As filed with Securities and Exchange Commission on November __,
1995
Registration No. 33-94858
________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
CARILLON LIFE ACCOUNT
(Exact Name of Trust)
THE UNION CENTRAL LIFE INSURANCE COMPANY
(Name of Depositor)
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
(Address of depositor's principal executive offices)
JOHN F. LABMEIER, ESQ.
The Union Central Life Insurance Company
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
(Name and address of agent for service)
Copies to:
STEPHEN E. ROTH, ESQ.
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, D.C. 20004-2404
________________
Flexible Premium Variable Universal Life Insurance Policies -
An Indefinite Amount of Securities Has Been Registered
Pursuant to Rule 24f-2 under the Investment Company Act of 1940
(Title, amount, and proposed maximum offering price of
securities being registered)
Amount of Filing Fee: The filing fee of $500
was paid concurrently with the filing of
the initial registration statement.
Approximate date of proposed public offering:
As soon as practicable after the effective date of this
Registration Statement.
The Registrant hereby amends this Registration Statement under
the Securities Act of 1933 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 Section 8(a), may
determine.<PAGE>
<PAGE>
CARILLON LIFE ACCOUNT
Registration Statement on Form S-6
Reconciliation and Tie Between Items
In Form N-8B-2 and the Prospectus
<TABLE>
<CAPTION>
Form N-8B-2
Item No. Caption in Prospectus
_________ _____________________
<C> <C>
1 Cover Page
2 Cover Page
3 Inapplicable
4 Sale of the Policies
5 Information about Union Central
6 Carillon Life Account
9 Inapplicable
10(a) Other Policy Benefits and Provisions
10(b) Summary and Diagram of the Policy
10(c),(d),(e) Death Benefit Options; Cash Value; Summary and
Diagram of the Policy; Other Policy Benefits and
Provisions;
Surrendering the Policy for Cash Surrender Value;
Partial Cash Surrenders; Loans; Transfer
Privilege;
Premiums; Supplemental and/or Rider Benefits
10(f),(g),(h) Voting Rights; Other Policy Benefits and
Provisions
10(i) Other Policy Benefits and Provisions; Death
Benefit Options; Carillon Life Account;
Supplemental and/or Rider Benefits
11 Carillon Life Account
12 Carillon Life Account; The Portfolios; Sale of the
Policies
13 Charges and Deductions; Sale of the Policies; The
Portfolios
14 Premiums; Charges and Deductions; Sale of the
Policies
15 Premiums
16 Carillon Life Account; The Portfolios
17 Captions referenced under Items 10(c), (d), (e)
and (i) above
18 Carillon Life Account; Cash Value
19 Reports to Policy Owners; Sale of the Policies
20 Captions referenced under Items 6 and 10(g) above
21 Loans
22 Inapplicable
23 Sale of the Policies
24 Other Policy Benefits and Provisions
25 Information about Union Central
26 Sale of the Policies
27 Information about Union Central
28 Union Central Directors and Executive Directors
29 Information about Union Central
30 Inapplicable
31 Inapplicable
32 Inapplicable
33 Inapplicable
34 Sale of the Policies
35 Information about Union Central
36 Inapplicable
37 Inapplicable
38 Sale of the Policies
39 Sale of the Policies
40 Sale of the Policies
41(a) Sale of the Policies
42 Inapplicable
43 Inapplicable
44(a) Carillon Life Account; The Portfolios; Premiums;
Charges and Deductions
44(b) Charges and Deductions
44(c) Premiums; Charges and Deductions
45 Inapplicable
46 The Portfolios; Captions referenced under Items
10(c), (d) and (e) above
47 Inapplicable
48 Inapplicable
49 Inapplicable
50 Inapplicable
51 Cover Page; Summary and Diagram of the Policy;
Death Benefit Options; Loan Repayment; Effect If
Not Repaid; Changes in Specified Amount; Charges
and Deductions; Supplemental and/or Rider
Benefits; Other Policy Benefits
and Provisions; Premiums; Sale of the Policies
52 Other Policy Benefits and Provisions
53 Tax Considerations
54 Inapplicable
55 Inapplicable
59 Financial Statements
/TABLE
<PAGE>
<PAGE>
PROSPECTUS
Individual Flexible Premium Variable Universal Life Insurance
Policies
___________________________________________________________
CARILLON LIFE ACCOUNT
of THE UNION CENTRAL LIFE INSURANCE COMPANY
Home Office:
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240-4088
Telephone: 1-800-999-1840
______________________________________________________
This prospectus describes an individual flexible
premium variable universal life insurance policy (the policy)
offered by The Union Central Life Insurance Company ("Union
Central," "we," "us" or "our"). The policy is designed to
provide insurance protection on the insured named in the policy,
and at the same time provide the owner ("you" or "your") with the
flexibility to vary the amount and timing of premium payments and
to change the amount of death benefits payable under the policy.
This flexibility allows you to provide for your changing
insurance needs under a single insurance policy.
You also have the opportunity to allocate net premiums to one or
more subdivisions of the variable account or to the guaranteed
account or to both. This prospectus generally describes only
that portion of the account value allocated to the variable
account, through which account value is invested in subaccounts
of Carillon Life Account (the "separate account"). For a brief
summary of the guaranteed account, see "The Guaranteed Account,"
page __. The assets of each subaccount are invested in a
corresponding portfolio of Carillon Fund, Inc., Scudder Variable
Life Investment Fund, TCI Portfolios, Inc., or MFS Variable
Insurance Trust. The accompanying prospectuses provide
additional information regarding the portfolios.
You can select from two death benefit options available under the
policy: a level death benefit ("Option A") and a death benefit
that includes the account value ("Option B"). Union Central
guarantees that the death benefit will never be less than the
specified amount of insurance (less any outstanding policy debt
and past due charges) so long as sufficient premiums are paid to
keep the policy in force.
The policy provides for a cash surrender value that can be
obtained by surrendering the policy. Because this value is based
on the performance of the portfolios to the extent that net
premiums are allocated to the variable account, there is no
guaranteed minimum cash surrender value.
If the cash surrender value is insufficient to cover the charges
due under the policy, the policy will lapse without value.
However, Union Central guarantees to keep the policy in force
during the minimum guaranteed period, so long as the minimum
monthly premium requirement and other conditions have been met.
The policy also permits loans and partial cash surrenders, within
limits.
It may not be advantageous to replace existing insurance with the
policy. Within certain limits, you may return the policy, or
convert it to a policy that provides benefits that do not vary
with the investment results of a separate account by exercising
the Conversion Right.
AN INVESTMENT IN THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, NOR IS THE POLICY FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE POLICY INVOLVES CERTAIN
RISKS, INCLUDING THE LOSS OF PREMIUM PAYMENTS (PRINCIPAL).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is _________________, 1995.<PAGE>
<PAGE>
PROSPECTUS CONTENTS
Page
DEFINITIONS OF TERMS
SUMMARY AND DIAGRAM OF THE POLICY
GENERAL INFORMATION ABOUT UNION CENTRAL, THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
The Union Central Life Insurance Company
Carillon Life Account
The Portfolios
Addition, Deletion or Substitution of Investments
Voting Rights
PREMIUM PAYMENTS AND ALLOCATIONS
Applying for a Policy
Free Look Right to Cancel the Policy
Premiums
Net Premium Allocations
Crediting Net Premiums
Transfer Privilege
Dollar Cost Averaging Plan
Portfolio Rebalancing Plan
Earnings Sweep Plan
GUARANTEED ACCOUNT
Minimum Guaranteed and Current Interest Rates
Calculation of Guaranteed Account Value
Transfers from Guaranteed Account
Payment Deferral
CHARGES AND DEDUCTIONS
Premium Expense Charge
Monthly Deduction
Daily Mortality and Expense Risk Charge
Transfer Charge
Surrender Charge
Special Arrangements
Fund Expenses
Cost of Additional Benefits Provided by Riders
Income Tax Charge
HOW YOUR ACCOUNT VALUES VARY
Determining the Account Value
Cash Value
Cash Surrender Value
DEATH BENEFIT AND CHANGES IN SPECIFIED AMOUNT
Amount of Death Benefit Proceeds
Death Benefit Options
Initial Specified Amount and Death Benefit Option
Changes in Death Benefit Option
Changes in Specified Amount
Selecting and Changing the Beneficiary
CASH BENEFITS
Loans
Surrendering the Policy for Cash Surrender Value
Partial Cash Surrenders
Maturity Benefit
Payment Options
ILLUSTRATIONS OF ACCOUNT VALUES, CASH SURRENDER VALUES, DEATH
BENEFITS AND ACCUMULATED PREMIUM PAYMENTS
OTHER POLICY BENEFITS AND PROVISIONS
Limits on Rights to Contest the Policy
Changes in the Policy or Benefits
When Proceeds Are Paid
Reports to Policy Owners
Assignment
Reinstatement
Supplemental and/or Rider Benefits
Participating
State Variations
TAX CONSIDERATIONS
Tax Status of Policy
Treatment of Policy Benefits
Possible Charge for Union Central's Taxes
OTHER INFORMATION ABOUT THE POLICIES AND UNION CENTRAL
Sale of the Policies
Union Central Directors and Executive Officers
State Regulation
Additional Information
Experts
Actuarial Matters
Litigation
Legal Matters
Financial Statements
APPENDIX A
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO
PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THE OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
THE PROSPECTUSES FOR THE PORTFOLIOS, OR THE STATEMENTS OF
ADDITIONAL INFORMATION FOR THE PORTFOLIOS.<PAGE>
<PAGE>
DEFINITIONS OF TERMS
account value - The sum of the variable account, the guaranteed
account, and the loan account. Calculation of the account value
is described on page ___.
age - The insured's age as of the birthday nearest to the date on
which age is determined.
annual date - The same day in each policy year as the policy
date.
beneficiary - The person or persons who will receive any death
benefit proceeds when the insured dies. The primary beneficiary
and the contingent beneficiary, if any, are designated in the
application or in the last notice filed with us. The contingent
beneficiary, if any, will become the beneficiary should the
primary beneficiary die prior to the date of death of the
insured.
cash surrender value - The cash value minus any outstanding
policy debt.
cash value - Account value minus any applicable surrender charge.
death benefit option - Specified amount (Option A), or specified
amount plus account value (Option B), depending on the option
selected. See page __.
guaranteed account - The account value that is part of Union
Central's general assets and is not part of or dependent upon
investment performance of the separate account. The guaranteed
interest rate on the account value allocated to the guaranteed
account is 4%. The guaranteed account is not FDIC-insured and is
subject to claims from our creditors.
home office - 1876 Waycross Road, P.O. Box 40888, Cincinnati,
Ohio 45240-4088.
initial specified amount - The specified amount on the policy
date.
insured - The person whose life is covered by the policy.
issue date - The date from which the suicide and contestable
periods start. It is shown in your policy.
lapse - Termination of the policy at the expiration of the grace
period while the insured is still living. See page __.
loan account - An account that is part of Union Central's general
assets and to which account values are transferred from the
variable account and/or guaranteed account as collateral for
policy loans.
maturity date - The date when coverage terminates and the
maturity benefit is paid. It is generally the insured's 100th
birthday, and is shown in the policy form.
minimum monthly premium - An amount used to measure premium
payments paid for purposes of determining whether the minimum
guaranteed period is in effect. See page ___.
monthly date - The same day as the policy date for each
succeeding month. The monthly deduction is deducted on each
monthly date.
net premium - A premium payment minus the applicable premium
expense charge. See page __.
notice - A written request notice or request in a form
satisfactory to us that is signed by the owner and received at
the home office.
owner, you - The person(s) who owns a policy.
planned periodic premium - The premium determined by the owner as
a level amount which is planned to be paid at fixed intervals
over a specified period of time.
policy - The individual flexible premium variable universal life
insurance policy, together with the application and any riders or
endorsements thereto, that is described in this prospectus.
policy debt - The sum of all outstanding policy loans plus
accrued interest.
policy date - The date from which policy months, years, and
anniversaries are measured.
policy month - Each one-month period beginning with a monthly
date and ending with the day immediately preceding the next
following monthly date.
policy year - Each period of twelve months commencing with the
policy date and ending immediately preceding the first annual
date, or any following year commencing with an annual date and
ending immediately preceding the next annual date.
portfolio - An investment company or series thereof in which a
subaccount of the separate account invests.
premium payment(s) - The amount(s) paid by the owner(s) to
purchase the policy; either a planned periodic premium or
unscheduled premium.
risk amount - As of any monthly date, the death benefit under the
policy less the account value (after deduction of the monthly
deduction on that day, except for the cost of insurance charge).
separate account - Carillon Life Account, a separate investment
account of Union Central.
specified amount - A dollar amount used to determine the death
benefit under a policy. See page __.
subaccount - A separate division of the separate account
established to invest in a particular portfolio and available for
investment under the policies through subdivisions of the
variable account.
subdivision - That portion of your variable account that is
invested in a particular subaccount of the separate account.
Union Central, we, our, us - The Union Central Life Insurance
Company.
unscheduled premium - Any premium other than a planned periodic
premium.
valuation date - Each day on which both the New York Stock
Exchange and Union Central are open for business.
valuation period - The interval of time commencing at the close
of business on one valuation date and ending at the close of
business on the next succeeding valuation date.
variable account - The account value that is attributable to one
or more subdivisions corresponding to subaccounts of the separate
account.
<PAGE>
SUMMARY AND DIAGRAM OF THE POLICY
The following summary of Prospectus information and diagram of
the policy should be read in conjunction with the detailed
information appearing elsewhere in this Prospectus. Unless
otherwise indicated, the description of the policy in this
Prospectus assumes that the policy is in force and there is no
outstanding policy debt.
The policy is similar in many ways to fixed-benefit life
insurance. As with fixed-benefit life insurance, the owner of a
policy pays premium payments for insurance coverage on the person
insured. Also like fixed-benefit life insurance, the policy
provides for accumulation of net premiums and a cash surrender
value which is payable if the policy is surrendered during the
insured's lifetime. As with fixed-benefit life insurance, the
cash surrender value during the early policy years is likely to
be substantially lower than the premium payments paid.
However, the policy differs from fixed-benefit life insurance in
several important respects. Unlike fixed-benefit life insurance,
the death benefit may and the account value will increase or
decrease to reflect the investment performance of the
subdivisions to which the account value is allocated. Also,
there is no guaranteed minimum cash surrender value.
Nonetheless, Union Central guarantees to keep the policy in force
during the first three policy years so long as the minimum
monthly premium requirement has been met. See "Minimum
Guaranteed Period," page ___. Otherwise, if the cash surrender
value is insufficient to pay charges due, the policy will lapse
without value after a grace period. See "Premiums to Prevent
Lapse," page ___. If a policy lapses while loans are
outstanding, adverse tax consequences may result. See "Tax
Considerations," page ___.
The most important features of the policy, such as charges, cash
benefits, death benefits, and calculation of policy values, are
summarized in the diagram on the following pages.
Purpose of the Policy. The policy is designed to be a long-term
investment providing insurance benefits. The policy should be
evaluated in conjunction with other insurance policies owned by
you, as well as your need for insurance and the policy's long-
term investment potential. It may not be advantageous to replace
existing insurance coverage with the policy. In particular,
replacement should be carefully considered if the decision to
replace existing coverage is based primarily on a comparison of
policy illustrations (see below).
Illustrations. Illustrations in this prospectus or used in
connection with the purchase of a policy are based on
hypothetical rates of return. These rates are not guaranteed.
They are illustrative only and should not be deemed a
representation of past or future performance. Actual rates of
return may be higher or lower than those reflected in any
illustrations, and therefore, actual values will be different
from these illustrated.
