
best interests of persons having voting rights under the policies, the Variable
Account may be operated as a management company under the Investment Company Act
of 1940 or it may be deregistered under such Act in the event such registration
is no longer required.
REINVESTMENT
All dividends and capital gains distributions from the Funds are
automatically reinvested in shares of the distributing Fund at their net asset
value.
THE CONTRACT
PURCHASE OF CONTRACTS
The Contracts are offered to the public through brokers as well as banks
licensed under the federal securities laws and state insurance laws. The
Contracts are distributed through the principal underwriter for the Variable
Account, Allstate Life Financial Services, Inc., an affiliate of Glenbrook Life
and Annuity Company. The offering of the Contracts is continuous and the
Company does not anticipate discontinuing the offering of the Contracts.
However, the Company reserves the right to discontinue the offering of the
Contracts.
3
<PAGE>
PERFORMANCE DATA
From time to time the Variable Account may publish advertisements
containing performance data relating to its Sub-accounts. The performance data
for the Sub-accounts (other than for the AIM V.I. Money Market Sub-account) will
always be accompanied by total return quotations. Performance figures used by
the Variable Account are based on actual historical performance of its Sub-
accounts for specified periods, and the figures are not intended to indicate
future performance. The Variable Account may also disclose yield, standard
total return, and non-standard total return for periods prior to the date that
the Variable Account commenced operations. For periods prior to the date the
Variable Account commenced operations, performance information for the Sub-
accounts will be calculated based on the performance of the underlying Funds and
the assumption that the Sub-accounts were in existence for the same periods as
those of the underlying Funds, with a level of charges equal to those currently
assessed against the Sub-accounts.
A Sub-account's "average annual total return" represents an
annualization of the Sub-account's total return over a particular period and is
computed by finding the annual percentage rate which, when compounded annually,
will accumulate a hypothetical $1,000 Purchase Payment to the redeemable value
at the end of the one, five or ten year period, or for a period from the date of
commencement of the Sub-account's operations, if shorter than any of the
foregoing. The average annual total return is obtained by dividing the ending
redeemable value, after deductions for any Withdrawal Charges or Contract
Maintenance Charges imposed on the Contracts by the Variable Account, by the
initial hypothetical $1,000 Purchase Payment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and subtracting 1 from
the result.
The Withdrawal Charges assessed upon redemption are computed as
follows: no Withdrawal Charge is assessed on 10% of the Contract Value, as
calculated based on the date of the first withdrawal during the Contract Year.
Withdrawal Charges are charged on the amount of redemption equal to the Purchase
Payment, reduced by the amount entitled to the 10% exception, if any. The
remaining amount of the redemption, if any, is not assessed a Withdrawal Charge.
The Withdrawal Charge Schedule specifies rates based on the number of complete
years since each Purchase Payment was made. One rate is specified for Purchase
Payments made in the current Contract Year, another rate for Purchase Payments
made in the prior Contract Year, another rate for Purchase Payments made in the
second prior Contract Year, and so on until a rate for Purchase Payments made in
the seventh prior Contract Year or prior to it is reached. For a one year
total return calculation the second rate, (i.e., the rate for Purchase Payments
made in the prior complete year since Purchase Payment being withdrawn was
made), is assessed. The Contract Maintenance Charge ($35 per contract) used in
the total return calculation is normally prorated using the following method:
The total amount of annual Contract fees collected during the year is divided by
the total average net assets of all the Sub-accounts. The resulting percentage
is then multiplied by the ending Contract Value.
In addition, the Variable Account may advertise the total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculations would not reflect deductions
for Withdrawal Charges which may be imposed on the Contracts by the Variable
Account which, if reflected, would reduce the performance quoted. The formula
for computing such total return quotations involves a per unit change
calculation. This calculation is based on the Accumulation Unit value at the
end of the defined period divided by the Accumulation Unit value at the
beginning of such period, minus 1. The periods included in such advertisements
are "year-to-date" (prior calendar year end to the day of the advertisement);
"year to most recent quarter" (prior calendar year end to the end of the most
recent quarter); "the prior calendar year"; "'n' most recent Calendar Years";
and "Inception (commencement of the Sub-account's operation) to date" (day of
the advertisement).
The Variable Account may also advertise the performance of the Sub-
accounts relative to certain performance rankings and indexes compiled by
independent organizations, such as: (a) Lipper Analytical Services, Inc.; (b)
the Standard & Poor's 500 Composite Stock Price Index ("S & P 500"); (c) A.M.
Best Company; (d) Bank Rate Monitor; and (e) Morningstar.
4
<PAGE>
TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS)
The Company accepts Purchase Payments which are the proceeds of a
Contract in a transaction qualifying for a tax-free exchange under Section 1035
of the Internal Revenue Code. Except as required by federal law in calculating
the basis of the Contract, the Company does not differentiate between Section
1035 Purchase Payments and non-Section 1035 Purchase Payments.
The Company also accepts "rollovers" and transfers from Contracts
qualifying as tax-sheltered annuities ("TSAs"), individual retirement annuities
or accounts ("IRAs"), or any other Qualified Contract which is eligible to
"rollover" into an IRA. The Company differentiates among Non-Qualified
Contracts, TSAs, IRAs and other Qualified Contracts to the extent necessary to
comply with federal tax laws. For example, the Company restricts the
assignment, transfer or pledge of TSAs and IRAs so the Contracts will continue
to qualify for special tax treatment. An Owner contemplating any such exchange,
rollover or transfer of a Contract should contact a competent tax adviser with
respect to the potential effects of such a transaction.
PREMIUM TAXES
Applicable premium tax rates depend on the Owner's state of residency
and the insurance laws and status of the Company in those states where premium
taxes are incurred. Premium tax rates may be changed by legislation,
administrative interpretations or judicial acts.
TAX RESERVES
The Company does not establish capital gains tax reserves for the Sub-
account nor deduct charges for tax reserves because the Company believes that
capital gains attributable to the Variable Account will not be taxable. However,
the Company reserves the right to deduct charges to establish tax reserves for
potential taxes on realized or unrealized capital gains.
INCOME PAYMENTS
CALCULATION OF VARIABLE ANNUITY UNIT VALUES
The amount of the first Income Payment is calculated by applying the
Contract Value allocated to each Variable Sub-account less any applicable
premium tax charge deducted at this time, to the income payment tables in the
Contract. The first Variable Annuity Income Payment is divided by the Sub-
account's then current annuity unit value to determine the number of annuity
units upon which later Income Payments will be based. Variable Annuity Income
Payments after the first will be equal to the sum of the number of annuity units
determined in this manner for each Sub-account times the then current annuity
unit value for each respective Sub-account.
Annuity units in each variable Sub-account are valued separately and
annuity unit values will depend upon the investment experience of the particular
Portfolios in which the Sub-account invests. The value of the annuity unit for
each variable Sub-account at the end of any Valuation Period is calculated by:
(a) multiplying the annuity unit Value at the end of the immediately preceding
Valuation Period by the Sub-accounts's Net Investment Factor during the period;
and then (b) dividing the product by the sum of 1.0 plus the assumed investment
rate for the period. The assumed investment rate adjusts for the interest rate
assumed in the Income Payment tables used to determine
5
<PAGE>
the dollar amount of the first Variable Annuity Income Payment, and is at an
effective annual rate which is disclosed in the Contract.
The amount of the first Income Payment paid under an income plan is
determined using the interest rate and mortality table disclosed in the
Contract. Due to judicial or legislative developments regarding the use of
tables which do not differentiate on the basis of sex, different annuity tables
may be used.