Tax Considerations. Union Central intends for the policy to
satisfy the definition of a life insurance contract under Section
7702 of the Internal Revenue Code. Certain policy transactions,
including the payment of premiums, may cause a policy to be a
modified endowment contract under the Internal Revenue Code. For
further discussion of the tax status of a policy and the tax
consequences of being treated as a life insurance contract or a
modified endowment contract, see page ___.
Free Look Right to Cancel and Conversion Right. For a limited
time after the policy is issued, you have the right to cancel
your policy and receive a refund. See "Free Look Right to Cancel
Policy," page ___. Until the end of this "free look" period,
Union Central will allocate net premiums to the subaccount
investing in the Money Market Portfolio of the Scudder Variable
Life Investment Fund. (See "Net Premium Allocations," page __.)
At any time within the first 24 months after the issue date, you
may transfer all or a portion of the variable account to the
guaranteed account without payment of any transfer fee. This
transfer effectively "converts" the policy into a contract that
provides fixed (non-variable) benefits. See "Conversion Right,"
page ___.
Owner Inquiries. If you have any questions, you may write or
call Union Central's home office at 1876 Waycross Road, P.O. Box
40888, Cincinnati, Ohio 45240-4088; telephone 1-800-219-8525.
<PAGE>
<PAGE>
DIAGRAM OF POLICY
(DESCRIPTION OF DIAGRAM: Each heading with the information
following is encased in a block. A down arrow appears at the
bottom of each block pointing to the next block)
PREMIUM PAYMENTS
* You select a plan for making planned periodic premiums, but
are not required to pay premium payments according to the plan.
You can vary the amount and frequency and can skip planned
periodic premiums. See page ___ for rules and limits.
* There is no minimum initial premium payment or planned
periodic premium.
* Unplanned premium payments may be made, within limits. See
page ___.
* If sufficient premiums are paid, a minimum guaranteed period
may keep the policy in force during the first three policy years.
See page __.
- - Under certain circumstances, which include taking excessive
loans, extra premium payments may be required to prevent lapse.
See page ___.
(a down arrow is centered here between blocks)
DEDUCTIONS FROM PREMIUM PAYMENTS
* For sales charges (4% of premium payments made through
policy year 10; 2% of premium payments thereafter). See page __.
* For state and local premium taxes (2.50% of premium
payments). See page ___.
(a down arrow is centered here between blocks)
NET PREMIUMS
* You direct the allocation of net premiums among ten
subdivisions of the variable account and the guaranteed account.
See page ___ for rules and limits on net premium allocations.
* The subdivisions are invested in corresponding portfolios of
Carillon Fund, Inc., Scudder Variable Life Investment Fund, TCI
Portfolios, Inc. and MFS Variable Insurance Trust. See page ___.
Portfolios available are:
Carillon Equity Portfolio
Carillon Bond Portfolio
Carillon Capital Portfolio
Carillon S&P 500 Index Portfolio
Scudder Capital Growth Portfolio
Scudder International Portfolio
Scudder Money Market Portfolio
TCI Growth Portfolio
MFS Growth With Income Series
MFS High Income Series
* Interest is credited on amounts allocated to the guaranteed
account at a guaranteed minimum interest rate of 4%. See page
___ for rules and limits on guaranteed account allocations.
(a down arrow is centered here between blocks)
(the next two items are encased in one block)
DEDUCTIONS FROM ACCOUNT VALUE
* Monthly deduction for cost of insurance, administrative
charge, and charges for any supplemental and/or rider benefits.
The administrative charge is currently $25.00 per month for the
first policy year and $5.00 per month thereafter.
DEDUCTIONS FROM ASSETS
* Daily charge at a guaranteed annual rate of 0.75% during the
first ten policy years, and 0.25% thereafter, from the
subaccounts for mortality and expense risks. See page ___.
This charge is not deducted from the guaranteed account.
* Investment advisory fees and fund operating expenses are
deducted from the assets of each portfolio. See page ___.
(a down arrow is centered here between blocks)
ACCOUNT VALUE
* Is the amount credited to your policy. It is equal to net
premiums, as adjusted each valuation date to reflect
subdivision investment experience, interest credited
on the guaranteed
account, charges deducted and other policy transactions
(such as transfers and partial cash surrenders). See page
___.
* Varies from day to day. There is no minimum guaranteed
account value. The policy may lapse if the cash surrender
value is insufficient to cover a monthly deduction due. See
page ___.
* Can be transferred among the subdivisions and the guaranteed
account. Currently, a transfer fee of $10 applies to each
transfer in excess of the first 12 transfers in a policy
year. See page ___ for rules and limits. Policy loans
reduce the amount available
for allocations and transfers.
* Is the starting point for calculating certain values under a
policy, such as the cash value, cash surrender value, and
the death benefit used to determine death benefit proceeds.
(the above item has two down arrows under it, each pointing to
one of the next two items which are blocked side by side)
CASH BENEFITS
* Loans may be taken for amounts up to 90% of the variable
account, plus 100% of the guaranteed account, less loan
interest due on the next annual date and any surrender
charges. See page ___ for rules and limits.
* Partial cash surrenders generally can be made provided there
is sufficient remaining cash surrender value. See page ___
for rules and limits.
* The policy may be surrendered in full at any time for its
cash surrender value. A surrender charge will apply during
the first fifteen policy years after issue and after any
increase in specified amount. See page ___.
* Payment options are available. See page ___.
* Loans, partial cash surrenders, and surrenders in full may
have adverse tax consequences. See page __.
DEATH BENEFITS
* Income tax free to beneficiary.
* Available as lump sum or under a variety of payment options.
* For all policies, a minimum initial specified amount of
$50,000.
* Two death benefit options available:
Option A, equal to the specified amount, and Option B, equal
to the specified amount plus account value. See page ___.
* Flexibility to change the death benefit option and specified
amount. See pages ___ and ___ for rules and limits.
* Supplemental and/or rider benefits may be available. See
page ___.
(end of graphic material)<PAGE>
<PAGE>
GENERAL INFORMATION ABOUT UNION CENTRAL, THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
The Union Central Life Insurance Company
The policies are issued by The Union Central Life Insurance
Company, which is a mutual life insurance company organized
under the laws of the State of Ohio in 1867. Union Central is
primarily engaged in the sale of life and disability insurance
and annuities and is currently licensed to transact life
insurance business in all states and the District of Columbia.
Union Central is subject to regulation by the Department of
Insurance of the State of Ohio as well as by the insurance
departments of all other states and jurisdictions in which it
does business. We submit annual statements on our operations and
finances to insurance officials in such states and jurisdictions.
The forms for the policy described in this Prospectus are filed
with and (where required) approved by insurance officials in each
state and jurisdiction in which policies are sold.
Carillon Life Account
Carillon Life Account was established as a separate investment
account under Ohio law on July 10, 1995. It is used to support
the policies and may be used to support other variable life
insurance policies, and for other purposes permitted by law. The
separate account is registered with the Securities and Exchange
Commission ("SEC") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") and is a
"separate account" within the meaning of the federal securities
laws. Union Central has established other separate investment
accounts that may also be registered with the SEC.
The assets in the separate account are owned by Union Central.
The separate account is divided into subaccounts which correspond
to subdivisions of the variable account. Subaccounts of the
separate account invest in shares of the portfolios. The
separate account may include other subaccounts that are not
available through the policies and are not otherwise discussed in
this Prospectus.
Income, gains and losses, realized or unrealized, of a subaccount
are credited to or charged against the subaccount without regard
to any other income, gains or losses of Union Central.
Applicable insurance law provides that assets equal to the
reserves and other contract liabilities of the separate account
shall not be chargeable with liabilities arising out of any other
business of Union Central. Union Central is obligated to pay all
benefits provided under the policies.
The Portfolios
Subaccounts of the separate account currently invest in ten
designated portfolios of four series-type mutual funds: Carillon
Fund, Inc. ("Carillon Fund"); Scudder Variable Life Investment
Fund ("Scudder Fund"), TCI Portfolios, Inc. ("TCI Fund") and MFS
Variable Insurance Trust ("MFS Fund"). The investment experience
of each subaccount of the separate account depends on the
investment performance of its corresponding portfolio. Each of
these portfolios is registered with the SEC under the 1940 Act as
a series of an open-end diversified investment company. The SEC
does not, however, supervise the management or the investment
practices and policies of the portfolios. The investment adviser
to Carillon Fund is Carillon Advisers, Inc. (a wholly-owned
subsidiary of Union Central). Scudder, Stevens & Clark, Inc. is
the investment adviser to the Scudder Fund. The investment
adviser to the TCI Fund is Investors Research Corporation, the
adviser to the Twentieth Century Mutual Fund group. The
investment adviser to the MFS Fund is Massachusetts Financial
Services Company.
The separate account invests in four portfolios of Carillon Fund:
the Equity Portfolio, the Bond Portfolio, the Capital Portfolio,
and the S&P 500 Index Portfolio. (The S&P 500 Index Portfolio is
available for allocations of net premiums on and after January 2,
1996). The separate account invests in three portfolios of the
Scudder Fund: the Capital Growth Portfolio, the International
Portfolio, and the Money Market Portfolio. (The Scudder Fund has
three additional portfolios that are not available through the
policy.) The separate account invests in one portfolio of the
TCI Fund: TCI Growth Portfolio. (The TCI Fund has three
additional portfolios that are not available through the policy.)
The separate account invests in two portfolios of the MFS Fund:
MFS Growth With Income Series and MFS High Income Series. (The
MFS Fund has ten additional portfolios that are not available
through the policy.) The assets of each portfolio are separate
from assets of the others, and each portfolio has different
investment objectives and policies. As a result, each portfolio
operates as a separate investment fund and the investment
performance of one portfolio has no effect on the investment
performance of any other portfolio. The investment objective of
each portfolio is set forth below.
The Carillon Equity Portfolio seeks primarily long-term
appreciation of capital by investing primarily in common stocks
and other equity securities.
The Carillon Bond Portfolio seeks as high a level of current
income as is consistent with reasonable investment risk by
investing primarily in investment-grade corporate bonds.
The Carillon Capital Portfolio seeks the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risk associated with an investment
portfolio of above-average quality by investing in equity
securities, debt instruments and money market instruments.
The Carillon S&P 500 Index Portfolio seeks investment
results that correspond to the total return performance of U.S.
common stocks, as represented by the Standard & Poor's 500
Composite Stock Index (the "S&P 500". <F1>) The S&P 500 is a
well-known stock market index that includes common stocks of
companies representing approximately 71% of the market value of
all common stocks publicly traded in the United States. The
investment adviser of the portfolio believes that the performance
of the S&P 500 is representative of the performance of publicly
traded common stocks in general. (This portfolio is available
for allocation of net premiums on and after January 2, 1996.)
[FN]
<F1>
The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P 500(R)", "S&P(R)", "Standard &
Poor's 500(R)", and "500" are trademarks of McGraw-Hill, Inc.
The Carillon S&P 500 Index Portfolio is not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard and Poor's
makes no representation regarding the advisability of investing
in this portfolio.
[FN]
The Scudder Capital Growth Portfolio seeks to maximize long-
term capital growth through a broad and flexible investment
program. The Portfolio invests in marketable securities,
principally common stocks and, consistent with its objective of
long-term capital growth, preferred stocks.
The Scudder International Portfolio seeks long-term growth
of capital principally from a diversified portfolio of foreign
equity securities.
The Scudder Money Market Portfolio seeks stability and
current income from a portfolio of money market instruments.
Money market funds are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that this portfolio
will maintain a stable net asset value per share.
The TCI Growth Portfolio seeks capital growth by investing
primarily in common stocks that are considered by management to
have better-than-average prospects for appreciation.
The MFS Growth With Income Series seeks to provide
reasonable current income and long-term growth of capital and
income.
The MFS High Income Series seeks high current income by
investing primarily in a professionally managed portfolio of
fixed income securities, some of which may involve equity
features. The MFS High Income Portfolio may invest up to 80% of
its assets in lower-rated bonds commonly known as junk bonds.
Before allocating any portion of net premiums to the subdivision
corresponding to this portfolio, owners should read the risk
disclosure in the accompanying prospectus for the MFS High Income
Series.
THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE
THEIR RESPECTIVE STATED OBJECTIVES. Additional information
concerning the investment objectives and policies of the
portfolios, as well as risks, can be found in the current
portfolio prospectuses that accompany this Prospectus. The
prospectuses for the portfolios should be read carefully before
any decision is made concerning the allocation of net premiums to
a particular subdivision. Certain subdivisions invest in
portfolios that have similar investment objectives and/or
policies. Therefore, you should carefully read the individual
prospectuses for the portfolios along with this Prospectus.
Please note that all of the portfolios described in the
Prospectuses for the portfolios may not be available under the
policy. Moreover, Union Central cannot guarantee that each fund
will always be available for its variable life contracts, but in
the unlikely event that a Fund is not available, Union Central
will take reasonable steps to secure the availability of a
comparable fund. Shares of each portfolio are purchased and
redeemed at net asset value, without a sales charge.
The portfolios presently serve as the investment media for the
policies. In addition, the portfolios may sell shares to
separate accounts of other insurance companies to fund variable
annuity contracts and/or variable life insurance policies, and/or
to certain retirement plans qualifying under Section 401 of the
Code. Union Central currently does not foresee any disadvantages
to owners that would arise from the possible sale of shares to
support the variable contracts of other insurance companies, or
from the possible sale of shares to such retirement plans.
However, the board of directors of each fund will monitor events
in order to identify any material irreconcilable conflicts that
might possibly arise if the shares of that fund were also offered
to support variable contracts other than the policies or to
support retirement plans. In event of such a conflict, the board
of directors of that fund would determine what action, if any,
should be taken in response to the conflict. In addition, if
Union Central believes that the fund's response to any such
conflicts insufficiently protects owners, it will take
appropriate action on its own, which may include withdrawing the
separate account's investment in that fund. (See the
prospectuses for the portfolios for more detail.)
Addition, Deletion or Substitution of Investments
Union Central reserves the right, subject to applicable law, to
make additions to, deletions from, or substitutions for the
shares that are held in the separate account or that the separate
account may purchase. If the shares of a portfolio are no longer
available for investment or if in Union Central's judgment
further investment in any portfolio should become inappropriate
in view of the purposes of the separate account, Union Central
may redeem the shares, if any, of that portfolio and substitute
shares of another registered open-end management company or unit
investment trust. Union Central will not substitute any shares
attributable to a policy's interest in the separate account
without notice and prior approval of the SEC and state insurance
authorities, to the extent required by the 1940 Act or other
applicable law.
Union Central also reserves the right to establish additional
subaccounts of the separate account, each of which would invest
in shares corresponding to a new portfolio or in shares of
another investment company having a specific investment
objective. Subject to applicable law and any required SEC
approval, Union Central may in its sole discretion establish new
subaccounts or eliminate one or more subaccounts if marketing
needs, tax considerations or investment conditions warrant. Any
new subaccount may be made available to existing owner(s) on a
basis to be determined by Union Central.
If any of these substitutions or changes are made, Union Central
may by appropriate endorsement change the policy to reflect the
substitution or other change. If Union Central deems it to be in
the best interests of owner(s), and subject to any approvals that
may be required under applicable law, the separate account may be
operated as a management company under the 1940 Act, it may be
deregistered under that Act if registration is no longer
required, or it may be combined with other Union Central separate
accounts. Union Central reserves the right to make any changes
to the separate account required by the 1940 Act or other
applicable law or regulation.
Voting Rights
Union Central is the legal owner of shares held by the
subaccounts and as such has the right to vote on all matters
submitted to shareholders of the portfolios. However, as
required by law, Union Central will vote shares held in the
subaccounts at regular and special meetings of shareholders of
the portfolios in accordance with instructions received from
owners with account value in the subdivisions. Should the
applicable federal securities laws, regulations or
interpretations thereof change, Union Central may be permitted to
vote shares of the portfolios in its own right, and if so, Union
Central may elect to do so.
To obtain voting instructions from owners, before a meeting
owners will be sent voting instruction material, a voting
instruction form and any other related material. The number of
shares held by each subaccount for which an owner may give voting
instructions is currently determined by dividing the portion of
the owner's account value in the subdivision corresponding to the
subaccount by the net asset value of one share of the applicable
portfolio. Fractional votes will be counted. The number of
votes for which an owner may give instructions will be determined
as of the date coincident with the date established by the fund
for determining shareholders eligible to vote at the relevant
meeting of the fund. Shares held by a subaccount for which no
timely instructions are received will be voted by Union Central
in the same proportion as those shares for which voting
instructions are received.
Union Central may, if required by state insurance officials,
disregard owner voting instructions if such instructions would
require shares to be voted so as to cause a change in
sub-classification or investment objectives of one or more of the
portfolios, or to approve or disapprove an investment advisory
agreement. In addition, Union Central may under certain
circumstances disregard voting instructions that would require
changes in the investment advisory agreement or investment
adviser of one or more of the portfolios, provided that Union
Central reasonably disapproves of such changes in accordance with
applicable federal regulations. If Union Central ever disregards
voting instructions, owners will be advised of that action and of
the reasons for such action in the next semiannual report.
Finally, Union Central reserves the right to modify the manner in
which the weight to be given to pass-through voting instructions
is calculated when such a change is necessary to comply with
current federal regulations or the current interpretation
thereof.
PREMIUM PAYMENTS AND ALLOCATIONS
Applying for a Policy
To purchase a policy, you must complete an application and submit
it through an authorized Union Central agent. There is no
minimum initial premium payment. Your policy coverage will
become effective on the policy date. If an initial premium
payment is submitted with the application, then the policy date
is generally the date of approval of your application. If the
application is not accompanied by an initial premium payment,
then the policy date will generally be two weeks after the date
that your application is approved.
As provided for under state insurance law, the owner, to preserve
insurance age, may be permitted to backdate the policy. In no
case may the policy date be more than six months prior to the
date the application was completed. Charges for the monthly
deduction for the backdated period are deducted on the issue
date. Temporary life insurance coverage may be provided prior to
the policy date under the terms of a temporary insurance
agreement. In accordance with Union Central's underwriting
rules, temporary life insurance coverage may not exceed $500,000
and will not remain in effect for more than sixty (60) days.
Union Central requires satisfactory evidence of the insured's
insurability, which may include a medical examination of the
insured. The available issue ages are 0 through 75. Age is
determined on the insured's age as of the birthday nearest the
policy date. The minimum specified amount is $50,000.
Acceptance of an application depends on Union Central's
underwriting rules, and Union Central reserves the right to
reject an application for any reason.
As the owner of the policy, you exercise all rights provided
under the policy. The insured is the owner, unless a different
owner is named in the application. The owner may by notice name
a contingent owner or a new owner while the insured is living.
If more than one person is named as owner, they are joint owners.
Any transaction under the policy except for telephone transfers
of account value will require the authorization of all owners.
Unless provided otherwise, in the event of a joint owner's death,
ownership passes to the surviving joint owner. Unless a
contingent owner has been named, on the death of the last
surviving owner, ownership of the policy passes to the estate of
the last surviving owner, who will become the owner if the
owner(s) die. The owner may also be changed prior to the
insured's death by notice satisfactory to us. A change in owner
may have tax consequences. See "Tax Considerations," page ___.
Free Look Right to Cancel the Policy
You may cancel your policy for a refund during your "free-look"
period. This period expires 20 days after you receive your
policy, 45 days after your application is signed, or 10 days
after Union Central mails or delivers a cancellation notice,
whichever is latest. (A longer period may apply to policies
issued in certain states.) If you decide to cancel the policy,
you must return it by mail or delivery to the home office or to
the authorized Union Central agent who sold it. Immediately
after mailing or delivery, the policy will be deemed void from
the beginning. Within seven calendar days after Union Central
receives the returned policy, Union Central will refund the
greater of any premiums paid, less any partial cash surrenders,
or account value.
Premiums
Planned Periodic Premiums. When applying for a policy, you
select a plan for paying level premium payments at specified
intervals, e.g., quarterly, semi-annually or annually, until the
maturity date. If you elect, Union Central will also arrange for
payment of planned period premiums on a monthly basis under a
pre-authorized payment arrangement. You are not required to pay
premium payments in accordance with these plans; rather, you can
pay more or less than planned or skip a planned periodic premium
entirely. (See, however, "Premium Payments to Prevent Lapse,"
page __.) Currently, there is no minimum amount for each
premium. Union Central may establish a minimum amount 90 days
after we send the owner a written notice of such increase.
Subject to the limits described below, you can change the amount
and frequency of planned periodic premiums whenever you want by
sending notice to the home office. However, Union Central
reserves the right to limit the amount of a premium payment or
the total premium payments paid.
Unless otherwise requested, you will be sent reminder notices for
planned periodic premiums. Reminder notices will not be sent if
you have arranged to pay planned periodic premiums by
pre-authorized payment arrangement.
Additional Unscheduled Premiums. Additional unscheduled premium
payments can be made at any time while the policy is in force.
Union Central has the right to limit the number and amount of
such premium payments.
Limitations on Premium Payments. Total premium payments paid in
a policy year may not exceed guideline premium payment
limitations for life insurance set forth in the Internal Revenue
Code. Union Central will promptly refund any portion of any
premium payment that is determined to be in excess of the premium
payment limit established by law to qualify a policy as a
contract for life insurance.
The payment of premiums may cause a policy to be a modified
endowment contract under the Internal Revenue Code. We have
established procedures for monitoring premium payments and making
efforts to notify you on timely basis if your policy is in
jeopardy of becoming a modified endowment contract as a result of
premium payments. See "Tax Considerations," page___.
Union Central reserves the right to reject any requested increase
in planned periodic premiums, or any unscheduled premium. We
also reserve the right to require satisfactory evidence of
insurability prior to accepting any premium which increases the
risk amount of the policy. See "Net Premium Allocations," page
__.
No premium payment will be accepted after the maturity date.
Premium payments must be made by check payable to The Union
Central Insurance Company or by any other method that Union
Central deems acceptable. The owner may specify that a specific
unscheduled premium payment is to be applied as a repayment of
policy debt, if any.
Premium payments after the initial premium payment must be made
to the home office.
Minimum Guaranteed Period. Union Central guarantees that a
policy will remain in force during the minimum guaranteed period,
regardless of the sufficiency of the cash surrender value, if the
sum of the premiums paid to date, less any partial cash
surrenders and policy debt equals or exceeds the minimum monthly
premium (shown in the policy) multiplied by the number of
complete policy months since the policy date, including the
current policy month. The minimum guaranteed period is three
years following the policy date.
The minimum monthly premium is calculated for each policy based
on the age, sex and rate class of the insured, the requested
specified amount and any supplemental and/or rider benefits. The
minimum monthly premium may change due to changes made during a
minimum guaranteed period to the specified amount, the death
benefit option, ratings, and supplemental and/or rider benefits.
Union Central will notify you of any increase in the minimum
monthly premium.
An extended minimum guaranteed period may be available under a
Guaranteed Death Benefit Rider. See "Supplemental Benefits
and/or Riders," page __.
Premium Payments Upon Increase in Specified Amount. Depending on
the account value at the time of an increase in the specified
amount and the amount of the increase requested, an additional
premium payment may be necessary or a change in the amount of
planned periodic premiums may be advisable. See "Changes in
Specified Amount," pages ___ and ___. In the event that you
increase the specified amount, you should contact your Union
Central agent to assist you in determining if additional premium
payments are necessary or appropriate.
Premium Payments to Prevent Lapse. Failure to pay planned
periodic premiums will not necessarily cause a policy to lapse.
Conversely, paying all planned periodic premiums will not
necessarily guarantee that a policy will not lapse (except when
the minimum guaranteed period is in effect). Rather, whether a
policy lapses depends on whether its cash surrender value is
sufficient to cover the monthly deduction (see page ___) when
due.
If the cash surrender value on a monthly date is less than the
amount of the monthly deduction to be deducted on that date and
the minimum guaranteed period is not in effect, the policy will
be in default and a grace period will begin. This could happen
if investment experience has been sufficiently unfavorable that
it has resulted in a decrease in cash surrender value or the cash
surrender value has decreased because you have not paid
sufficient premium payments to offset the monthly deduction.
Grace Period. If your policy goes into default, you will be
allowed a 61-day grace period to pay a premium payment sufficient
to cover the monthly deductions due during the grace period.
Union Central will send notice of the amount required to be paid
during the grace period ("grace period premium payment") to your
last known address and the address of any assignee of record.
The grace period will begin when the notice is sent. Your policy
will remain in effect during the grace period. If the insured
should die during the grace period and before the grace period
premium payment is paid, the death benefit proceeds will still be
payable to the beneficiary, although the amount paid will reflect
a reduction for the monthly deductions due on or before the date
of the insured's death (and for any policy debt). See "Amount of
Death Benefit," page ___. If the grace period premium payment
has not been paid before the grace period ends, your policy will
lapse. It will have no value and no benefits will be payable.
See "Reinstatement," page ___.
A grace period also may begin if policy debt becomes excessive.
See "Loan Repayment; Effect if not Repaid," page ___.
Net Premium Allocations
In the application, you specify the percentage of a net premium
to be allocated to each subdivision and to the guaranteed
account. This allocation must comply with the allocation rules
described below. Net premiums will generally be allocated to the
subdivisions and to the guaranteed account on the valuation date
that Union Central receives them in accordance with the
allocations specified in the application or subsequent notice.
Union Central will allocate all net premiums received before the
end of the "free look" period (including the initial net premium)
to the subdivision invested in the Scudder Money Market
Portfolio. After the end of the "free look" period, the account
value will be allocated to the subdivisions and to the guaranteed
account based on the premium payment allocation percentages in
the application. See "Determining the Account Value," page ___.
For this purpose, the end of the "free look" period is deemed to
be 25 days after the date the policy is issued and mailed to your
agent for delivery.
The net premium allocation percentages specified in the
application will apply to subsequent premium payments until you
change the percentages. You can change the allocation
percentages at any time, subject to the rules below, by sending
notice to the home office. The change will apply to all premium
payments received with or after receipt of your notice.
Allocation Rules. The minimum allocation percentage you may
specify for a subdivision or the guaranteed account is 5%, and
your allocation percentages must be whole numbers. The sum of
your allocations must equal 100%. Union Central reserves the
right to limit the number of subdivisions to which account value
may be allocated.
Crediting Net Premiums
The initial net premium will be credited to the policy on the
policy date, or, if later, the date we receive the initial
premium payment. For backdated policies, the initial net premium
will be credited on the issue date. Planned periodic premiums
and unscheduled premiums that are not underwritten will be
credited to the policy and the net premiums will be invested as
requested on the valuation date they are received by the home
office. However, any premium payment that is underwritten will
be allocated to the subdivision corresponding to the Scudder
Money Market Portfolio until underwriting has been completed and
the premium payment has been accepted. When accepted, the
account value allocated to the subdivision corresponding to the
Scudder Money Market Portfolio and attributable to the resulting
net premium will be credited to the policy and allocated in
accordance with your instructions. If an additional premium
payment is rejected, Union Central will return the premium
payment promptly, without any adjustment for investment
experience.
Transfer Privilege
After the free-look period and prior to the maturity date, you
may transfer all or part of your account value from subdivisions
investing in one portfolio to other subdivision(s) or to the
guaranteed account, or transfer a part of an amount in the
guaranteed account to the subdivision(s), subject to the
following restrictions. The minimum transfer amount is the
lesser of $100 or the entire amount in that subdivision or the
guaranteed account. A transfer request that would reduce the
amount in a subdivision or the guaranteed account below $25 will
be treated as a transfer request for the entire amount in that
subdivision or the guaranteed account. With the exception of the
Conversion Right described below, we reserve the right to limit
the number or frequency of transfers permitted in the future.
We will make the transfer as of the end of the valuation period
during which we receive notice requesting such transfer.
Currently, there is no limit on the number of transfers that can
be made between subdivisions or to the guaranteed account.
However, transfers from the guaranteed account during any policy
year are limited to an amount equal to 20% of the account value
in the guaranteed account on the annual date at the beginning of
such policy year. (See "Transfers from Guaranteed Account," page
22, for restrictions). Currently, we assess a transfer charge
equal to $10 for each transfer during a policy year in excess of
the first twelve transfers. (We reserve the right to decrease or
eliminate the number of free transfers; in addition, the transfer
charge may be increased, but is guaranteed not to exceed $15 per
transfer.) The transfer charge will be deducted from the
subdivisions or the guaranteed account from which the requested
transfer is being made, on a pro-rata basis.
Telephone Transfers. Telephone transfers will be based upon
instructions given by telephone, provided the appropriate
election has been made at the time of application or proper
authorization has been provided to us. We reserve the right to
suspend telephone transfer privileges at any time, for any
reason, if we deem such suspension to be in the best interests of
owners.
We will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if we follow those
procedures we will not be liable for any losses due to
unauthorized or fraudulent instructions. We may be liable for
such losses if we do not follow those reasonable procedures. The
procedures we will follow for telephone transfers include
requiring some form of personal identification prior to acting on
instructions received by telephone, providing written
confirmation of the transaction, and making a tape recording of
the instructions given by telephone.
Conversion Right. During the first twenty-four policy months
following the issue date, and within sixty days of the later of
notification of a change in the investment policy of the separate
account or the effective date of such change, the owner may
exercise a one-time Conversion Right by requesting that all or a
portion of the variable account be transferred to the guaranteed
account. Exercise of the Conversion Right is not subject to the
transfer charge. Following the exercise of the Conversion Right,
net premiums may not be allocated to the subdivisions of the
variable account, and transfers of account value to the
subdivisions will not be permitted. The other terms and
conditions of the policy will continue to apply.
Dollar Cost Averaging Plan
The Dollar Cost Averaging Plan, if elected, enables you to
transfer systematically and automatically, on a monthly,
quarterly, semi-annual, or annual basis, specified dollar amounts
from a subdivision you specify to other subdivisions or to the
guaranteed account. (Dollar Cost Averaging Plan transfers may
not be made from the guaranteed account.) By allocating on a
regularly scheduled basis, as opposed to allocating the total
amount at one particular time, you may be less susceptible to the
impact of market fluctuations. However, we make no guarantee
that the Dollar Cost Averaging Plan will result in a profit.
You specify the amount to be transferred automatically; you can
specify either a fixed dollar amount, or a percentage of the
account value in the subdivision from which transfers will be
made. At the time that you elect the Dollar Cost Averaging Plan,
the account value in the subdivision from which transfers will be
made must be at least $2,000. The required amounts may be
allocated to the subdivision through initial or subsequent net
premiums or by transferring amounts into the subdivision from the
other subdivisions or from the guaranteed account (which may be
subject to certain restrictions).
You may elect this plan at the time of application by completing
the authorization on the application or at any time after the
policy is issued by properly completing the election form and
returning it to us. Dollar Cost Averaging Plan transfers may not
commence until the end of the free-look period.
Once elected, transfers from the subdivision will be processed
until the number of designated transfers have been completed, or
the value of the subdivision is completely depleted, or you send
us notice instructing us to cancel the transfers.
Currently, transfers made under the Dollar Cost Averaging Plan
will not be subject to any transfer charge and will not count
against the number of free transfers permitted in a policy year.