GENERAL MATTERS
INCONTESTABILITY
The Contract will not be contested after it is issued.
SETTLEMENTS
Due proof of the Owner(s) death (or Annuitant's death if there is a
non-natural Owner) must be received prior to settlement of a death claim.
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
The Company holds title to the assets of the Variable Account. The
assets are kept physically segregated and held separate and apart from the
Company's general corporate assets. Records are maintained of all purchases and
redemptions of the Fund shares held by each of the variable Sub-accounts.
The Fund does not issue certificates and, therefore, the Company holds
the Account's assets in open account in lieu of stock certificates. See the
Fund's prospectus for a more complete description of the custodian of the Fund.
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
THE COMPANY 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 the individual circumstances of each person. If you are concerned
about any tax consequences with regard to your individual circumstances, you
should consult a competent tax adviser.
6
<PAGE>
TAXATION OF GLENBROOK LIFE AND ANNUITY COMPANY
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Internal Revenue Code. The following discussion assumes
that the Company is taxed as a life insurance company under Part I of Subchapter
L. Since the Variable Account is not an entity separate from the Company, and
its operations form a part of the Company, it will not be taxed separately as a
"Regulated Investment Company" under Subchapter M of the Code. Investment
income and realized capital gains are automatically applied to increase reserves
under the contract. Under existing federal income tax law, the Company believes
that the Variable Account investment income and realized net capital gains will
not be taxed to the extent that such income and gains are applied to increase
the reserves under the contract.
Accordingly, the Company does not anticipate that it will incur any
federal income tax liability attributable to the Variable Account, and therefore
the Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the Company
being taxed on income or gains attributable to the Variable Account, then the
Company may impose a charge against the Variable Account (with respect to some
or all contracts) in order to set aside provisions to pay such taxes.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE
There are several exceptions to the general rule that contracts held
by a non-natural owner are not treated as annuity contracts for federal income
tax purposes. Contracts will generally be treated as held by a natural person
if the nominal owner is a trust or other entity which holds the contract as
agent for a natural person. However, this special exception will not apply in
the case of an employer who is the nominal owner of an annuity contract under a
non-qualified deferred compensation arrangement for its employees. Other
exceptions to the non-natural owner rule are: (1) contracts acquired by an
estate of a decedent by reason of the death of the decedent; (2) certain
qualified contracts; (3) contracts purchased by employers upon the termination
of certain qualified plans; (4) certain contracts used in connection with
structured settlement agreements, and (5) contracts purchased with a single
premium when the annuity starting date is no later than a year from purchase of
the annuity and substantially equal periodic payments are made, not less
frequently than annually, during the annuity period.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment
received from a non-qualified annuity contract unless the payment is: (1) made
after the owner reaches 59 1/2; (2) attributable to the owner's disability; (3)
attributable to investment before August 14, 1982, including earnings on pre-
August 14, 1982 investments; (4) made from certain qualified contracts; (5) made
after the death of the owner; (6) made under an immediate annuity contract; (7)
made from an annuity purchased and held by an employer upon the termination of a
qualified retirement plan; (8) made under a qualified funding asset; (9) made as
part of a series of substantially equal periodic payments (not less frequently
than annually) for the life or life expectancy of the owner or the joint lives
or the joint life expectancies of the owner and designated beneficiary. Similar
rules apply in the case of qualified contracts.
IRS REQUIRED DISTRIBUTION AT DEATH RULES
In order to be considered an annuity contract for federal income tax
purposes, an annuity contract must provide: (1) if any owner dies on or after
the annuity start date but before the entire interest in the contract has been
distributed, the remaining portion of such interest must be distributed at least
as rapidly as under the method of distribution being used as of the date of the
owner's death; (2) if any owner dies prior to the annuity start date, the entire
interest in the contract will be distributed within five years after the date of
the owner's death. These requirements are satisfied if any portion of the
owner's interest which is payable to (or for the benefit of) a designated
beneficiary is distributed over the life of such beneficiary (or over a period
not extending beyond the life
7
<PAGE>
expectancy of the beneficiary) and the distributions begin within one year of
the owner's death. If the owner's designated beneficiary is the surviving
spouse of the owner, the contract may be continued with the surviving spouse as
the new owner. If the owner of the contract is a non-natural person, then the
annuitant will be treated as the owner for purposes of applying the distribution
at death rules. In addition, a change in the annuitant on a contract owned by a
non-natural person will be treated as the death of the owner.
QUALIFIED PLANS
This annuity contract may be used with several types of qualified
plans. The tax rules applicable to participants in such qualified plans vary
according to the type of plan and the terms and conditions of the plan itself.
Adverse tax consequences may result from excess contributions, premature
distributions, distributions that do not conform to specified commencement and
minimum distribution rules, excess distributions and in other circumstances.
Owners and participants under the plan and annuitants and beneficiaries under
the contract may be subject to the terms and conditions of the plan regardless
of the terms of the contract.
TYPES OF QUALIFIED PLANS
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an Individual Retirement Annuity.
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a tax-
deferred basis into an Individual Retirement Annuity.
SIMPLIFIED EMPLOYEE PENSION PLANS
Section 408(k) of the Code allows employers to establish simplified
employee pension plans for their employees using the employees' individual
retirement annuities if certain criteria are met. Under these plans the
employer may, within specified limits, make deductible contributions on behalf
of the employees to their individual retirement annuities.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and
employees of certain types of tax-exempt organizations (specified in Section
501(c)(3) of the Code) to have their employers purchase annuity contracts for
them, and subject to certain limitations, to exclude the purchase payments from
the employees' gross income. An annuity contract used for a Section 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 after the employee attains age 59 1/2, separates from service, dies,
becomes disabled or on the account of hardship (earnings on salary reduction
contributions may not be distributed for hardship).
CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of tax favored retirement plans for employees. The
Self-Employed Individuals Retirement Act of 1962, as amended, (commonly referred
to as "H.R. 10" or "Keogh") permits self-employed individuals to establish tax
favored retirement plans
8
<PAGE>
for themselves and their employees. Such retirement plans may permit the
purchase of annuity contracts in order to provide benefits under the plans.
STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION
DEFERRED COMPENSATION PLANS
Section 457 of the Code permits employees of state and local
governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants
in an eligible deferred compensation plan. Under these plans, contributions
made for the benefit of the employees will not be includible in the employees'
gross income until distribution from the plan.
VARIABLE ACCOUNT FINANCIAL STATEMENTS
The financial statements of Glenbrook Life and Annuity Company
Separate Account A are not included herein because, as of the date hereof, the
Variable Account had not yet commenced operations, had no assets or liabilities
and received no income. The financial statements of the Variable Account will
be audited on an annual basis once the Variable Account commences operations.
9
<PAGE>
PART C
OTHER INFORMATION
24A. FINANCIAL STATEMENTS
PART A: Glenbrook Life and Annuity Company Financial Statements and
Financial Statement Schedules are contained in Part A of this Registration
Statement.*
The financial statements of Glenbrook Life and Annuity Company
Separate Account A are not included herein because, as of the date hereof, the
Variable Account had not yet commenced operations, had no assets or liabilities
and received no income. The financial statements of the Variable Account will
be audited on an annual basis once the Variable Account commences operations.
24B. EXHIBITS
The following exhibits:
The following exhibits correspond to those required by paragraph (b) of
item 24 as to exhibits in Form N-4:
(1) Form of Resolution of the Board of Directors of Glenbrook Life and
Annuity Company authorizing establishment of the Glenbrook Life and
Annuity Company Separate Account A.*
(2) Not Applicable.