We reserve the right to impose a $15 transfer charge for each
transfer effected under a Dollar Cost Averaging Plan. We also
reserve the right to alter the terms or suspend or eliminate the
availability of the Dollar Cost Averaging Plan at any time.
Portfolio Rebalancing Plan
You may elect to have the accumulated balance of each subdivision
periodically redistributed (or "rebalanced") to equal the
allocation percentages you have specified in the election form.
This rebalancing may be done on a quarterly, semi-annual, or
annual basis.
You may elect the Portfolio Rebalancing Plan at the time of
application by completing the authorization on the application or
at any time after the policy is issued by properly completing the
election form and returning it to us. Portfolio Rebalancing Plan
transfers may not commence until the end of the free-look period.
Transfers pursuant to the Portfolio Rebalancing Plan will
continue until you send us notice terminating the plan, or the
policy terminates. The Portfolio Rebalancing Plan cannot be
elected if either a Dollar Cost Averaging Plan or an Earnings
Sweep Plan is in effect.
Currently, transfers made under the Portfolio Rebalancing Plan
will not be subject to any transfer charge and will not count
against the number of free transfers permitted in a policy year.
We reserve the right to impose a $15 transfer charge for each
transfer effected under the plan. We also reserve the right to
alter the terms or suspend or eliminate the availability of the
Portfolio Rebalancing Plan at any time.
Earnings Sweep
You may elect to have the accumulated earnings of one or more
specified subdivisions or the interest credited to the guaranteed
account periodically transferred (or "swept") into specified
subdivisions or the guaranteed account. The sweep may be done
on a quarterly, semi-annual, or annual basis.
You may elect the Earnings Sweep Plan at the time of application
by completing the authorization on the application or at any time
after the policy is issued by properly completing the election
form and returning it to us. Earnings Sweep Plan transfers may
not commence until the end of the free-look period. Transfers
pursuant to the Earnings Sweep Plan will continue until you send
us notice terminating the plan, or the policy terminates.
Currently, transfers made under the Earnings Sweep Plan will not
be subject to any transfer charge and will not count against the
number of free transfers permitted in a policy year. We reserve
the right to impose a $15 transfer charge for each transfer
effected under the plan. We also reserve the right to alter the
terms or suspend or eliminate the availability of the Earnings
Sweep Plan at any time.
GUARANTEED ACCOUNT
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN
THE GUARANTEED ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR HAS THE GUARANTEED ACCOUNT BEEN
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY
ACT OF 1940. ACCORDINGLY, NEITHER THE GUARANTEED ACCOUNT NOR ANY
INTERESTS THEREIN ARE SUBJECT TO THE PROVISIONS OF THESE ACTS
AND, AS A RESULT, THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS
RELATING TO THE GUARANTEED ACCOUNT. THE DISCLOSURE REGARDING THE
GUARANTEED ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY
APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO
THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
You may allocate some or all of your net premiums and transfer
some or all of the variable account to the guaranteed account,
which is part of our general account and pays interest at
declared rates (subject to a minimum interest rate we guarantee
to be at least 4%). The principal, after deductions, is also
guaranteed. Our general account assets support our insurance and
annuity obligations.
The portion of the account value allocated to the guaranteed
account will be credited with interest, as described below.
Since the guaranteed account is part of our general account, we
assume the risk of investment gain or loss on this amount. All
assets in the general account are subject to our general
liabilities from business operations.
Minimum Guaranteed and Current Interest Rates
The guaranteed account is guaranteed to accumulate at a minimum
effective annual interest rate of 4%. We may credit the
guaranteed account with current rates in excess of the minimum
guarantee, but we are not obligated to do so. These current
interest rates are influenced by, but do not necessarily
correspond to, prevailing general market interest rates. Since
we, in our sole discretion, anticipate changing the current
interest rate from time to time, different allocations to and
from the guaranteed account will be credited with different
current interest rates, based upon the date amounts are allocated
into the guaranteed account. We may change the interest rate
credited to new deposits at any time. Any interest credited on
the amounts in the guaranteed account in excess of the minimum
guaranteed rate of 4% per year will be determined in our sole
discretion. You assume the risk that interest credited may not
exceed the guaranteed rate.
Amounts deducted from the guaranteed account for the monthly
deduction, partial cash surrenders, transfers to the
subdivisions, or charges are currently, for the purpose of
crediting interest, accounted for on a last-in, first-out
("LIFO") method. We reserve the right to change the method of
crediting from time to time, provided that such changes do not
have the effect of reducing the guaranteed rate of interest below
4% per annum.
Calculation of Guaranteed Account Value
The guaranteed account at any time is equal to net premiums
allocated or account value transferred to it, plus interest
credited to it, minus amounts deducted, transferred, or
surrendered from it.
Transfers from the Guaranteed Account
The amount transferred from the guaranteed account may not exceed
20% of the guaranteed account on the annual date immediately
preceding the date of the transfer, unless the balance after the
transfer is less than $25, in which case we will transfer the
entire amount.
Payment Deferral
We reserve the right to defer payment of any partial cash
surrender, full surrender, or transfer from the guaranteed
account for up to six months from the date of receipt of the
notice for the partial or full surrender or transfer. However,
we will not defer payment of any amounts needed to pay premiums
on other policies in force with us.
CHARGES AND DEDUCTIONS
Premium Expense Charge
A sales charge is deducted from each premium payment. This
charge is equal to 4% of premiums paid through policy year 10;
and 2% thereafter. It is guaranteed not to increase for the life
of the policy. The sales charge is intended to partially
reimburse Union Central for some of the expenses incurred in the
distribution of the policies. The sales charge may be
insufficient to recover distribution expenses related to the sale
of the policies. Unrecovered expenses are borne by Union
Central's general assets, which may include profits, if any, from
the mortality and expense risk charge and mortality gains from
cost of insurance charges. See "Daily Mortality and Expense Risk
Charge," page ___, and "Cost of Insurance Charge," page __.
A 2.50% charge for state and local premium taxes and expenses is
also deducted from each premium payment. The state and local
premium tax charge reimburses Union Central for premium taxes
associated with the policies and related administrative costs.
The stated premium tax rates in the jurisdictions in which Union
Central does business range from 0.75% to 4.00%, and the
jurisdiction in which a policy is issued may impose no premium
tax, or a premium tax higher or lower than the charge deducted
under the policies. The 2.5% charge, which is based on the
average state and local premium tax rate that we expect to pay in
all states and on certain administrative costs associated with
state filings, is not intended to produce a profit.
Monthly Deduction
On each monthly date, Union Central will deduct from the account
value the monthly deductions due, commencing as of the policy
date. Your policy date is the date used to determine your
monthly date. The monthly deduction consists of (1) cost of
insurance charges ("cost of insurance charge"), (2) the monthly
administrative charge (the "administrative charge"), and (3) any
charges for supplemental and/or rider benefits ("supplemental
and/or rider benefit charges"), as described below. The monthly
deduction is deducted from the subdivisions and from the
guaranteed account pro rata on the basis of the portion of
account value in each.
Cost of Insurance Charge. This charge compensates Union Central
for the expense of providing insurance coverage. The charge
depends on a number of variables and therefore will vary from
policy to policy and from monthly date to monthly date. For any
policy, the cost of insurance on a monthly date is calculated by
multiplying the current cost of insurance rate for the insured by
the risk amount under the policy for that monthly date.
The risk amount for a monthly date is the difference between the
death benefit (see page ___) for a policy (as adjusted to take
into account assumed monthly earnings at an annual rate of 4%)
and the account value, as calculated on that monthly date less
any monthly deduction due on that date (except the cost of
insurance).
The current cost of insurance rate for a policy is based on the
age at issue, sex and rate class of the insured and on the policy
year, and therefore varies from time to time. Different current
cost of insurance rates apply to policies with a specified amount
under $250,000 than to policies with a specified amount of
$250,000 or more and, in general, policies with a specified
amount of $250,000 or more may have lower current cost of
insurance rates. Union Central currently places insureds in the
following rate classes, based on underwriting: Standard Tobacco
(ages 0-75), Standard Nontobacco (ages 20-75), or Preferred (ages
20-70). The Preferred rate class is only available under
policies with specified amounts of $100,000 or more. We also may
place an insured in a substandard rate class, which involves a
higher mortality risk than the standard tobacco or standard
nontobacco classes.
Union Central will determine a cost of insurance rate for
increases in coverage based on the age of the insured at the time
of the increase. The following rules will apply for purposes of
determining the risk amount for each rate.
Union Central places the insured in a rate class when the policy
is issued, based on Union Central's underwriting of the
application. This original rate class applies to the initial
specified amount. When an increase in specified amount is
requested, Union Central conducts underwriting before approving
the increase (except as noted below) to determine whether a
different rate class will apply to the increase. If the rate
class for the increase has lower cost of insurance rates than the
original rate class, then the rate class for the increase will
also be applied to the initial specified amount. If the rate
class for the increase has higher cost of insurance rates than
the original rate class, the rate class for the increase will
apply only to the increase in specified amount, and the original
rate class will continue to apply to the initial specified
amount.
Union Central does not conduct underwriting for an increase in
specified amount if the increase is requested by exercising an
option to increase the specified amount automatically, without
underwriting. See "Supplemental and/or Rider Benefits," page
___. In such case, the insured's rate class for an increase will
be the class in effect when the guaranteed option rider was
issued.
For purposes of determining the risk amount associated with a
specified amount, we will attribute the account value solely to
the initial specified amount unless the account value exceeds the
initial specified amount. If the account value exceeds the
initial specified amount, the excess will be considered
attributable to the increases in specified amount in the order of
the increases. If there is a decrease in specified amount after
an increase, a decrease is applied first to decrease any prior
increases in specified amount, starting with the most recent
increase and then each prior increase.
Union Central guarantees that the cost of insurance rates used to
calculate the monthly cost of insurance charge will not exceed
the maximum cost of insurance rates set forth in the policies.
The guaranteed rates for standard classes are based on the 1980
Commissioners' Standard Ordinary Mortality Tables, Male or
Female, Smoker or Nonsmoker Mortality Rates ("1980 CSO Tables").
The guaranteed rates for substandard classes are based on
multiples of or additives to the 1980 CSO Tables.
Union Central's current cost of insurance rates may be less than
the guaranteed rates that are set forth in the policy. Current
cost of insurance rates will be determined based on Union
Central's expectations as to future mortality, investment
earnings, expenses, taxes, and persistency experience. These
rates may change from time to time.
Cost of insurance rates (whether guaranteed or current) for an
insured in a standard nontobacco class are equal to or lower than
guaranteed rates for an insured of the same age and sex in a
standard tobacco class. Cost of insurance rates (whether
guaranteed or current) for an insured in a standard nontobacco or
tobacco class are generally lower than guaranteed rates for an
insured of the same age and sex and tobacco status in a
substandard class.
Legal Considerations Relating to Sex-Distinct Premium
Payments and Benefits. Mortality tables for the policies
generally distinguish between males and females. Thus,
premium payments and benefits under policies covering males
and females of the same age will generally differ.
Union Central does, however, also offer policies based on
unisex mortality tables if required by state law. Employers
and employee organizations considering purchase of a policy
should consult with their legal advisors to determine
whether purchase of a policy based on sex-distinct actuarial
tables is consistent with Title VII of the Civil Rights Act
of 1964 or other applicable law. Upon request, Union
Central may offer policies with unisex mortality tables to
such prospective purchasers.
Monthly Administrative Charge. Union Central deducts a monthly
administrative charge from the account value on each monthly
date. The administrative charge is currently equal to $25 per
month during the first policy year, and $5 per month thereafter.
We reserve the right to increase the administrative charge after
the first policy year up to $10 per month. The administrative
charge is guaranteed not to increase during the first policy
year, and is guaranteed not to exceed $10 per month thereafter.
The monthly administrative charge reimburses Union Central for
expenses incurred in the administration of the policies and the
separate account. Such expenses include but are not limited to:
confirmations, annual reports and account statements, maintenance
of policy records, maintenance of separate account records,
administrative personnel costs, mailing costs, data processing
costs, legal fees, accounting fees, filing fees, the costs of
other services necessary for owner servicing and accounting,
valuation, regulatory and updating requirements.
We do not expect to profit from these charges. Should the
guaranteed charges prove to be insufficient, we will not increase
the charges above such guaranteed levels.
Supplemental and/or Rider Benefit Charges. See "Supplemental
and/or Rider Benefits," page ___.
Daily Mortality and Expense Risk Charge
Union Central deducts a daily charge from assets in the separate
account attributable to the policies. This charge does not apply
to guaranteed account assets attributable to the policies.
During the first ten policy years, the charge is equal on an
annual basis to 0.75% of assets. Thereafter, the charge is equal
on an annual basis to 0.25% of assets. These rates are
guaranteed not to increase for the duration of a policy. Union
Central may realize a profit from this charge. Although Union
Central does not believe that it is possible to allocate this
charge to different risks, Union Central feels that a reasonable
estimate is that during the first ten policy years, 0.30% of this
charge is allocable to mortality risk, and 0.45% to expense risk;
and thereafter, 0.10% of this charge is allocable to mortality
risk, and 0.15% to expense risk.
The mortality risk Union Central assumes is that the insureds on
the policies may die sooner than anticipated and therefore Union
Central will pay an aggregate amount of death benefits greater
than anticipated. The expense risk Union Central assumes is that
expenses incurred in issuing and administering the policies and
the separate account will exceed the amounts realized from the
administrative charges assessed against the policies.
Transfer Charge
We currently assess a transfer charge of $10 for each transfer
made during a policy year after the first twelve transfers. We
reserve the right to decrease or eliminate the number of free
transfers; in addition the transfer charge may be increased, but
is guaranteed not to exceed $15 per transfer. We will deduct the
transfer charge from the remaining account value in the
subdivisions or the guaranteed account from which the transfer is
being made on a pro rata basis. We do not expect a profit from
this charge.
Surrender Charge
If a policy is completely surrendered or lapses, Union Central
may deduct a surrender charge from the account value. The
surrender charge includes a sales surrender charge and an
administrative surrender charge. The maximum surrender charge is
set forth in your policy. There is no additional sales surrender
charge applicable to increases in specified amount. However, if
the policy is completely surrendered following an increase in
specified amount, an additional administrative surrender charge
may apply, as described below.
Any surrender charge deducted upon lapse is credited back to the
policy's account value upon reinstatement. The surrender charge
on the date of reinstatement will be the same as it was on the
date of lapse. For purposes of determining the surrender charge
on any date after reinstatement, the period the policy was lapsed
will not count.
Sales Surrender Charge. A sales surrender charge is deducted if
the policy is surrendered or lapses during the first fifteen
policy years following the policy date. The maximum sales
surrender charge is 26% of the premiums paid up to a sales
surrender premium shown in the policy. The maximum amount shown
in the policy is based on the age at issue, sex, specified
amount, death benefit option, and rate class applicable to the
insured. Increases in the policy's specified amount will not
affect the amount of the sales surrender premium, or the amount
of the maximum sales surrender charge. Decreases in the policy's
specified amount may reduce the sales surrender premium if the
decrease is effective prior to the payment of cumulative premiums
in an amount equal to the initial sales surrender premium shown
in the policy. We will notify you of any reduction in the sales
surrender premium, and the amount of the maximum sales surrender
charge, at the time of any decrease in specified amount that
causes such reductions.