(3) Form of Underwriting Agreement*
(4) Specimen Contract
(5) Form of application for a Contract
(6) (a) Certificate of Incorporation of Glenbrook Life and Annuity
Company.*
(b) By-laws of Glenbrook Life and Annuity Company.*
(7) Reinsurance Agreement*
(8) Form of Participation Agreement*
(9) Opinion and Consent of Michael J. Velotta, Vice President, Secretary
and General Counsel of Glenbrook Life and Annuity Company.
(10) (a) Consent of Accountants*
(b) Consent of Attorneys*
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) Financial Data Schedule*
(99) Powers of Attorney.
_____________
* To be filed by pre-effective amendment
<PAGE>
25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Position and Office With Depositor
BUSINESS ADDRESS OF THE TRUST
Louis G. Lower, II Chairman of the Board and Chief Executive Officer
Michael J. Velotta Vice President, Secretary, General Counsel
and Director
Marla G. Friedman President, Chief Operating Officer and Director
Peter H. Heckman Vice President and Director
G. Craig Whitehead Assistant Vice President and Director
Myron J. Resnick Treasurer
Sarah R. Donahue Assistant Vice President
Margarita Kellen Assistant Vice President
Mary J. McGinn Assistant Secretary
Barry S. Paul Assistant Vice President and Controller
Robert N. Roeters Assistant Vice President
Theodore A. Schnell Assistant Treasurer
C. Nelson Strom Assistant Vice President and Corporate Actuary
The principal business address of the foregoing officers and directors is 3100
Sanders Road, Northbrook, IL 60062
26. Persons Controlled by or Under Common Control with Depositor or
Registrant
--------------------------------------------------------------
See 10-K Commission File #1-11840, The Allstate Corporation.
27. NUMBER OF CONTRACT OWNERS
Not Applicable
28. INDEMNIFICATION
The by-laws of both Glenbrook Life and Annuity Company (Depositor) and
Allstate Life Financial Services, Inc. (Distributor), provide for the
indemnification of its Directors, Officers and Controlling Persons, against
expenses, judgments, fines and amounts paid in settlement as incurred by such
person, if such person acted properly. No indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of a duty
to the Company, unless a court determines such person is entitled to such
indemnity.
29a. RELATIONSHIP OF PRINCIPAL UNDERWRITER TO OTHER INVESTMENT COMPANIES
Not applicable
<PAGE>
29b. PRINCIPAL UNDERWRITER
Name and Principal Business Allstate Life Financial
Address Of Each Such Person Services, Inc. ("ALFS")
___________________________________________________________________________
Louis G. Lower, II Director
Marla G, Friedman Director
Michael J. Velotta Director and Secretary
Robert J. Kelly President and Chief Executive
Officer
Diane Bellas Vice President and Controller
Richard A. Scholl Vice President
Myron J. Resnick Treasurer
John R. Hedrick General Counsel and Assistant
Secretary
Robert N. Roeters Assistant Vice President
The principal address of ALFS is 3100 Sanders Road, Northbrook, Illinois
29c. COMPENSATION OF ALLSTATE LIFE FINANCIAL SERVICES, INC.
None
30. LOCATION OF ACCOUNTS AND RECORDS
The Depositor, Glenbrook Life and Annuity Company, is located at 3100
Sanders Road, Northbrook, Illinois 60062.
The Underwriter, Allstate Life Financial Services, Inc., is located at 3100
Sanders Road, Northbrook, Illinois 60062.
Each company maintains those accounts and records required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.
31. MANAGEMENT SERVICES
None
32. UNDERTAKINGS
The Registrant promises to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted. Registrant furthermore agrees to include either as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a statement of Additional Information or a post
card or similar written communication affixed to or included in the Prospectus
that the applicant can remove to send for a Statement of Additional Information.
Finally the Registrant agrees to deliver any Statement of Additional Information
and any Financial Statements required to be made available under this Form N-4
promptly upon written or oral request.
<PAGE>
33. REPRESENTATIONS PURSUANT TO SECTION 403(B) OF THE INTERNAL REVENUE CODE
The Company represents that it is relying upon a November 28, 1988
Securities and Exchange Commission no-action letter issued to the American
Council of Life Insurance ("ACLI") and that the provisions of paragraphs 1-4 of
the no-action letter have been complied with.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant, Glenbrook Life and Annuity Company Separate
Account A, has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the Township of Northfield, State of
Illinois, on the 11th day of August, 1995.
GLENBROOK LIFE AND ANNUITY COMPANY SEPARATE ACCOUNT A
(REGISTRANT)
BY: GLENBROOK LIFE AND ANNUITY COMPANY
(DEPOSITOR)
(SEAL)
Attest: __/s/MARY J. MCGINN__ By: __/s/MICHAEL J.VELOTTA__
Mary J. McGinn Michael J. Velotta
Assistant Secretary Vice President, Secretary and
General Counsel
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registration Statement has been duly signed below by
the following Directors and Officers of Glenbrook Life and Annuity Company on
the 11th day of August, 1995.
*/ LOUIS G. LOWER, II Chairman of the Board of Directors and
- ---------------------- Chief Executive Officer
Louis G. Lower, II (Principal Executive Officer)
**/ MARLA G. FRIEDMAN President and Chief Operating Officer
- ----------------------- and Director
Marla G. Friedman
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
- ---------------------- Counsel and Director
Michael J. Velotta
**/ MYRON J. RESNICK Treasurer
- ----------------------- (Principal Financial Officer)
Myron J. Resnick
**/ PETER H. HECKMAN Vice President and Director
- -----------------------
Peter H. Heckman
**/ G. CRAIG WHITEHEAD Assistant Vice President and Director
- -----------------------
G. Craig Whitehead
**/ BARRY S. PAUL Assistant Vice President and Controller
- ----------------------- (Principal Accounting Officer)
Barry S. Paul
**/ By Michael J. Velotta, pursuant to Power of Attorney, filed herewith.
<PAGE>
FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACT
GLENBROOK LIFE AND ANNUITY COMPANY, A Stock Company, Home Office:
Allstate Plaza, Northbrook, Illinois 60062
This Contract is issued in consideration of the initial purchase payment and any
application. Glenbrook Life and Annuity Company will pay the benefits of
this Contract, subject to its terms
and conditions.
Throughout this Contract, "you" and "your" refer to the Contract owner(s).
"We", "us" and "our" refer to Glenbrook Life and Annuity Company.
This flexible premium deferred variable annuity provides a cash withdrawal
benefit and a death benefit during the Accumulation Phase and periodic income
payments beginning on the Payout Start Date during the Payout Phase.
THE DOLLAR AMOUNT OF INCOME PAYMENTS OR OTHER VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, VARIES TO
REFLECT THE PERFORMANCE OF THE VARIABLE ACCOUNT. FOR AMOUNTS IN THE FIXED
ACCOUNT, THE WITHDRAWAL BENEFIT, THE DEATH BENEFIT, TRANSFERS TO OTHER SUB-
ACCOUNTS AND ANY PERIODIC INCOME PAYMENTS MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT WHICH MAY RESULT IN AN UPWARD OR DOWNWARD ADJUSTMENT OF THE AMOUNT
DISTRIBUTED.
This Contract does not pay dividends.
The tax status of this Contract as it applies to the owner should be reviewed
each year.
PLEASE READ YOUR CONTRACT CAREFULLY.
THIS IS A LEGAL CONTRACT BETWEEN THE CONTRACT OWNER(S) AND GLENBROOK LIFE AND
ANNUITY COMPANY.
RETURN PRIVILEGE
IF YOU ARE NOT SATISFIED WITH THIS CONTRACT FOR ANY REASON, YOU MAY RETURN IT TO
US OR OUR AGENT WITHIN 20 DAYS AFTER YOU RECEIVE IT. WE WILL REFUND ANY
PURCHASE PAYMENTS ALLOCATED TO THE VARIABLE ACCOUNT, ADJUSTED TO REFLECT
INVESTMENT GAIN OR LOSS FROM THE DATE OF ALLOCATION TO THE DATE OF CANCELLATION,
PLUS ANY PURCHASE PAYMENTS ALLOCATED TO THE FIXED ACCOUNT. IF THIS CONTRACT IS
QUALIFIED UNDER SECTION 408 OF THE INTERNAL REVENUE CODE, WE WILL REFUND THE
GREATER OF ANY PURCHASE PAYMENTS OR THE CONTRACT VALUE.
If you have any questions about your Glenbrook Life variable annuity, please
contact Glenbrook Life at (708) 402-6185.
/S/ Michael J. Velotta /S/ Louis G. Lower, II
Secretary President
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
Page 1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<S> <C>
THE PERSONS INVOLVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ACCUMULATION PHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PAYOUT PHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INCOME PAYMENT TABLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
</TABLE>
Page 2
<PAGE>
- -------------------------------------------------------------------------------
THE PERSONS INVOLVED
- -------------------------------------------------------------------------------
OWNER. The person named at the time of application is the owner of this
Contract unless subsequently changed. As owner, you will receive any periodic
income payments, unless you have directed us to pay them to someone else.
You may exercise all rights stated in this Contract, subject to the rights of
any irrevocable beneficiary.
You may change the owner or beneficiary at any time. If the owner is a natural
person, you may change the annuitant prior to the Payout Start Date. Once we
have received a satisfactory written request for an owner, beneficiary or
annuitant change, the change will take effect as of the date you signed it. We
are not liable for any payment we make or other action we take before receiving
any written request for a change from you.
You may not assign an interest in this Contract as collateral or security for a
loan. However, you may assign periodic income payments under this Contract
prior to the Payout Start Date. We are bound by an assignment only if it is
signed by the assignor and filed with us. We are not responsible for the
validity of an assignment.
If the sole surviving owner dies prior to the Payout Start Date, the beneficiary
becomes the new owner. If the sole surviving owner dies after the Payout Start
Date, the beneficiary becomes the new owner and will receive any subsequent
guaranteed income payments.
If more than one person is designated as owner:
/ / owner as used in this contract refers to all people named as owners, unless
otherwise indicated;
/ / any request to exercise ownership rights must be signed by all owners; and
/ / on the death of any person who is an owner, the surviving person(s) named
as owner will continue as owner.
ANNUITANT. The annuitant is the person named on the Annuity Data Page, but may
be changed by the owner, as described above. The annuitant must be a natural
person. If the annuitant dies prior to the Payout Start Date, the new annuitant
will be:
/ / the youngest owner; otherwise,
/ / the youngest beneficiary.
BENEFICIARY. The beneficiary is the person(s) named on the Annuity Data Page,
but may be changed by the owner, as described above. We will determine the
beneficiary from the most recent written request we have received from you. If
you do not name a beneficiary or if the beneficiary named is no longer living,
the beneficiary will be:
/ / your spouse if living; otherwise
/ / your children equally if living; otherwise
/ / your estate.
The beneficiary may become the owner under the circumstances described above.
The beneficiary may assign benefits under the Contract, as described above, once
they are payable to the beneficiary. We are bound by an assignment only if it
is signed by the assignor and filed with us. We are not responsible for the
validity of an assignment.
Page 3
<PAGE>
- ----------------------------------------------------------------------
ACCUMULATION PHASE
- ----------------------------------------------------------------------
ACCUMULATION PHASE DEFINED. The "Accumulation Phase" is the first of two phases
during your Contract. The Accumulation Phase begins on the issue date stated
on the Annuity Data Page. This phase will continue until the Payout Start Date
unless the Contract is terminated before that date.
CONTRACT YEAR. The one year period beginning on the issue date and on each
anniversary of the issue date.
PURCHASE PAYMENTS. You may make subsequent purchase payments during the
Accumulation Phase. The number of purchase payments is unlimited. The minimum
subsequent purchase payment amount is $500. We may limit the maximum amount of
purchase payments we will accept.
We will invest the purchase payments in the Investment Alternatives you select.
You may allocate any portion of your purchase payment in whole percents from 0%
to 100% or in exact dollar amounts to any of the Investment Alternatives. The
total allocation must equal 100%. For each purchase payment, the minimum
amount that may be allocated to the Fixed Account is $500.
The allocation of the initial purchase payment is shown on the Annuity Data
Page. Allocation of each subsequent purchase payment will be the same as for
the most recent purchase payment unless you change the allocation. You may
change the allocation of subsequent purchase payments at any time, without
charge, simply by giving us written notice. Any change will be effective at the
time we receive the notice.
INVESTMENT ALTERNATIVES. Investment Alternatives are the Sub-accounts of the
Variable Account and the Sub-accounts of the Fixed Account shown on the Annuity
Data Page.
VARIABLE ACCOUNT. The "Variable Account" for this Contract is the Glenbrook
Life and Annuity Company Separate Account A. This account is a separate
investment account to which we allocate assets contributed under this and
certain other contracts. These assets will not be
charged with liabilities arising from any other business we may have.
VARIABLE SUB-ACCOUNTS. The Variable Account is divided into Sub-accounts.
Each Sub-account invests solely in the shares of the mutual fund underlying that
Sub-account.
FIXED ACCOUNT. The Fixed Account is divided into Sub-accounts. A Sub-account
is identified by the Guarantee Period and the date the Guarantee Period begins.
You create a Sub-account when:
/ / you make a purchase payment; or
/ / you select a new Guarantee Period after the prior Sub-account expires; or
/ / you transfer an amount from an existing Sub-account of the Variable Account
or the Fixed Account.
A Sub-account continues until the end of the Guarantee Period.
You must select the Guarantee Period for all purchase payments and transfers
allocated to the Fixed Account. If you do not select a Guarantee Period for a
purchase payment or transfer, we will assign the same period(s) as used for the
most recent purchase payment. Guarantee Periods may be 1, 3, 5, 7, or 10 years.
We may change the Guarantee Periods available for future purchase payments or
transfers allocated to the Fixed Account.
Page 4
<PAGE>
We will mail you a notice prior to the expiration of each Sub-account outlining
the options available at the end of a Guarantee Period. During the 30 day
period after a Guarantee Period expires you may:
/ / take no action and we will automatically renew the Sub-account value to a
Guarantee Period of the same duration to be established on the day the
previous Guarantee Period expired; or
/ / notify us to apply the Sub-account value to a new Guarantee Period(s) to be
established on the day the previous Guarantee Period expired; or
/ / notify us to apply the Sub-account value to any Sub-account of the Variable
Account on the day we receive the notification; or
/ / receive a portion of the Sub-account value or the entire Sub-account value
through a partial or full withdrawal that is not subject to a Market Value
Adjustment. In this case, the amount withdrawn will be deemed to have been
withdrawn on the day the Guarantee Period expired.
The minimum amount that can be allocated to a new Sub-account is $500.