The greatest sales surrender charge applicable to a portion of
account value is paid if you lapse or surrender in policy years
one through five. The maximum sales surrender charge in these
years equals 26% of actual premiums paid up to the sales
surrender premium shown in the policy. After the fifth policy
year, the maximum sales surrender charge percentage declines on a
monthly basis in level increments until it reaches 0% at the end
of the fifteenth policy year, as shown in the table below:
<TABLE>
<CAPTION>
END OF POLICY YEAR SALES SURRENDER CHARGE PERCENTAGE
- ------------------ --------------------------------
<S> <C>
1-5 26%
6 23.4%
7 20.8%
8 18.2%
9 15.6%
10 13.0%
11 10.4%
12 7.8%
13 5.2%
14 2.6%
15 0%
</TABLE>
The purpose of the sales surrender charge is to reimburse Union
Central for some of the expenses incurred in the distribution of
the policies. The sales surrender charge may be insufficient to
recover distribution expenses related to the sale of the
policies. Unrecovered expenses are borne by Union Central's
general assets, which may include profits, if any, from the
mortality and expense risk charge and mortality gains from cost
of insurance charges. See "Daily Mortality and Expense Risk
Charge," page ___, and "Cost of Insurance Charge," page __.
Administrative Surrender Charge. An administrative surrender
charge is deducted if the policy is surrendered or lapses during
the first fifteen policy years following the policy date or any
increase in specified amount (see "Surrender Charge" above). The
administrative surrender charge is equal to an amount per $1000
of specified amount, and depends upon the age of the insured at
the time that the specified amount to which it applies was
issued, and the policy year in which the charge is imposed. For
issue ages 30 to 39, the amount per $1000 is $3.50 during policy
years 1 through 5; for issue ages 40 to 49, the amount per $1000
is $4.50 during policy years 1 through 5; for issue ages 50 to
59, the amount per $1000 is $5.50 during policy years 1 through
5; and for issue ages 60 to 69, the amount per $1000 is $6.50
during policy years 1 through 5. The charge declines monthly
after the end of the fifth policy year to zero at the end of
policy year fifteen. Applicable administrative surrender charge
rates, which increase with issue age, are set forth in full in
the policy.
If the specified amount is increased, the increase is subject to
a new administrative surrender charge. This charge is imposed if
the policy is surrendered or lapses within fifteen policy years
from the effective date of the increase, and is in addition to
any sales surrender charge or administrative surrender charge
that may be applicable if the policy is surrendered or lapses
within fifteen policy years after the policy date.
The administrative surrender charge partially covers the
administrative costs of processing surrenders, lapses, and
increases and reductions in specified amount, as well as legal,
actuarial, systems, mailing, and other overhead costs connected
with Union Central's variable life insurance operations. This
charge has been designed to cover actual costs and is not
intended to produce a profit.
Fund Expenses
The value of the net assets of each subaccount reflects the
investment advisory fees and other expenses incurred by the
corresponding portfolio in which the subaccount invests. See the
prospectuses for the portfolios.
Cost of Additional Benefits Provided by Riders
The cost of additional benefits provided by riders is part of the
monthly deduction and is charged to the account value on the
monthly date.
Income Tax Charge
Union Central does not currently assess any charge for income
taxes incurred as a result of the operations of the subaccounts
of the separate account. We reserve the right, however, to
assess a charge for such taxes against the subaccounts if we
determine that such taxes will be incurred.
Special Arrangements
Where permitted by state regulation, Union Central may reduce or
waive the premium expense charge, monthly administrative charge,
and/or surrender charge under policies purchased by (i)
directors, officers, employees, or agents of Union Central, or
affiliates thereof, or their spouses or dependents; (ii)
directors, officers, employees, or agents of broker-dealers that
have entered into selling agreements with Carillon Investments,
Inc. relating to the policies, or their spouses or dependents; or
(iii) directors, officers, employees, or affiliates of the
portfolios or investment advisers or sub-advisers or distributors
thereof, or their spouses or dependents. Union Central may in
the future reduce or eliminate the premium expense charge and/or
surrender charge if a policy is purchased by the owner of another
policy issued by Union Central, and/or through transfer or
exchange from a life insurance policy issued by Union Central,
each in accordance with rules established by Union Central and
applied on a uniform basis. The home office can provide advice
regarding the availability of reduced or waived charges.
The Policies may be issued to group or sponsored arrangements, as
well as on an individual basis. A "group arrangement" includes a
program under which a trustee, employer or similar entity
purchases policies covering a group of individuals. An example
of such an arrangement is a non-qualified deferred compensation
plan. A "sponsored arrangement" includes a program under which
an employer permits group solicitation of its employees or an
association permits group solicitation of its members for the
purchase of policies on an individual basis. The policies may
not be available in connection with group or sponsored
arrangements in all states.
For policies issued in connection with group or sponsored
arrangements, Union Central may reduce or waive one or more of
the following charges: the premium expense charge, surrender
charge, monthly charge for the cost of insurance, rider charges,
monthly administrative charges, daily mortality and expense risk
charge, and/or transfer charge. In addition, the interest rate
credited on amounts taken from the subdivisions as a result of a
loan may be increased for these policies. Union Central will
waive or reduce these charges according to its rules in effect
when the policy application is approved. To qualify for a waiver
or reduction, a group or sponsored arrangement must satisfy
certain criteria, for example, size of the group, or number of
years in existence. Generally, the sales contacts and effort,
administrative costs and mortality cost per policy vary based on
such factors as the size of the group or sponsored arrangement,
its stability, the purposes for which the policies are purchased,
and certain characteristics of its members. The amount of
reduction and the criteria for qualification will reflect the
reduced sales and administrative effort resulting from sales to
qualifying group or sponsored arrangements. Union Central may
modify from time to time the amount or availability of any charge
reduction or waiver, or the criteria for qualification.
Charge reductions or waivers will not be unfairly discriminatory
against any person, including the affected owners and all other
owners of policies funded by the separate account.
HOW YOUR ACCOUNT VALUES VARY
There is no minimum guaranteed account value or cash surrender
value. These values will vary with the investment experience of
the subaccounts and/or the daily crediting of interest in the
guaranteed account, and will depend on the allocation of account
value. If the cash surrender value on a monthly date is less
than the amount of the monthly deduction to be deducted on that
date (see page ___) and the minimum guaranteed period is not then
in effect, the policy will be in default and a grace period will
begin. See "Minimum Guaranteed Period," page __, and "Grace
Period," page ___.
Determining the Account Value
On the policy date, the account value is equal to the initial net
premium credited, less the monthly deduction made as of the
policy date. On each valuation date thereafter, the account
value is the sum of the variable account, the guaranteed account,
and the loan account. The account value will vary to reflect the
performance of the subdivisions to which amounts have been
allocated, interest credited on amounts allocated to the
guaranteed account, interest credited on amounts in the loan
account, charges, transfers, partial cash surrenders, loans and
loan repayments.
Subaccount Values. When you allocate an amount to a subdivision,
either by net premium allocation or transfer, your policy is
credited with accumulation units in the subaccount corresponding
to that subdivision. The number of accumulation units is
determined by dividing the amount allocated to the subdivision by
the subaccount's accumulation unit value for the valuation date
when the allocation is effected.
The number of accumulation units credited to your policy will
increase when net premiums are allocated to the subdivision,
amounts are transferred to the subdivision, and loan repayments
are credited to the subdivision. The number of accumulation
units credited to a policy will decrease when the allocated
portion of the monthly deduction is taken from the subdivision, a
loan is made, an amount is transferred from the subdivision, or a
partial surrender is taken from the subdivision.
Determination of Unit Value. The unit value for each subaccount
was arbitrarily set at $10 when the subaccount began operations.
Thereafter, the unit value at the end of every valuation date is
the unit value at the end of the previous valuation date times
the net investment factor, as described below. The variable
account for a policy is determined on any day by multiplying the
number of units attributable to each subaccount corresponding to
subdivisions in which account value is invested by the unit value
for that subaccount on that day, and aggregating the resulting
subaccount values.
Net Investment Factor. The net investment factor is an index
applied to measure the investment performance of a subaccount
from one valuation period to the next. Each subaccount has a net
investment factor for each valuation period which may be greater
or less than one. Therefore, the value of a unit may increase or
decrease. The net investment factor for any subaccount for any
valuation period is determined by dividing (1) by (2) and
subtracting (3) from the result, where:
(1) is the net result of:
a. the net asset value per share of the portfolio held in
the subaccount, determined at the end of the current
valuation period; plus
b. the per share amount of any dividend or capital gain
distributions made by the portfolio to the subaccount,
if the "ex-dividend" date occurs during the current
valuation period; plus or minus
c. a per share charge or credit for any taxes incurred by
or reserved for in the subaccount, which is determined
by us to have resulted from the operations of the
subaccount.
(2) is the net result of:
a. the net asset value per share of the portfolio held in
the subaccount, determined at the end of the last prior
valuation period (adjusted for an "ex-dividend"); plus
or minus
b. the per share charge or credit for any taxes reserved
for the immediately preceding valuation period.
(3) is a daily factor representing the mortality and expense
risk charge deducted from the subaccount for the policy
adjusted for the number of days in the valuation period.
Guaranteed Account. On any valuation date, the guaranteed
account of a policy is the total of all net premiums allocated to
the guaranteed account, plus any amounts transferred to the
guaranteed account, plus interest credited on such net premiums
and amounts, less the amount of any transfers, including transfer
charges, taken from the guaranteed account, less the amount of
any partial cash surrenders taken from the guaranteed account,
less any amounts transferred from the guaranteed account in
connection with loans, and less the pro-rata portion of the
monthly deduction deducted from the guaranteed account.
Loan Account. On any valuation date, if there have been any
loans, the loan account is equal to amounts transferred to the
loan account from the subaccounts and from the guaranteed account
as collateral for loans and for due and unpaid loan interest,
amounts transferred from the loan account to the subaccounts and
the guaranteed account as policy debt is repaid, and interest
credited on the loan account.
Cash Value
The cash value on a valuation date is the account value less the
surrender charge that would be applicable on that valuation date.
Cash Surrender Value
The cash surrender value on a valuation date is the cash value
reduced by any policy debt. Cash surrender value is used to
determine whether a partial cash surrender may be taken, and
whether policy debt is excessive (see page ___). It is also the
amount that is available upon full surrender of the policy (see
page __).
DEATH BENEFIT AND CHANGES IN SPECIFIED AMOUNT
As long as the policy remains in force, Union Central will pay
the death benefit proceeds upon receipt at the home office of
proof of the insured's death that Union Central deems
satisfactory. Union Central may require return of the policy.
The death benefit proceeds will be paid in a lump sum generally
within seven calendar days of receipt of satisfactory proof (see
"When Proceeds Are Paid," page __) or, if elected, under a
payment option (see "Payment Options," page __). The death
benefit will be paid to the beneficiary. See "Selecting and
Changing the Beneficiary," page __.
Amount of Death Benefit Proceeds
The death benefit proceeds are equal to the sum of the death
benefit under the death benefit option selected calculated on the
date of the insured's death, plus any supplemental and/or rider
benefits, minus any policy debt on that date. If the date of
death occurred during a grace period, the death benefit proceeds
are the death benefit immediately prior to the start of the grace
period, minus policy debt and minus any past due monthly
deductions. Under certain circumstances, the amount of the death
benefit may be further adjusted. See "Limits on Rights to
Contest the Policy" and "Misstatement of Age or Sex," page __.
If part or all of the death benefit is paid in one sum, Union
Central will pay interest on this sum as required by applicable
state law from the date of receipt of due proof of the insured's
death to the date of payment.
Death Benefit Options
The owner may choose one of two death benefit options, which will
be used to determine the death benefit. Under Option A, the
death benefit is the greater of the specified amount or the
Applicable Percentage of account value on the date of the
insured's death. Under Option B, the death benefit is the
greater of the specified amount plus the account value on the
date of death, or the Applicable Percentage of the account value
on the date of the insured's death.
If investment performance is favorable, the amount of the death
benefit may increase. However, under Option A, the death benefit
ordinarily will not change for several years to reflect any
favorable investment performance and may not change at all.
Under Option B, the death benefit will vary directly with account
value, which reflects the investment performance of the
subaccounts as well as interest credited to the guaranteed
account. For an illustration of the impact that investment
performance may have on the death benefit, see the illustrations
beginning on page __.
The "Applicable Percentage" is 250% when the insured has attained
age 40 or less, and decreases each year thereafter to 100% when
the insured has attained age 95. A table showing the Applicable
Percentages for Attained Ages 0 to 95 is included in Appendix A.
Initial Specified Amount and Death Benefit Option
The initial specified amount is set at the time the policy is
issued. You may change the specified amount from time to time,
as discussed below. You select the death benefit option when you
apply for the policy. You also may change the death benefit
option, as discussed below.
Changes in Death Benefit Option
On or after one year from the policy date, you may change the
death benefit option on your policy, by notice to us, subject to
the following rules. After any change, the specified amount must
be at least $50,000. The effective date of the change will be
the monthly date next following the day that Union Central
receives and accepts notice of the request for change. Union
Central may require satisfactory evidence of insurability.
When a change from Option A to Option B is made, the specified
amount after the change is effected will be equal to the
specified amount before the change less the account value on the
effective date of the change. When a change from Option B to
Option A is made, unless requested by notice to us, the specified
amount after the change will be equal to the specified amount
before the change is effected and the death benefit will be
reduced by the account value on the effective date of the change.
Changes in Specified Amount
On or after one year from the policy date, you may request a
change in the specified amount, by notice to us, subject to the
following rules. If a change in the specified amount would
result in total premiums paid exceeding the premium limitations
prescribed under current tax law to qualify your policy as a life
insurance contract, Union Central will refund promptly to the
owner the amount of such excess above the premium limitations.
The minimum amount of any decrease in specified amount is $5,000,
and any decrease in specified amount will become effective on the
monthly date next following the date that notice requesting the
decrease is received and approved by us. Union Central reserves
the right to decline a requested decrease in the specified amount
if compliance with the guideline premium limitations under
current tax law resulting from this decrease would result in
immediate termination of the policy, or if to effect the
requested decrease, payments to the owner would have to be made
from the accumulated value for compliance with the guideline
premium limitations, and the amount of such payments would exceed
the cash surrender value under the policy.
Decreasing the specified amount of the policy may have the effect
of decreasing monthly cost of insurance charges.
Any increase in the specified amount must be at least $5,000
(unless the increase is effected pursuant to a rider providing
for automatic increases in specified amount), and an application
must be submitted. Any increase that is not guaranteed by rider
will require satisfactory evidence of insurability and must meet
Union Central's underwriting rules. A change in planned periodic
premiums may be advisable. See "Premium Payments Upon Increase
in Specified Amount," page __. The increase in specified amount
will become effective on the monthly date next following the date
the request for the increase is received and approved, and the
account value will be adjusted to the extent necessary to reflect
a monthly deduction as of the effective date based on the
increase in specified amount.
A new administrative surrender charge period will apply to each
portion of the policy resulting from an increase in specified
amount, starting with the effective date of the increase. (See
"Surrender Charge," page __).
Selecting and Changing the Beneficiary
You select one or more beneficiary(ies) in your application. You
may later change the beneficiary(ies) in accordance with the
terms of the policy. The primary beneficiary, or, if the primary
beneficiary is not living, the contingent beneficiary, is the
person entitled to receive the death benefit proceeds under the
policy. If the insured dies and there is no surviving
beneficiary, the owner or the estate of the owner will be the
beneficiary. If a beneficiary is designated as irrevocable, then
the beneficiary's consent must be obtained to change the
beneficiary.
CASH BENEFITS
Loans
After the first policy year and while the insured is living, and
provided the policy is not in the grace period, you may borrow
against your policy at any time by submitting notice to the home
office. (In certain states, loans may also be available during
the first policy year.) The minimum amount of any loan request
is $500 (subject to state regulation). The maximum loan amount
is equal to the sum of 90% of the variable account, plus 100% of
the guaranteed account, less any surrender charges that would be
applicable on the effective date of the loan, less loan interest
to the annual date. Outstanding loans reduce the amount
available for new loans. Loans will be processed as of the date
your notice is received and approved. Loan proceeds generally
will be sent to you within seven calendar days. See "When
Proceeds Are Paid," page __, and "Payments from the Guaranteed
Account," page __.
Interest. Each year Union Central will set the annual loan
interest rate. The rate will never be more than the maximum
permitted by law, and will not be changed more frequently than
once per year. The rate for a policy year may not exceed the
greater of (i) the Published Monthly Average for the calendar
month ending two months before the annual date at the beginning
of the policy year; or (ii) the guaranteed minimum interest rate
applicable to the guaranteed account, plus 1.0%. The Published
Monthly Average means Moody's Corporate Bond Yield Average -
Monthly Average Corporates, as published by Moody's Investor
Service, Inc., or any successor to that service; or if the
average is no longer published, a substantially similar average,
established by regulation issued by the insurance supervisory
official of the state in which the policy is delivered.
If the maximum annual loan interest rate for a policy year is at
least 0.5% higher than the rate set for the previous policy year,
we may increase the rate to no more than that limit. If the
maximum limit for a policy year is at least 0.5% lower than the
rate set for the previous policy year, we will reduce the rate to
at least that limit.
Union Central will notify owners of the initial rate of interest
when a loan is made. We will notify the owner at least thirty
days in advance of any increase in the annual loan interest rate
applicable to any outstanding loan.
Interest is due and payable at the end of each policy year while
a loan is outstanding. If interest is not paid when due, the
amount of the interest is added to the loan and becomes part of
the outstanding loan.
Policy Debt. Outstanding loans (including unpaid interest added
to the loan) plus accrued interest not yet due equals the policy
debt.
Loan Collateral. When a policy loan is made, an amount
sufficient to secure the loan is transferred out of the variable
account and the guaranteed account and into the policy's loan
account. Thus, a loan will have no immediate effect on the
account value, but other policy values, such as the cash
surrender value and the death benefit proceeds, will be reduced
immediately by the amount transferred to the loan account. This
transfer is made against the account value in each subdivision
and the guaranteed account in proportion to the account value in
each on the effective date of the loan, unless the owner
specifies that transfers be made from specific subdivisions. An
amount of account value equal to any due and unpaid loan interest
which exceeds interest credited to the loan account will also be
transferred to the loan account on each annual date. Such
interest will be transferred from each subdivision and the
guaranteed account in the same proportion that account value in
each subdivision and the guaranteed account bears to the total
unloaned account value.
The loan account will be credited with interest at an effective
annual rate of not less than the annual loan interest rate, less
1.25% during the first ten policy years, and 0.50% thereafter.
Thus, the maximum net cost of a loan per year is 1.25% during the
first ten policy years, and 0.50% thereafter (the net cost of a
loan is the difference between the rate of interest charged on
policy loans and the amount credited on the equivalent amount
held in the loan account). Union Central will determine the rate
of interest to be credited to the loan account in its sole
discretion, and the rate may change from time to time.
Loan Repayment; Effect if Not Repaid. You may repay all or part
of your policy debt at any time while the insured is living and
the policy is in force. Loan repayments must be sent to the home
office and will be credited as of the date received. The owner
may give us notice that a specific unscheduled premium made while
a loan is outstanding is to be applied as a loan repayment.
(Loan repayments, unlike unscheduled premiums, are not subject to
premium expense charges.) We will apply any planned periodic
premiums, and any unscheduled premiums without notice, as
premium payments. When a loan repayment is made, account value
in the loan account in an amount equivalent to the repayment is
transferred from the loan account to the subdivisions and the
guaranteed account. Thus, a loan repayment will have no
immediate effect on the account value, but other policy values,
such as the cash surrender value, will be increased immediately
by the amount of the loan repayment. Amounts will be transferred
to the subdivisions and the guaranteed account in accordance with
the owner's current net premium allocation instructions.
If the death benefit becomes payable while a loan is outstanding,
the policy debt will be deducted in calculating the death benefit
proceeds.
If on a monthly date the cash value less any policy debt (the
cash surrender value) exceeds the amount of the monthly deduction
due for the following policy month, the policy will be in
default. You, and any assignee of record, will be sent notice of
the default. You will have a 61-day grace period to submit a
sufficient payment to avoid termination of coverage under the
policy. The notice will specify the amount that must be repaid
to prevent termination.
Effect of Policy Loan. A loan, whether or not repaid, will have
a permanent effect on the death benefit and policy values because
the investment results of the subaccounts of the separate account
and current interest rates credited on account value in the
guaranteed account will apply only to the non-loaned portion of
the account value. The longer the loan is outstanding, the
greater the effect is likely to be. Depending on the investment
results of the subaccounts or credited interest rates for the
guaranteed account while the loan is outstanding, the effect
could be favorable or unfavorable. Loans may increase the
potential for lapse if investment results of the subaccounts are
less than anticipated. Also, loans could, particularly if not
repaid, make it more likely than otherwise for a policy to
terminate. See "Tax Considerations," page __, for a discussion
of the tax treatment of policy loans, and the adverse tax
consequences if a policy lapses with loans outstanding. In
addition, if your policy is a modified endowment contract, loans
may be currently taxable and subject to a 10% penalty tax.
Surrendering the Policy for Cash Surrender Value
You may surrender your policy at any time for its cash surrender
value by submitting notice to the home office. Union Central may
require return of the policy. A surrender charge may apply. See
"Surrender Charges," page __. A surrender request will be
processed as of the date your notice and all required documents
are received. Payment will generally be made within seven
calendar days. See "When Proceeds are Paid," page __, and
"Payments from the Guaranteed Account," page __. The cash
surrender value may be taken in one lump sum or it may be applied
to a payment option acceptable to you and to us. See "Payment
Options," page __. Your policy will terminate and cease to be in
force if it is surrendered. It cannot later be reinstated. A
surrender may result in adverse tax consequences, and if your
policy is a modified endowment contract, may also trigger a 10%
penalty tax. See "Tax Considerations," page __.
Partial Cash Surrenders
You may make partial cash surrenders under your policy at any
time subject to the conditions below. You must submit notice to
the home office. Each partial cash surrender must be at least
$500. The partial surrender amount may not exceed the cash
surrender value. There is no fee or charge imposed on a partial
cash surrender. As of the date Union Central receives notice of
a partial cash surrender request, the cash value will be reduced
by the partial cash surrender amount.
Unless the owner requests that a partial cash surrender be
deducted from specified subdivisions, the partial cash surrender
amount will be deducted from your account value in the
subdivisions and in the guaranteed account pro-rata in proportion
to the account value in each.
If death benefit Option A is in effect, Union Central will reduce
the specified amount by the partial cash surrender amount. Union
Central may reject a partial cash surrender request if the
partial cash surrender would reduce the specified amount below
$50,000, or if the partial cash surrender would cause the policy
to fail to qualify as a life insurance contract under applicable
tax laws, as interpreted by Union Central.
Partial cash surrender requests will be processed as of the date
notice is received by us, and generally will be paid within seven
calendar days. See "When Proceeds Are Paid," page __, and
"Payments from the Guaranteed Account," page __.
A partial cash surrender may result in adverse tax consequences,
and if your policy is a modified endowment contract, may also
trigger a 10% penalty tax. See "Tax Considerations," page __.
Maturity Benefit
The maturity date is generally the insured's age 100. If the
policy is still in force on the maturity date, the maturity
benefit will be paid to you. The maturity benefit is equal to
the cash surrender value on the maturity date.
Payment Options
Surrender proceeds and death benefit proceeds under the policy
are generally payable in a lump sum. We may offer alternative
payment options. Owners or beneficiaries should contact Union
Central or their Union Central agent for information regarding
payment options that may be available at the time of payment.
ILLUSTRATIONS OF ACCOUNT VALUES, CASH SURRENDER VALUES, DEATH
BENEFITS AND ACCUMULATED PREMIUM PAYMENTS
The following tables have been prepared to illustrate
hypothetically how certain values under a policy may change with
investment performance over an extended period of time. The
tables illustrate how account values, cash surrender values and
death benefits under a policy covering an insured of a given age
on the issue date, would vary over time if periodic planned
premiums were paid annually and the return on the assets in the
each of the portfolios were an assumed uniform gross annual rate
of 0%, 6% and 12%. The values would be different from those
shown if the returns averaged 0%, 6% or 12% but fluctuated over
and under those averages throughout the years shown. The tables
also show planned periodic premiums accumulated at 5% interest
compounded annually. THE HYPOTHETICAL INVESTMENT RATES OF RETURN
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. Actual rates of
return for a particular policy may be more or less than the
hypothetical investment rates of return and will depend on a
number of factors, including the investment allocations made by
an owner and prevailing rates. These illustrations assume that
net premiums are allocated equally among the subdivisions
available under the policy, and that no amounts are allocated to
the guaranteed account.
The illustrations reflect the fact that the net investment return
on the assets held in the subaccounts is lower than the gross
after tax return of the selected portfolios. The tables assume
an average annual expense ratio of 0.799% of the average daily
net assets of the portfolios available under the policies. This
average annual expense ratio is based on (i) the expense ratios
of each of the portfolios except the Carillon S&P 500 Index
Portfolio for the last fiscal year, adjusted, as appropriate, for
any material changes in expenses effective for the current fiscal
year of a portfolio; and (ii) for the Carillon S&P 500 Index
Portfolio, which commenced operations on January 2, 1996, the
estimated expense ratio for the first year of operations, net of
the effect of a voluntary expense reimbursement arrangement with
the portfolio's adviser. (This arrangement can be terminated at
any time. If the arrangement is terminated, the amounts shown in
the following illustrations could be lower.) For information on
the portfolios' expenses, see the prospectuses for the portfolios
accompanying this Prospectus.
In addition, the illustrations reflect the daily charge to the
separate account for assuming mortality and expense risks, which
is equal on an annual basis to 0.75% during the first ten policy
years, and 0.25% thereafter. After deduction of portfolio
expenses and the mortality and expense risk charge, the
illustrated gross annual investment rates of return of 0%, 6% and
12% would correspond to approximate net annual rates of -1.537%,
4.371% and 10.278%, respectively, during the first ten policy
years, and -1.044%, 4.894%, and 10.831%, respectively,
thereafter.
The illustrations also reflect the deduction of the applicable
premium expense charge, and the monthly deduction, including the
monthly cost of insurance charge for the hypothetical insured.
Union Central's current cost of insurance charges, and the higher
guaranteed maximum cost of insurance charges that Union Central
has the contractual right to charge, are reflected in separate
illustrations on each of the following pages. All the
illustrations reflect the fact that no charges for federal or
state income taxes are currently made against the separate
account and assume no policy debt or charges for supplemental
and/or rider benefits.
The illustrations are based on Union Central's sex distinct
preferred rates. Upon request, owner(s) will be furnished with a
comparable illustration based upon the proposed insured's
individual circumstances. Such illustrations may assume
different hypothetical rates of return than those illustrated in
the following tables.
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 40 $5,000 ANNUAL PREMIUM USING CURRENT CHARGES 400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- -----------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- -----------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ------ ------ ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 400000 400000 400000 3486 3727 3968 386 627 868
2 10762 400000 400000 400000 7108 7812 8546 3938 4642 5376
3 16551 400000 400000 400000 10626 12028 13548 7456 8859 10378
4 22628 400000 400000 400000 14034 16373 19008 10864 13203 15839
5 29010 400000 400000 400000 17336 20856 24981 14167 17687 21812
6 35710 400000 400000 400000 20535 25485 31522 17682 22632 28669
7 42746 400000 400000 400000 23638 30274 38699 21103 27738 36163
8 50133 400000 400000 400000 26647 35231 46581 24429 33012 44362
9 57889 400000 400000 400000 29563 40363 55244 27661 38462 53342
10 66034 400000 400000 400000 32380 45676 64767 30795 44091 63182
11 74586 400000 400000 400000 35380 51542 75739 34112 50275 74471
12 83565 400000 400000 400000 38283 57645 87873 37332 56694 86922
13 92993 400000 400000 400000 41081 63987 101295 40447 63353 100661
14 102893 400000 400000 400000 43767 70577 116152 43450 70260 115835
15 113287 400000 400000 400000 46331 77419 132603 46331 77419 132603
20 173596 400000 400000 400000 58488 117246 247396 58488 117246 247396
25 250567 400000 400000 538433 66270 165497 441338 66270 165497 441338
30 348804 400000 400000 885322 67998 224883 763209 67998 224883 763209
(1) Assumes that no policy loans have been made.
(2) Current values reflect applicable Premium Expense Charges,
current cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $5.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894%, and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
/TABLE
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 40 $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- --------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% -------------------- ----------------------- --------------------
OF INTEREST 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 400000 400000 400000 3409 3647 3885 309 547 785
2 10762 400000 400000 400000 6881 7574 8296 3711 4404 5126
3 16551 400000 400000 400000 10239 11611 13098 7070 8441 9928
4 22628 400000 400000 400000 13474 15753 18323 10305 12584 15153
5 29010 400000 400000 400000 16589 20007 24018 13419 16838 20849
6 35710 400000 400000 400000 19571 24365 30221 16718 21512 27368
7 42746 400000 400000 400000 22416 28826 36979 19880 26290 34444
8 50133 400000 400000 400000 25120 33389 44350 22901 31170 42131
9 57889 400000 400000 400000 27678 38055 52396 25776 36153 50494
10 66034 400000 400000 400000 30079 42817 61179 28494 41233 59595
11 74586 400000 400000 400000 32586 48026 71252 31318 46758 69984
12 83565 400000 400000 400000 34919 53360 82320 33968 52409 81369
13 92993 400000 400000 400000 37056 58805 94485 36422 58171 93851
14 102893 400000 400000 400000 38978 64353 107868 38661 64036 107551
15 113287 400000 400000 400000 40657 69984 122598 40657 69984 122598
20 173596 400000 400000 400000 44599 99031 222930 44599 99031 222930
25 250567 400000 400000 480255 37678 127808 393651 37678 127808 393651
30 348804 400000 400000 782929 10583 151454 674938 10583 151454 674938
(1) Assumes that no policy loans have been made.
(2) Guaranteed values reflect applicable Premium Expense Charges,
guaranteed cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $10.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894% and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 40 $5,000 ANNUAL PREMIUM USING CURRENT CHARGES $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ---------------------- --------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- --------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- ------- ------ ------ ------ ------ ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 403478 403718 403958 3478 3718 3958 378 618 858
2 10762 407082 407784 408515 7082 7784 8515 3913 4614 5346
3 16551 410574 411969 413480 10574 11969 13480 7405 8800 10311
4 22628 413946 416268 418884 13946 16268 18884 10776 13099 15715
5 29010 417201 420689 424775 17201 20689 24775 14032 17519 21605
6 35710 420341 425235 431202 20341 25235 31202 17488 22382 28349
7 42746 423374 429920 438227 23374 29920 38227 20839 27384 35692
8 50133 426301 434747 445911 26301 34747 45911 24082 32528 43692
9 57889 429121 439722 454319 29121 39722 54319 27219 37821 52417
10 66034 431829 444844 463518 31829 44844 63518 30244 43259 61934
11 74586 434702 450478 474074 34702 50478 74074 33434 49210 72806
12 83565 437461 456302 485683 37461 56302 85683 36510 55351 84732
13 92993 440094 462310 498447 40094 62310 98447 39460 61676 97813
14 102893 442594 468504 512482 42594 68504 112482 42277 68188 112165
15 113287 444948 474877 527909 44948 74877 127909 44948 74877 127909
20 173596 455828 511246 633602 55828 111246 233602 55828 111246 233602
25 250567 461378 551913 803999 61378 151913 403999 61378 151913 403999
30 348804 459569 595424 107966 59569 195424 679666 59569 195424 679666
(1) Assumes that no policy loans have been made.