CREDITING INTEREST. We credit interest daily to money allocated to the Fixed
Account at a rate which compounds over one year to the interest rate we
guaranteed when the money was allocated. We will credit interest to the initial
purchase payment from the issue date. We will credit interest to subsequent
purchase payments from the date we receive them. We will credit interest to
transfers from the date the transfer is made. The interest rates will never be
less than the minimum guaranteed rate shown on the Annuity Data Page.
TRANSFERS. Prior to the Payout Start Date, you may transfer amounts between
Investment Alternatives. You may make 12 transfers per Contract Year without
charge. Each transfer after the 12th transfer in any Contract Year may be
assessed a $10 transfer fee. Transfers are subject to the following
restrictions.
/ / The minimum amount that may be transferred into a Sub-account of the Fixed
Account is $500.
/ / Any transfer from a Sub-account of the Fixed Account at a time other than
during the 30 day period after a Guarantee Period expires will be subject
to a Market Value Adjustment.
/ / If any transfer reduces the value of a Sub-account of the Fixed Account to
less than $500, we will treat the request as a transfer of the entire Sub-
account value.
We reserve the right to waive the transfer restrictions contained in this
Contract.
CONTRACT VALUE. Your "Contract Value" is equal to the sum of:
/ / the number of Accumulation Units you hold in each Sub-account of the
Variable Account multiplied by the Accumulation Unit Value for that Sub-
account on the most recent Valuation Date; plus
/ / the sum of Sub-account values in the Fixed Account.
ACCUMULATION UNITS AND ACCUMULATION UNIT VALUE. Amounts which you allocate to a
Sub-account of the Variable Account are used to purchase Accumulation Units in
that Sub-account. The Accumulation Unit Value for each Sub-account at the end
of any Valuation Period is calculated by multiplying the Accumulation Unit Value
at the end of the immediately preceding Valuation Period by the Sub-account's
Net Investment Factor for the Valuation Period. The Accumulation Unit
Values may go up or down. Additions or transfers to a Sub-account of the
Variable Account will increase the number of Accumulation Units for that Sub-
account. Withdrawals or transfers from a Sub-account of the Variable Account
will decrease the number of Accumulation Units for that Sub-account.
Page 5
<PAGE>
VALUATION PERIOD AND VALUATION DATE. A "Valuation Period" is the time interval
between the closing of the New York Stock Exchange on consecutive Valuation
Dates. A "Valuation Date" is any date the New York Stock Exchange is open for
trading.
NET INVESTMENT FACTOR. For each Sub-account of the Variable Account, the "Net
Investment Factor" for a Valuation Period is (A) divided by (B), minus (C)
where:
(A) is the sum of:
(1) the net asset value per share of the mutual fund
underlying the Sub-account determined at the end of the
current Valuation Period, plus
(2) the per share amount of any dividend or capital gain
distributions made by the mutual fund underlying the
Sub-account during the current Valuation Period.
(B) is the net asset value per share of the mutual fund underlying
the Sub-account determined as of the end of the immediately
preceding Valuation Period.
(C) is the sum of the annualized Administrative Expense Charge and
the annualized Mortality and Expense Risk Charge divided by 365
and then multiplied by the number of calendar days in the current
Valuation Period.
CHARGES. The charges for this Contract include Administrative Expense Charges,
Mortality and Expense Risk Charges, Contract Maintenance Charges, transfer
charges, and taxes. If withdrawals are made, the Contract may also be subject
to Withdrawal Charges and Market Value Adjustments.
ADMINISTRATIVE EXPENSE CHARGE. The annualized Administrative Expense Charge
will never be greater than 0.10%. (See Net Investment Factor for a description
of how this charge is applied.)
MORTALITY AND EXPENSE RISK CHARGE. The annualized Mortality and Expense Risk
Charge will never be greater than 1.35%. (See Net Investment Factor for a
description of how this charge is applied.)
Our actual mortality and expense experience will not adversely affect the dollar
amount of variable benefits or other contractual payments or values under this
Contract.
CONTRACT MAINTENANCE CHARGE. Prior to the Payout Start Date, a Contract
Maintenance Charge will be deducted from your Contract Value on each contract
anniversary. The charge will be deducted on a pro-rata basis from each Sub-
account of the Variable Account in the proportion that your value in each bears
to your total value in all Sub-accounts of the Variable Account. A full
Contract Maintenance Charge will be deducted if the Contract is terminated on
any date other than a contract anniversary. After the Payout Start Date the
Contract Maintenance Charge will be deducted in equal parts from each income
payment. The annualized charge will never be greater than $35 per contract
year. The Contract Maintenance Charge will be waived if total purchase payments
are $50,000 or more or if all money is allocated to the Fixed Account on the
contract anniversary.
TAXES. Any premium tax or income tax withholding relating to this Contract may
be deducted from purchase payments or the Contract Value when the tax is
incurred or at a later time.
WITHDRAWAL. You have the right to withdraw part or all of your Contract Value
at any time during the Accumulation Phase. A withdrawal must be at least $50.
If any withdrawal reduces the value of any Sub-account of the Fixed Account to
less than $500, we will treat the request as a withdrawal of the entire Sub-
account value. If any withdrawal reduces the Contract Value to less than
$1,000, we will treat the request as a withdrawal of the entire Contract Value.
If you withdraw the entire Contract Value, the Contract will terminate.
You must specify the Investment Alternative(s) from which you wish to make a
withdrawal. When you make a withdrawal, your Contract Value will be reduced by
the amount paid to you and any applicable Withdrawal Charge, Market Value
Adjustment, and taxes.
Page 6
<PAGE>
FREE WITHDRAWAL AMOUNT. Each Contract Year the Free Withdrawal Amount is equal
to 10% of the Contract Value, as determined on the date of the first withdrawal
during the Contract Year. Each Contract Year you may withdraw the Free
Withdrawal Amount without any Withdrawal Charge or Market Value Adjustment.
Each Contract Year begins on the anniversary of the date the Contract was
established. Any Free Withdrawal Amount which is not withdrawn in a year may
not be carried over to increase the Free Withdrawal Amount in a subsequent year.
WITHDRAWAL CHARGE. Withdrawals in excess of the Free Withdrawal Amount will be
subject to a Withdrawal Charge as follows:
Payment Year: 1 2 3 4 5 6 7 8 and Later
Percentage: 6% 6% 5% 5% 4% 4% 3% 0%
To determine the Withdrawal Charge, we assume that purchase payments are
withdrawn first, beginning with the oldest payment. When all purchase payments
have been withdrawn, additional withdrawals will not be assessed a Withdrawal
Charge.
For each purchase payment withdrawal, the "Payment Year" in the table is
measured from the date we received the purchase payment. The Withdrawal Charge
is determined by multiplying the percentage corresponding to the Payment Year
times that part of each purchase payment withdrawal that is in excess of the
Free Withdrawal Amount.
To determine federal tax liability, withdrawals are assumed to be made from
earnings first.