(2) Current values reflect applicable Premium Expense Charges,
current cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $5.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894%, and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
</TABLE>
<TABLE>
<CAPTION>
MALE ISSUE AGE: 40 $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- --------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- -----------------------
OF INTEREST 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- ------- ------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 403399 403637 403875 3399 3637 3875 299 537 775
2 10762 406854 407543 408262 6854 7543 8262 3684 4374 5093
3 16551 410184 411547 413025 10184 11547 13025 7014 8377 9855
4 22628 413379 415640 418188 13379 15640 18188 10209 12470 15019
5 29010 416442 419825 423794 16442 19825 23794 13273 16656 20624
6 35710 419359 424092 429871 19359 24092 29871 16507 21239 27018
7 42746 422124 428434 436458 22124 28434 36458 19589 25898 33922
8 50133 424732 432848 443600 24732 32848 43600 22513 30629 41381
9 57889 427177 437327 451345 27177 37327 51345 25275 35426 49444
10 66034 429445 441859 459740 29445 41859 59740 27860 40275 58155
11 74586 431793 446781 469301 31793 46781 69301 30525 45513 68034
12 83565 433942 451762 479713 33942 51762 79713 32991 50811 78762
13 92993 435865 456778 491036 35865 56778 91036 35231 56144 90402
14 102893 437541 461805 503345 37541 61805 103345 37224 61488 103028
15 113287 438936 466806 516707 38936 66806 116707 38936 66806 116707
20 173596 440817 490305 602602 40817 90305 202602 40817 90305 202602
25 250567 430671 506475 730620 30671 106475 330620 30671 106475 330620
30 348804 400355 503252 917553 355 103252 517553 355 103252 517553
(1) Assumes that no policy loans have been made.
(2) Guaranteed values reflect applicable Premium Expense Charges,
guaranteed cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $10.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894% and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
/TABLE
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 50 $5,300 ANNUAL PREMIUM USING CURRENT CHARGES $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- -----------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- -----------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 250000 250000 250000 3619 3872 4125 866 1119 1372
2 11408 250000 250000 250000 7368 8106 8876 4543 5281 6050
3 17544 250000 250000 250000 10998 12465 14055 8173 9639 11229
4 23986 250000 250000 250000 14509 16953 19709 11683 14128 16883
5 30750 250000 250000 250000 17895 21571 25884 15069 18746 23059
6 37853 250000 250000 250000 21154 26324 32637 18611 23781 30094
7 45310 250000 250000 250000 24296 31226 40040 22035 28965 37779
8 53141 250000 250000 250000 27336 36302 48183 25358 34324 46205
9 61363 250000 250000 250000 30284 41570 57161 28589 39875 55465
10 69996 250000 250000 250000 33148 47048 67073 31735 45635 65660
11 79061 250000 250000 250000 36219 53131 78545 35089 52001 77414
12 88579 250000 250000 250000 39223 59505 91304 38375 58657 90456
13 98573 250000 250000 250000 42154 66181 105503 41589 65616 104937
14 109066 250000 250000 250000 45006 73175 121314 44723 72893 121031
15 120085 250000 250000 250000 47780 80510 138938 47780 80510 138938
20 184012 250000 250000 304279 59187 122107 262310 59187 122107 262310
25 265601 250000 250000 502069 65703 174896 469223 65703 174896 469223
30 369732 250000 256734 854050 59274 244509 813381 59274 244509 813381
(1) Assumes that no policy loans have been made.
(2) Current values reflect applicable Premium Expense Charges,
current cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $5.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894%, and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 50 $5,300 ANNUAL PREMIUM USING GUARANTEED CHARGES $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- -----------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- -----------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 250000 250000 250000 3386 3632 3878 633 879 1125
2 11408 250000 250000 250000 6810 7516 8254 3984 4691 5428
3 17544 250000 250000 250000 10078 11468 12977 7252 8642 10151
4 23986 250000 250000 250000 13180 15479 18076 10354 12653 15250
5 30750 250000 250000 250000 16101 19536 23577 13276 16711 20752
6 37853 250000 250000 250000 18831 23631 29516 16288 21088 26973
7 45310 250000 250000 250000 21355 27754 35931 19095 25493 33671
8 53141 250000 250000 250000 23669 31901 42877 21691 29923 40899
9 61363 250000 250000 250000 25762 36065 50411 24066 34369 48716
10 69996 250000 250000 250000 27612 40229 58591 26199 38816 57178
11 79061 250000 250000 250000 29457 44720 67950 28327 43590 66820
12 88579 250000 250000 250000 31022 49220 78213 30174 48372 77365
13 98573 250000 250000 250000 32270 53704 89487 31705 53139 88921
14 109066 250000 250000 250000 33157 58143 101900 32874 57861 101618
15 120085 250000 250000 250000 33635 62506 115611 33635 62506 115611
20 184012 250000 250000 250000 28249 82325 212416 28249 82325 212416
25 265601 250000 250000 407525 1086 94296 380864 1086 94296 380864
30 369732 0 250000 692589 0 83739 659608 0 83739 659608
(1) Assumes that no policy loans have been made.
(2) Guaranteed values reflect applicable Premium Expense Charges,
guaranteed cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $10.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894% and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
/TABLE
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 50 $5,300 ANNUAL PREMIUM USING CURRENT CHARGES $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
----------------------- ----------------------- -----------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% ----------------------- ----------------------- -----------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 53602 253854 254106 3602 3854 4106 849 1101 1353
2 11408 257318 258051 258815 7318 8051 8815 4492 5225 5989
3 17544 260896 262348 263921 10896 12348 13921 8070 9522 11095
4 23986 264334 266744 269461 14334 16744 19461 11508 13919 16635
5 30750 267624 271236 275471 17624 21236 25471 14798 18410 22645
6 37853 270763 275819 281991 20763 25819 31991 18220 23276 29447
7 45310 273759 280505 289080 23759 30505 39080 21498 28245 36819
8 53141 276627 285312 296811 26627 35312 46811 24649 33334 44833
9 61363 279378 290253 305259 29378 40253 55259 27683 38558 53564
10 69996 282018 295340 314503 32018 45340 64503 30605 43927 63090
11 79061 284833 300949 325122 34833 50949 75122 33703 49819 73992
12 88579 287550 306762 336818 37550 56762 86818 36702 55914 85970
13 98573 290160 312779 349699 40160 62779 99699 39595 62213 99134
14 109066 292657 319001 363883 42657 69001 113883 42374 68718 113600
15 120085 295040 325437 379511 45040 75437 129511 45040 75437 129511
20 184012 303526 359250 483221 53526 109250 233221 53526 109250 233221
25 265601 305062 394724 648146 55062 144724 398146 55062 144724 398146
30 369732 289317 420111 901627 39317 170111 651627 39317 170111 651627
(1) Assumes that no policy loans have been made.
(2) Current values reflect applicable Premium Expense Charges,
current cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $5.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%,
and 12% would correspond to approximate net annual rates of -1.537%,
4.371%, and 10.278% respectively, during the first ten policy years,
and -1.044%, 4.894%, and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
/TABLE
<PAGE>
<PAGE>
- ----------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
- ----------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE
EXCEL CHOICE
<TABLE>
<CAPTION>
MALE ISSUE AGE: 50 $5,300 ANNUAL PREMIUM USING GUARANTEED CHARGES $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
DEATH BENEFIT ACCOUNT VALUE CASH SURRENDER VALUE
--------------------- ----------------------- ---------------------
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM Investment Return of Investment Return of Investment Return of
END AT 5% --------------------- ----------------------- --------------------
OF INTEREST 0% 6% 12% 0% 6% 12 % 0% 6% 12%
YEAR PER YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
- ---- -------- ------ ------ ----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 253366 253610 253855 3366 3610 3855 613 857 1102
2 11408 256749 257449 258180 6749 7449 8180 3924 4624 5354
3 17544 259954 261326 262815 9954 11326 12815 7128 8500 9989
4 23986 262968 265226 267775 12968 15226 17775 10142 12400 14950
5 30750 265772 269127 273072 15772 19127 23072 12946 16301 20246
6 37853 268351 273011 278719 18351 23011 28719 15808 20468 26176
7 45310 270689 276857 284733 20689 26857 34733 18428 24596 32472
8 53141 272777 280650 291137 22777 30650 41137 20799 28672 39159
9 61363 274601 284370 297953 24601 34370 47953 22905 32674 46258
10 69996 276135 287982 305192 26135 37982 55192 24722 36569 53779
11 79061 277602 291777 313304 27602 41777 63304 26472 40647 62174
12 88579 278729 295422 321950 28729 45422 71950 27881 44574 71102
13 98573 279472 298862 331137 29472 48862 81137 28907 48297 80571
14 109066 279783 302032 340868 29783 52032 90868 29500 51750 90585
15 120085 279609 304861 351142 29609 54861 101142 29609 54861 101142
20 184012 269982 311450 410970 19982 61450 160970 19982 61450 160970
25 265601 0 294985 482672 0 44985 232672 0 44985 232672
30 369732 0 0 554128 0 0 304128 0 0 304128
(1) Assumes that no policy loans have been made.
(2) Guaranteed values reflect applicable Premium Expense Charges,
guaranteed cost of insurance rates, a monthly administrative charge of
$25.00 per month in year 1 and $10.00 per month thereafter, and a
mortality and expense risk charge of 0.75% of assets during the first
ten policy years, and 0.25% thereafter.
(3) Net investment returns are calculated as the hypothetical gross
investment returns less all charges and deductions shown in the
prospectus.
(4) Assumes that the planned periodic premium is paid at the
beginning of each policy year. Values would be different if the
premiums are paid with a different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%,
6%, and 12% would correspond to approximate net annual rates of -
1.537%, 4.371%, and 10.278% respectively, during the first ten policy
years, and -1.044%, 4.894% and 10.831% respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE
IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND PREVAILING RATES. THE DEATH BENEFIT AND ACCOUNT VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS.
NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE PORTFOLIOS THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<PAGE>
OTHER POLICY BENEFITS AND PROVISIONS
Limits on Rights to Contest the Policy
Incontestability. Subject to state regulation, Union Central
will not contest the policy, or any supplemental and/or rider
benefits (except accidental death and/or disability benefits),
after the policy or rider has been in force during the insured's
lifetime for two years from the issue date or the effective date
of the rider, unless fraud is involved. Any increase in the
specified amount will be incontestable with respect to statements
made in the evidence of insurability for that increase after the
increase has been in force during the life of the insured for two
years after the effective date of the increase.
Suicide Exclusion. Subject to state regulation, if the insured
dies by suicide within two years after the issue date, we will
not pay a death benefit. The policy will be terminated, and we
will return the premium payments made before death, less any
policy debt and any partial cash surrenders. If the insured dies
by suicide within two years after an increase in specified amount
that is subject to evidence of insurability, we will not pay any
death benefit attributable to the increase. In such case, prior
to calculating the death benefit, Union Central will restore to
the cash value the sum of the monthly cost of insurance charges
made for that increase.
Changes in the Policy or Benefits
Misstatement of Age or Sex. If the insured's age or sex has been
misstated in the application for the policy or in any application
for supplemental and/or rider benefits:
if the misstatement becomes known after the death of the insured,
then the death benefit under the policy or such supplemental
and/or rider benefits will be adjusted to the correct amount
(reflecting the correct age or sex) for the monthly deduction
made for the month in which death occurred;
if the misstatement becomes known during the lifetime of the
insured, policy values will be adjusted to those based on the
correct monthly deductions (reflecting the correct age or sex)
since the policy date. If the policy's values are insufficient
to cover the monthly deduction on the prior monthly date, the
grace period will be deemed to have begun on such date, and
notification will be sent to the owner at least 61 days prior to
the end of the grace period.
Other Changes. At any time Union Central may make such changes
in the policy as are necessary to assure compliance at all times
with the definition of life insurance prescribed by the Internal
Revenue Code or to make the policy conform with any law or
regulation issued by any government agency to which it is
subject.
When Proceeds Are Paid
Union Central will ordinarily pay any death benefit proceeds,
loan proceeds, partial cash surrender proceeds, or full surrender
proceeds within seven calendar days after receipt at the home
office of all the documents required for such a payment. Other
than the death benefit, which is determined as of the date of
death, the amount will be determined as of the date of receipt of
required documents. However, Union Central may delay making a
payment or processing a transfer request if (1) the New York
Stock Exchange is closed for other than a regular holiday or
weekend, trading on the New York Stock Exchange is restricted by
the SEC, or the SEC declares that an emergency exists as a result
of which the disposal or valuation of separate account assets is
not reasonably practicable; or (2) the SEC by order permits
postponement of payment to protect Union Central's policy owners.
See also "Payments from the Guaranteed Account," page __.
Reports to Policy Owners
Each year you will be sent a report at your last known address
showing, as of the end of the current report period: account
value; cash value; death benefit; amount of interest credited to
the guaranteed account; change in value of the variable account;
premiums paid since the last report; loans; partial cash
surrenders; expense charges; and cost of insurance charges since
the prior report; and any other information required by law. You
will also be sent an annual and a semi-annual report for each
portfolio underlying a subdivision to which you have allocated
account value, including a list of the securities held in each
portfolio, as required by the 1940 Act. In addition, when you
pay premium payments, or if you take out a loan, transfer amounts
or make partial cash surrenders, you will receive a written
confirmation of these transactions.
Assignment
The policy may be assigned in accordance with its terms. In
order for any assignment to be binding upon Union Central, it
must be in writing and filed at the home office. Once Union
Central has received a signed copy of the assignment, the owner's
rights and the interest of any beneficiary (or any other person)
will be subject to the assignment. Union Central assumes no
responsibility for the validity or sufficiency of any assignment.
An assignment is subject to any policy debt.
Reinstatement
The policy may be reinstated within five years after lapse and
before the maturity date, subject to compliance with certain
conditions, including the payment of a necessary premium payment
and submission of satisfactory evidence of insurability. See
your policy for further information.
Supplemental and/or Rider Benefits
The following supplemental and/or rider benefits may be available
and added to your policy. Any monthly charges for these benefits
and/or riders will be deducted from your account value as part of
the monthly deduction (see page __). The supplemental and/or
rider benefits available with the policies provide fixed benefits
that do not vary with the investment experience of the separate
account.
Term Insurance Rider for Other Insured Persons. Provides a
death benefit amount payable on the death of other insured
persons specified. The other insured death benefit amount
may be changed, subject to certain conditions. In addition,
the rider coverage may be converted to a new policy on the
other insured, subject to certain conditions.
Scheduled Increase Option Rider for the Insured. Provides
for automatic increases in the specified amount on each
annual date, subject to the terms of the rider; the amount
of the increase is specified in the rider. The rate class
applicable to the scheduled increases will be the rate class
of the insured on the issue date of the rider. There is no
cost for this rider.
Guaranteed Death Benefit Rider. Provides that the policy
will remain in force and will not lapse during the
Guaranteed Death Benefit Period, provided that the sum of
premium payments to date, less any partial cash surrenders
and any policy debt, equals or exceeds the Guaranteed Death
Benefit Premium times the number of policy months since the
policy date. This rider terminates on any monthly date when
the sum of premium payments, less any partial cash
surrenders and any policy debt, is less than the Guaranteed
Death Benefit Premium multiplied by the number of policy
months since the policy date. This rider is not available
for all ages and rate classes, or under certain
circumstances where the Term Insurance Rider for Other
Insured Persons is also added to the policy.