MARKET VALUE ADJUSTMENT. Withdrawals in excess of the Free Withdrawal Amount,
transfers, death benefits, and amounts applied to an income plan from a Sub-
account of the Fixed Account other than during the 30 day period after a
Guarantee Period expires are subject to a Market Value Adjustment. A Market
Value Adjustment is an increase or decrease in the amount reflecting changes in
the level of interest rates since the Sub-account was established. As used in
this provision, "Treasury Rate" means the U. S. Treasury Note Constant Maturity
yield as reported in Federal Reserve Bulletin Release H.15. The Market Value
Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Sub-account's
Guarantee Period for the week preceding the establishment of
the Sub-account;
N = the number of whole and partial years from the date we
receive the withdrawal or death benefit request, or from the
Payout Start Date, to the end of the Sub-account's Guarantee
Period;
J = the Treasury Rate for a maturity of length N for the week
preceding the receipt of the withdrawal request, death
benefit request, or Income Payment request. If a Note with
a maturity of length N is not available, a weighted average
will be used. If N is one year or less, J will be the 1-
year Treasury Rate.
An adjustment factor is determined from the following formula:
.9 x (I-J) x N
The amount subject to a Market Value Adjustment that is deducted from a Sub-
account of the Fixed Account is multiplied by the adjustment factor to determine
the amount of the Market Value Adjustment. The amount deducted from the Sub-
account includes the amount we pay you, income tax we withhold for you, the
Withdrawal Charge, any applicable premium tax charge, and the Market Value
Adjustment.
DEATH OF OWNER OR ANNUITANT. A death benefit may be paid to the owner
determined immediately after the death if, prior to the Payout Start Date:
/ / any owner dies; or
/ / the annuitant dies and the owner is not a natural person.
Page 7
<PAGE>
If the owner eligible to receive the death benefit is not a natural person, then
the owner must receive the death benefit in a lump sum within five years of the
date of death.
Otherwise, within 60 days of the date when the death benefit is calculated, the
owner may elect to receive the death benefit under an Income Plan or in a lump
sum. Payments from the Income Plan must begin within one year of the date of
death and must be payable throughout:
/ / the life of the owner; or
/ / a period not to exceed the life expectancy of the owner; or
/ / the life of the owner with payments guaranteed for a period not to exceed
the life expectancy of the owner.
Any death benefit payable in a lump sum must be paid within five years of the
date of death. If no election is made, funds will be distributed at the end of
the five year period.
If the surviving spouse of the deceased owner is the new 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.
DEATH BENEFIT. Prior to the Payout Start Date, the death benefit is equal to
the greatest of:
/ / Contract Value on the date we determine the death benefit; or
/ / the amount that would have been payable in the event of a full withdrawal
of the Contract Value on the date we determine the death benefit; or
/ / the Contract Value on the Death Benefit Anniversary immediately preceding
the date we determine the death benefit adjusted by any purchase payments ,
withdrawals and charges made between such Death Benefit Anniversary and the
date we determine the death benefit.
The first Death Benefit Anniversary is the issue date. Subsequent Death Benefit
Anniversaries are those contract anniversaries that are multiples of 7 Contract
Years, beginning with the 7th contract anniversary. For example, the issue
date, 7th, and 14th contract anniversaries are the first three Death Benefit
Anniversaries.
We will determine the value of the death benefit as of the end of the Valuation
Period during which we receive a complete request for payment of the death
benefit. A complete request includes due proof of death.
Page 8
<PAGE>
- -------------------------------------------------------------------------------
PAYOUT PHASE
- -------------------------------------------------------------------------------
PAYOUT PHASE DEFINED. The "Payout Phase" is the second of the two phases during
your Contract. During this phase the Contract Value adjusted by any Market
Value Adjustment and less any applicable taxes is applied to the Income Plan you
choose and is paid out as provided in that plan.
The Payout Phase begins on the Payout Start Date. It continues until we make
the last payment as provided by the Income Plan chosen.
PAYOUT START DATE. The "Payout Start Date" is the date the Contract Value
adjusted by any Market Value Adjustment and less any applicable taxes is applied
to an Income Plan. The anticipated Payout Start Date is shown on the Annuity
Data Page. You may change the Payout Start Date by writing to us at least 30
days prior to this date.
The Payout Start Date must be on or before the later of:
/ / the annuitant's 90th birthday; or
/ / the 10th anniversary of this Contract's issue date.
INCOME PLANS. An "Income Plan" is a series of payments on a scheduled basis to
you or to another person designated by you. The Contract Value on the Payout
Start Date adjusted by any Market Value Adjustment and less any applicable
taxes, will be applied to your Income Plan choice from the following list:
1. LIFE INCOME WITH GUARANTEED PAYMENTS. We will make payments
for as long as the annuitant lives. If the annuitant dies before
the selected number of guaranteed payments have been made, we
will continue to pay the remainder of the guaranteed payments.
2. JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. We
will make payments for as long as either the annuitant or
joint annuitant, named at the time of Income Plan selection,
lives. If both the annuitant and the joint annuitant die before
the selected number of guaranteed payments have been made, we
will continue to pay the remainder of the guaranteed payments.
3. GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD. We will make
payments for a specified period beginning on the Payout Start
Date. These payments do not depend on the annuitant's life. The
number of months guaranteed may be from 60 to 360.
We reserve the right to make available other Income Plans.
INCOME PAYMENTS. Income payment amounts may vary based on any Sub-account of
the Variable Account and/or may be fixed for the duration of the Income Plan.
The method of calculating the initial payment is different for the two accounts.
The Contract Maintenance Charge will be deducted in equal payments from each
income payment. The Contract Maintenance Charge will be waived if total
Purchase Payments are $50,000 or more.
VARIABLE AMOUNT INCOME PAYMENTS. The initial income payment based upon the
Variable Account is calculated by applying the portion of the Contract Value in
the Variable Account on the Payout Start Date, less any applicable premium tax,
to the appropriate value from the Income Payment Table selected. Subsequent
income payments will vary depending upon the changes in the Annuity Unit Values
for the Sub-accounts upon which the income payments are based.
The portion of the initial income payment based upon a particular Variable Sub-
account is determined by applying the amount of the Contract Value in that Sub-
account on the Payout Start Date, less any applicable premium tax, to the
appropriate value from the Income Payment Table. This portion of the initial
income payment is divided by the Annuity Unit Value on the Payout Start Date for
that Variable Sub-account to determine the number of Annuity Units from that
Sub-account which will be used to determine subsequent income payments. Unless
Annuity Transfers are made between Sub-accounts, each subsequent income payment
from that Sub-account will be that number of Annuity Units times the Annuity
Unit Value for the Sub-account for the Valuation Date on which the income
payment is made.
Page 9
<PAGE>
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-account of the Variable
Account at the end of any Valuation Period is calculated by:
/ / multiplying the Annuity Unit Value at the end of the immediately preceding
Valuation Period by the Sub-account's Net Investment Factor during the
period; and then
/ / dividing the result by 1.000 plus the assumed investment rate for the
period. The assumed investment rate is an effective annual rate of
3%.
FIXED AMOUNT INCOME PAYMENTS. The income payment amount derived from any monies
allocated to Sub-accounts of the Fixed Account during the Accumulation Phase are
fixed for the duration of the Income Plan. The Fixed Amount Income Payment is
calculated by applying the portion of the Contract Value in the Fixed Account on
the Payout Start Date, adjusted by any Market Value Adjustment and less any
applicable premium tax, to the greater of the appropriate value from the Income
Payment Table selected or such other value as we are offering at that time.
ANNUITY TRANSFERS. After the Payout Start Date, no transfers may be made from
the Fixed Amount Income Payment. Transfers between Sub-accounts of the Variable
Account, or from the Variable Amount Income Payment to the Fixed Amount Income
Payment may not be made for six months after the Payout Start Date. Annuity
Transfers may be made once every six months thereafter.
PAYOUT TERMS AND CONDITIONS. The income payments are subject to the following
terms and conditions:
/ / If the Contract Value is less than $2,000, or not enough to
provide an initial payment of at least $20, we reserve the right to:
/ / change the payment frequency to make the payment at least
$20; or
/ / terminate the Contract and pay you the Contract Value
adjusted by any Market Value Adjustment and less any
applicable taxes in a lump sum.
/ / If we do not receive a written choice of an Income Plan from you at least
30 days before the Payout Start Date, the Income Plan will be life income
with guaranteed payments for 120 months.
/ / If you choose an Income Plan which depends on any person's life, we
may require:
/ / proof of age and sex before income payments begin; and
/ / proof that the annuitant or joint annuitant is still alive before we
make each payment.
/ / After the Payout Start Date, the Income Plan cannot be changed and
withdrawals cannot be made unless income payments are being made from
the Variable Account under Income Plan 3. You may terminate the
income payments being made from the Variable Account under Income Plan
3 at any time and withdraw their value, subject to Withdrawal Charges.
/ / If any owner dies during the Payout Phase, the remaining income payments
will be paid to the successor owner as scheduled.
Page 10
<PAGE>
- -------------------------------------------------------------------------------
INCOME PAYMENT TABLES
- -------------------------------------------------------------------------------
The initial income payment will be at least the amount based on the adjusted age
of the annuitant(s) and the tables below, less any federal income taxes which
are withheld. The adjusted age is the actual age on the Payout Start Date
reduced by one year for each six full years between January 1, 1983 and the
Payout Start Date. Income payments for ages and guaranteed payment periods not
shown below will be determined on a basis consistent with that used to determine
those that are shown. The Income Payment Tables are based on 3.0% interest and
the 1983a Annuity Mortality Tables.
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS FOR 120 MONTHS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Monthly Income Payment for each $1,000 Applied to this Income Plan
- ----------------------------------------------------------------------------------------------------------
Annuitant's Annuitant's Annuitant's
- ----------------------------------------------------------------------------------------------------------
Age Male Female Age Male Female Age Male Female
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.43 $3.25 49 $4.15 $3.82 63 $5.52 $4.97
36 3.47 3.28 50 4.22 3.88 64 5.66 5.09
37 3.51 3.31 51 4.29 3.94 65 5.80 5.22
38 3.55 3.34 52 4.37 4.01 66 5.95 5.35
39 3.60 3.38 53 4.45 4.07 67 6.11 5.49
40 3.64 3.41 54 4.53 4.14 68 6.27 5.64
41 3.69 3.45 55 4.62 4.22 69 6.44 5.80
42 3.74 3.49 56 4.71 4.29 70 6.61 5.96
43 3.79 3.53 57 4.81 4.38 71 6.78 6.13
44 3.84 3.58 58 4.92 4.46 72 6.96 6.31
45 3.90 3.62 59 5.02 4.55 73 7.13 6.50
46 3.96 3.67 60 5.14 4.65 74 7.31 6.69
47 4.02 3.72 61 5.26 4.75 75 7.49 6.88
48 4.08 3.77 62 5.39 4.86
- ----------------------------------------------------------------------------------------------------------
</TABLE>
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS FOR 120
MONTHS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Monthly Income Payment for each $1,000 Applied to this Income Plan
- ----------------------------------------------------------------------------------------------------------
Female Annuitant's Age
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Male
Annuitant's
Age
35 40 45 50 55 60 65 70 75
- ----------------------------------------------------------------------------------------------------------
35 $3.09 $3.16 $3.23 $3.28 $3.32 $3.36 $3.39 $3.40 $3.42
40 3.13 3.22 3.31 3.39 3.46 3.51 3.56 3.59 3.61
45 3.17 3.28 3.39 3.50 3.60 3.69 3.76 3.81 3.85
50 3.19 3.32 3.45 3.60 3.74 3.87 3.98 4.07 4.14
55 3.21 3.35 3.51 3.68 3.87 4.06 4.23 4.37 4.48
60 3.23 3.37 3.55 3.75 3.98 4.23 4.47 4.70 4.88
65 3.24 3.39 3.57 3.80 4.07 4.37 4.71 5.04 5.34
70 3.24 3.40 3.59 3.83 4.13 4.48 4.90 5.36 5.81
75 3.25 3.41 3.61 3.86 4.17 4.56 5.04 5.61 6.22
</TABLE>
INCOME PLAN 3 - GUARANTEED NUMBER OF PAYMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Specified Period Monthly Income Payment for each
$1,000 Applied to this Income Plan
- ------------------------------------------------------------------
<S> <C>
10 Years $9.61
11 Years 8.86
12 Years 8.24
13 Years 7.71
14 Years 7.26
15 Years 6.87
16 Years 6.53
17 Years 6.23
18 Years 5.96
19 Years 5.73
20 Years 5.51
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
Page 11
<PAGE>
- -------------------------------------------------------------------------------
GENERAL PROVISIONS
- -------------------------------------------------------------------------------
THE ENTIRE CONTRACT. The entire contract consists of this Contract, any
attached application, and any attached endorsements.
All statements made in written applications are representations and not
warranties. No statement will be used by us in defense of a claim or to void
the Contract unless it is included in a written application.
Only our officers may, in order to conform to any state or federal law, change
the Contract or waive a right or requirement. No other individual may do this.
We may not modify this Contract without your consent, except to make it comply
with any changes in the Internal Revenue Code or as required by any other
applicable law.
INCONTESTABILITY. We will not contest the validity of this Contract after the
issue date.
MISSTATEMENT OF AGE OR SEX. If any age or sex has been misstated, we will pay
the amounts which would have been paid at the correct age and sex.
If we find the misstatement of age or sex after the income payments begin, we
will:
/ / pay all amounts underpaid including interest; or
/ / stop payments until the total payments are equal to the corrected amount.
For purposes of the Misstatement of Age or Sex provision, interest will be
calculated at an effective annual rate of 6%.
ANNUAL STATEMENT. At least once a year, prior to the Payout Start Date, we will
send you a statement containing Contract Value information. We will provide you
with Contract Value information at any time upon request. The information
presented will comply with any applicable law.
SETTLEMENTS. We may require that this Contract be returned to us prior to any
settlement. We must receive due proof of death of the owner or annuitant prior
to settlement of a death claim. Due proof of death is one of the following:
/ / a certified copy of a death certificate; or
/ / a certified copy of a decree of a court of competent jurisdiction as to a
finding of death; or
/ / any other proof acceptable to us.
Any full withdrawal or death benefit under this Contract will not be less than
the minimum benefits required by any statute of the state in which the Contract
is delivered.
DEFERMENT OF PAYMENTS. We will pay any amounts due from the Variable Account
under this Contract within seven days, unless:
/ / the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on such Exchange is restricted;
/ / an emergency exists as defined by the Securities and Exchange Commission;
or
/ / the Securities and Exchange Commission permits delay for the protection of
Contract holders.
We reserve the right to postpone payments or transfers from the Fixed Account
for up to six months. If we elect to postpone payments or transfers from the
Fixed Account for 30 days or more, we will pay interest as required by
applicable law. Any interest would be payable from the date the withdrawal
request is received by us to the date the payment or transfer is made.
Page 12
<PAGE>
VARIABLE ACCOUNT MODIFICATIONS. We reserve the right, subject to applicable
law, to make additions to, deletions from, or substitutions for the mutual fund
shares underlying the Sub-accounts of the Variable Account. We will not
substitute any shares attributable to your interest in a Sub-account of the
Variable Account without notice to you and prior approval of the Securities and
Exchange Commission, to the extent required by the Investment Company Act of
1940.
We reserve the right to establish additional Sub-accounts of the Variable
Account, each of which would invest in shares of another mutual fund. You may
then instruct us to allocate purchase payments or transfers to such Sub-
accounts, subject to any terms set by us or the mutual fund.
In the event of any such substitution or change, we may by endorsement, make
such changes as may be necessary or appropriate to reflect such substitution or
change.
If we deem it to be in the best interests of persons having voting rights under
the contracts, the Variable Account may be operated as a management company
under the Investment Company Act of 1940 or it may be deregistered under such
Act in the event such registration is no longer required.
Page 13
<PAGE>
EXHIBIT NO. (5)
FORM OF APPLICATION FOR A CONTRACT
<PAGE>
<TABLE>
<S> <C>
GLENBROOK LIFE AND ANNUITY COMPANY
P.O. Box 94042, Palatine, IL 60094
- ------------------------------------------------------------------------------------------------------------------------------------
APPLICATION FOR: AIM Variable Annuity
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ALTERNATIVE ALLOCATION: (Whole % only, must total 100%, no fractions)
AIM V.I. VARIABLE ACCOUNT
% Capital Appreciation Fund % Diversified Income Fund % Global Utilities Fund
% Government Securities Fund % Growth Fund % Growth and Income Fund
% International Equity Fund % Money Market Fund % Value Fund
FIXED ACCOUNT GUARANTEE PERIOD
% 1 Year % 3 Year % 5 Year % 7 Year % 10 Year
INITIAL PURCHASE PAYMENT: $
-
ENHANCED DEATH BENEFIT OPTION: Option A (default) Option B
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER(S)
Name Soc. Sec. No. - - Birth Date / /
Address / / Male / / Female Relationship to Other Owner
City State Zip
Name Soc. Sec. No. - - Birth Date / /
Address / / Male / / Female Relationship to Other Owner
City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITANT (Leave blank if the Annuitant is the same as the sole Owner.)
Name Soc. Sec. No. - - Birth Date / /
Address City State Zip
/ / Male / / Female
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
Primary Relationship to Owner
Contingent Relationship to Owner
- ------------------------------------------------------------------------------------------------------------------------------------
TAX QUALIFIED PLAN / / Yes / / No
/ / IRA Rollover / / IRA Transfer / / IRA/Year of Contribution / / Other
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS: REPLACEMENT:
Will the annuity applied for replace or change any
existing insurance or annuity? / / Yes / / No
Company
Policy No.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
If this application is declined, Glenbrook Life and Annuity Company will have no liability except to return the purchase
payment. I understand that any distribution from a fixed account prior to the end of a rate guarantee period may be subject to a
Market Value Adjustment. I understand that contract values and income payments based on the investment experience of a variable
account are variable and are not guaranteed as to dollar amount. I have received the current prospectus for this Glenbrook Life
variable annuity.
I have read the above statements. I represent that they are complete and true to the best of my knowledge.
Signed at Date / /
City State
Owner(s) :
Signature(s) Phone No(s)
- ------------------------------------------------------------------------------------------------------------------------------------
AGENT USE ONLY Do you have any reason to believe that the Contract applied for is to replace or change any existing
annuity or life insurance? / / Yes / / No
Agent's Signature Branch/Agent No.
Agent's Name License Identification No.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GLAR92
<PAGE>
OPINION AND CONSENT OF MICHAEL J. VELOTTA,
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL OF
GLENBROOK LIFE AND ANNUITY COMPANY
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road
Northbrook, Illinois 60062
Direct Dial Number 708.402.2400
Facsimile 708.402.4371
Michael J. Velotta Please direct reply to:
Vice President, Secretary Post Office Box 3005
and General Counsel Northbrook, Illinois 60065-3005
July 25, 1995
TO: GLENBROOK LIFE AND ANNUITY COMPANY
NORTHBROOK, ILLINOIS 60062
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM N-4 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940
FILE NO. 33- , 811-7632
With reference to the Registration Statement on Form N-4 filed by Glenbrook
Life and Annuity Company with the Securities and Exchange Commission covering
Individual Flexible Premium Deferred Variable Annuity Contracts ("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:
1. Glenbrook Life and Annuity Company is duly organized and existing
under the laws of the State of Illinois and has been duly authorized
to do business and to issue the Contracts by the Director of Insurance
of the State of Illinois.
2. The Contracts covered by the above Registration Statement have been or
will be approved and authorized by the Director of Insurance of the
State of Illinois and when issued will be valid, legal and binding
obligations of Glenbrook Life and Annuity 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 Statement of Additional Information constituting a part
of the Registration Statement.
Sincerely,
/s/MICHAEL J.VELOTTA
Michael J. Velotta
Vice President, Secretary
and General Counsel
<PAGE>
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Louis G. Lower, II, whose signature
appears below, constitutes and appoints Michael J. Velotta, his attorney-in-
fact, with power of substitution, and his in any and all capacities, to sign any
Form N-4 registration statements and amendments thereto for the Glenbrook Life
and Annuity Company Separate Account A 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 each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
______July 18, 1995___________
Date
____/s/Louis G. Lower, II_____
Louis G. Lower, II
Chairman of the Board, CEO
and Director Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Marla G. Friedman, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, her attorneys-in-fact, with power of substitution,
and him in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Glenbrook Life and Annuity Company Separate
Account A Contract 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 each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
____July 24, 1995_____________
Date
____/s/Marla G. Friedman_______
Marla G. Friedman
President, COO and Director
Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Michael J. Velotta, whose signature
appears below, constitutes and appoints Louis G. Lower, II, his attorney-in-
fact, with power of substitution, and his in any and all capacities, to sign any
Form N-4 registration statements and amendments thereto for the Glenbrook Life
and Annuity Company Separate Account A 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 each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
____July 13, 1995_____________
Date
____/s/Michael J. Velotta_____
Michael J. Velotta
Vice President, Secretary
and General Counsel and Director
Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Myron J. Resnick, whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorneys-in-fact, with power of substitution, and him in any
and all capacities, to sign any Form N-4 registration statements and amendments
thereto for the Glenbrook Life and Annuity Company Separate Account A Contract
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 each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
____July 13, 1995_____________
Date
____/s/Myron J. Resnick________
Myron J. Resnick
Treasurer
Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Peter H. Heckman, whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorneys-in-fact, with power of substitution, and him in any
and all capacities, to sign any Form N-4 registration statements and amendments
thereto for the Glenbrook Life and Annuity Company Separate Account A Contract
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 each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
____July 17, 1995_____________
Date
____/s/Peter H. Heckman_______
Peter H. Heckman
Vice President, Director
Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that G. Craig Whitehead, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and him in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Glenbrook Life and Annuity Company Separate
Account A Contract 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 each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
____July 17, 1995_____________
Date
____/s/G. Craig Whitehead______
G. Craig Whitehead
Assistant Vice President and Director
Glenbrook Life and Annuity Company
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE GLENBROOK LIFE AND ANNUITY COMPANY
SEPARATE ACCOUNT A CONTRACT
Know all men by these presents that Barry S. Paul, whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorneys-in-fact, with power of substitution, and him in any
and all capacities, to sign any Form N-4 registration statements and amendments
thereto for the Glenbrook Life and Annuity Company Separate Account A Contract
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 each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
____July 20, 1995_____________
Date
____/s/Barry S. Paul__________
Barry S. Paul
Assistant Vice President and Controller
Glenbrook Life and Annuity Company