Cost of Living Rider for the Insured. Provides for
automatic increases in the specified amount on each annual
date, subject to the terms of the rider; the amount of the
increase will be based on increases in the Consumer Price
Index, as specified in the rider. The rate class applicable
to the cost of living increases will be the rate class of
the insured on the issue date of the rider. There is no
cost for this rider.
Guaranteed Insurability Option Rider. Provides the right to
increase the specified amount on each option date by the
benefit amount shown in the rider. No evidence of
insurability will be required. Option dates are the annual
dates nearest the insured's 25th, 28th, 31st, 34th, 37th,
and 40th birthdays. Option dates may be advanced in the
event of the insured's marriage or adoption of a child.
Accidental Death Benefit Rider. Provides an additional
death benefit payable if the insured's death results from
certain accidental causes. There is no cash value for this
benefit.
Total Disability Benefit Rider - Waiver of Monthly
Deduction. Provides for waiver of the monthly deduction
during the total disability of the insured.
Total Disability Benefit Rider - Policy Continuation to
Maturity Date Not Guaranteed. Provides for the crediting to
the policy as premium payments the monthly total disability
benefit set forth in the rider during the total disability
of the insured.
Children's Insurance Rider. Provides a death benefit
payable on the death of a child of the insured. More than
one child can be covered. There is no cash value for this
benefit.
Insurance Exchange Rider. Provides the right to exchange
the policy for a new policy on the life of a substitute
insured. Exercise of the right is subject to satisfactory
evidence of insurability of the substitute insured, and may
result in a cost or credit to the owner. The new policy can
be any adjustable life insurance policy issued by Union
Central at the time the exchange privilege is exercised.
The policy date for the new policy will generally be the
same as the policy date of the exchanged policy; the issue
date for the new policy will be the date of exchange. The
initial cash value under the new policy will be the same as
the cash value of the policy on the date of the exchange.
There is no cost for this rider, and there are no charges or
other fees imposed under the policy or the new policy at the
time of the exchange. For purposes of calculating any
surrender charges subsequently imposed on the policy
acquired by exchange, we will take into account the number
of policy years that this policy, and the policy acquired by
exchange, have been in force. Exercise of this rider will
result in a taxable exchange.
Accelerated Benefits Rider. Union Central intends to offer
in the future a rider benefit that will allow you to receive
an accelerated payment of a portion of the policy's death
benefit. This advance payment of the death benefit will be
available where certain special needs exist, as described
briefly below. The right to exercise the rider will be
subject to conditions specified in the rider. We will make
the accelerated benefits rider available to you only if (1)
your state insurance department has approved the rider, and
(2) the availability of the rider will not jeopardize the
qualification of the policy as life insurance under federal
income tax law. However, Union Central may determine not to
offer the benefit, or may offer a substantially different
benefit, to the extent that we deem advisable in light of
future clarification or interpretation of applicable federal
income tax law. If the accelerated benefit rider is
offered, it is expected to provide that if the insured is
diagnosed as terminally ill, as defined in the rider, you
may request an accelerated payment of the policy's death
benefit. The payment may be subject to discounting and
charges. Payment will be subject to evidence satisfactory
to Union Central.
Additional rules and limits apply to these supplemental and/or
rider benefits. Not all such benefits may be available at any
time and in any given state, and supplemental and/or rider
benefits in addition to those listed above may be made available.
Please ask your Union Central agent for further information, or
contact the home office.
Participating
The policy is issued on a participating basis, and as such is
eligible to share in Union Central's profits and surplus to the
extent determined by our Board of Directors in its sole
discretion. Union Central does not currently anticipate that the
policies will participate in profits or surplus in the
foreseeable future.
State Variations
Certain policy features, including the "free look,"
incontestability, and suicide provisions, are subject to state
variation. The owner should read his or her policy carefully to
determine whether any variations apply in the state in which the
policy is issued.
TAX CONSIDERATIONS
The following summary provides a general description of the
Federal income tax considerations associated with the policy and
does not purport to be complete or to cover all situations. This
discussion is not intended as tax advice. Counsel or other
competent tax advisers should be consulted for more complete
information. This discussion is based upon Union Central's
understanding of the present Federal income tax laws as they are
currently interpreted by the Internal Revenue Service (the
"Service"). No representation is made as to the likelihood of
continuation of the present Federal income tax laws or of the
current interpretations by the Internal Revenue Service.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code") sets forth a definition of a life insurance contract
for Federal income tax purposes. Although the Secretary of the
Treasury (the "Treasury") is authorized to prescribe regulations
implementing Section 7702, while proposed regulations and other
interim guidance has been issued, final regulations have not been
adopted. In short, guidance as to how Section 7702 is to be
applied is limited. If a policy were determined not to be a life
insurance contract for purposes of Section 7702, such policy
would not provide the tax advantages normally provided by a life
insurance policy.
With respect to a policy issued on a standard basis, Union
Central believes that such a policy should meet the Section 7702
definition of a life insurance contract. With respect to a
policy that is issued on a substandard basis (i.e., a premium
class with extra rating involving higher than standard mortality
risk), there is less guidance, in particular as to how the
mortality and other expense requirements of Section 7702 are to
be applied in determining whether such a policy meets the section
7702 definition of a life insurance contract. Thus, it is not
clear whether or not a policy issued on a substandard basis would
satisfy section 7702, particularly if the owner pays the full
amount of premiums permitted under the policy.
If it is subsequently determined that a policy does not satisfy
Section 7702, Union Central may take whatever steps are
appropriate and reasonable to attempt to cause such a policy to
comply with Section 7702. For these reasons, Union Central
reserves the right to modify the policy as necessary to attempt
to qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Code requires that the investments of each
of the subaccounts must be "adequately diversified" in accordance
with Treasury regulations in order for the policy to qualify as a
life insurance contract under Section 7702 of the Code (discussed
above). The subaccounts, through the portfolios, intend to
comply with the diversification requirements prescribed in Treas.
Reg. Section 1.817-5, which affect how the portfolio's assets are to be
invested. Union Central believes that the subaccounts will,
thus, meet the diversification requirements, and Union Central
will monitor continued compliance with this requirement.
In certain circumstances, owners of variable life insurance
contracts may be considered the owners, for federal income tax
purposes, of the assets of the subaccounts used to support their
contracts. In those circumstances, income and gains from the
subaccount assets would be includible in the variable contract
owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of
subaccount assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise
investment control over the assets. The Treasury Department has
also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not
provide guidance concerning the circumstances in which investor
control of the investments of a segregated asset account may
cause the investor (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in
the account." This announcement also stated that guidance would
be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular
subaccounts without being treated as owners of the underlying
assets."
The ownership rights under the policy are similar to, but
different in certain respects from, those described by the IRS in
rulings in which it was determined that policyowners were not
owners of subaccount assets. For example, an owner has
additional flexibility in allocating premium payments and account
value. These differences could result in an owner being treated
as the owner of a pro rata portion of the assets of the
subaccounts. In addition, Union Central does not know what
standards will be set forth, if any, in the regulations or
rulings which the Treasury Department has stated it expects to
issue. Union Central therefore reserves the right to modify the
policy as necessary to attempt to prevent an owner from being
considered the owner of a pro rata share of the assets of the
subaccounts.
The following discussion assumes that the policy will qualify as
a life insurance contract for Federal income tax purposes.
Tax Treatment of Policy Benefits
In General. Union Central believes that the proceeds and cash
value increases of a policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. Thus, the death benefit under the policy
should be excludible from the gross income of the beneficiary
under Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a policy, a
change in the policy's death benefit option, a policy loan, a
partial cash surrender, a surrender, a change in ownership, or an
assignment of the policy may have Federal income tax
consequences. In addition, federal, state and local transfer,
and other tax consequences of ownership or receipt of policy
proceeds depends on the circumstances of each owner or
beneficiary.
The policy may also be used in various arrangements, including
nonqualified deferred compensation or salary continuance plans,
split dollar insurance plans, executive bonus plans, retiree
medical benefit plans and others. The tax consequences of such
plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you
are contemplating the use of a policy in any arrangement the
value of which depends in part on its tax consequences, you
should be sure to consult a qualified tax advisor regarding the
tax attributes of the particular arrangement.
Generally, the owner will not be deemed to be in constructive
receipt of the account value, including increments thereof, until
there is a distribution. The tax consequences of distributions
from, and loans taken from or secured by, a policy depend on
whether the policy is classified as a "Modified Endowment
Contract." Whether a policy is or is not a Modified Endowment
Contract, upon a complete surrender or lapse of a policy or when
benefits are paid at a policy's maturity date, if the amount
received plus the amount of indebtedness exceeds the total
investment in the policy, the excess will generally be treated as
ordinary income subject to tax.
Modified Endowment Contracts. Section 7702A establishes a class
of life insurance contracts designated as "Modified Endowment
Contracts," which applies to life insurance contracts entered
into or materially changed after June 20, 1988. The rules
relating to whether a policy will be treated as a Modified
Endowment Contract are extremely complex and cannot be adequately
described in the limited confines of this summary. In general, a
policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven policy years
exceeds the sum of the net level premiums which would have been
paid on or before such time if the policy provided for paid-up
future benefits after the payment of seven level annual premiums.
A policy may also become a Modified Endowment Contract after a
material change. The determination of whether a policy will be a
Modified Endowment Contract after a material change generally
depends upon the relationship of the death benefit and account
value at the time of such change and the additional premiums paid
in the seven years following the material change.
Due to the policy's flexibility, classification as a Modified
Endowment Contract will depend on the individual circumstances of
each policy. In view of the foregoing, a current or prospective
owner should consult with a competent tax advisor to determine
whether a policy transaction will cause the policy to be treated
as a Modified Endowment Contract. Union Central has established
procedures for monitoring premium payments made under the
policies and for making efforts to notify you on a timely basis
if your policy is in jeopardy of becoming a Modified Endowment
Contract due to the payment of premiums. If acceptance of a
premium paid would, in Union Central's view, cause the policy to
become a Modified Endowment Contract, then to the extent feasible
Union Central will not accept that portion of the premium that
would cause the policy to become a Modified Endowment Contract
unless the owner confirms in writing the owner's intent to
convert the policy to a Modified Endowment Contract. Union
Central may return that portion of the payment pending receipt of
instructions from the owner.
Distributions from Policies Classified as Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts
will be subject to the following tax rules: First, all
distributions, including distributions upon surrender and partial
cash surrender from such a policy are treated as ordinary income
subject to tax up to the amount equal to the excess (if any) of
the account value immediately before the distribution over the
investment in the policy described below) at such time. Second,
loans taken from or secured by such a policy are treated as
distributions from the policy and taxed accordingly. Past due
loan interest that is added to the loan amount will be treated as
a loan. Third, a 10 percent additional income tax is imposed on
the portion of any distribution from, or loan taken from or
secured by, such a policy that is included in income except where
the distribution or loan is made on or after the owner attains
age 59-1/2, is attributable to the owner's becoming disabled, or is
part of a series of substantially equal periodic payments for the
life (or life expectancy) of the owner or the joint lives (or
joint life expectancies) of the owner and the owner's
beneficiary.
Distributions From Policies Not Classified as Modified Endowment
Contracts. Distributions from a policy that is not a Modified
Endowment Contract are generally treated as first, recovering the
investment in the policy (described below) and then, only after
the return of all such investment in the policy, as distributing
taxable income. An exception to this general rule occurs in the
case of a decrease in the policy's death benefit or any other
change that reduces benefits under the policy in the first 15
years after the policy is issued and that results in a cash
distribution to the owner in order for the policy to continue
complying with the Section 7702 definitional limits. Such a cash
distribution will be taxed in whole or in part as ordinary income
(to the extent of any gain in the policy) under rules prescribed
in Section 7702.
Loans from, or secured by, a policy that is not a Modified
Endowment Contract are not treated as distributions. Instead,
such loans are treated as indebtedness of the owner.
Finally, neither distributions (including distributions upon
surrender) nor loans from, or secured by, a policy that is not a
Modified Endowment Contract are subject to the 10 percent
additional income tax rule.
Policy Loan Interest. Generally, consumer interest paid on any
loan under a policy which is owned by an individual is not
deductible. In addition, interest on any loan under a policy
owned by a taxpayer and covering the life of any individual who
is an officer or employer of or is financially interested in the
business carried on by the taxpayer will not be tax deductible to
the extent the aggregate amount of such loans with respect to
contracts covering such individuals exceeds $50,000. The
deduction of interest on policy loans may also be subject to
other restrictions under the Code. A qualified tax adviser
should be consulted before deducting any policy loan interest.
Investment in the Policy. Investment in the policy means: (i)
the aggregate amount of any premiums or other consideration paid
for a policy, minus (ii) the aggregate amount received under the
policy which is excluded from gross income of the owner (except
that the amount of any loan from, or secured by, a policy that is
a Modified Endowment Contract, to the extent such amount is
excluded from gross income, will be disregarded), plus (iii) the
amount of any loan from, or secured by, a policy that is a
Modified Endowment Contract to the extent that such amount is
included in the gross income of the owner.
Multiple Policies. All Modified Endowment Contracts that are
issued by Union Central (or its affiliates) to the same owner
during any calendar year are treated as one Modified Endowment
Contract for purposes of determining the amount includible in an
owner's gross income under Section 72(e) of the Code.
Possible Charge for Union Central's Taxes
At the present time, Union Central makes no charge for any
Federal, state or local taxes (other than the charge for state
premium taxes) that it incurs that may be attributable to the
subaccounts or to the policies. Union Central, however, reserves
the right in the future to make additional charges for any such
tax or other economic burden resulting from the application of
the tax laws that it determines to be properly attributable to
the subaccounts or to the policies. Owners will be notified in
advance of the imposition of any such charges for taxes. If any
tax charges are made in the future, they will be accumulated
daily and transferred from the applicable subaccount to Union
Central's General Account. Any investment earnings on tax
charges accumulated in a subaccount will be retained by Union
Central.
OTHER INFORMATION ABOUT THE POLICIES AND UNION CENTRAL
Sale of the Policies
The policies will be offered to the public on a continuous basis,
and we do not anticipate discontinuing the offering of the
policies. However, we reserve the right to discontinue the
offering. Applications for policies are solicited by agents who
are licensed by applicable state insurance authorities and
appointed by us to sell our variable life contracts and who are
also registered representatives of Carillon Investments, Inc.
("Carillon Investments") or of a broker-dealer that has entered
into a selling agreement with Carillon Investments. The address
of Carillon Investments, one of our wholly-owned subsidiaries, is
1876 Waycross Road, Cincinnati, Ohio 45240. Carillon
Investments is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc.
Carillon Investments acts as the principal underwriter (as
defined in the 1940 Act) for the separate account, pursuant to an
underwriting agreement between Union Central and Carillon
Investments. Carillon Investments is not obligated to sell any
specific number of policies. Selling agents may be paid a
maximum of 50% of planned periodic premiums paid up to an amount
equal to one "target premium," plus 2% of any other first-year
premiums. A "target premium" is an amount of premium based on
the insured's age at issue, sex, rate class, specified amount,
and supplemental and/or rider benefits. Selling agents may also
receive service fees in policy years after the first, additional
compensation based on persistency or other policy-related
factors, as well as non-cash compensation. Sales managers may
also be compensated.
Union Central Directors and Executive Officers
The following table sets forth the name, age, address and
principal occupations during the past five years of each of Union
Central's directors and executive officers.
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions with Depositor and Background
- --------------- ---------------------------------------
<S> <C>
Philip G. Barach Director, Union Central; prior to 1994,
9403 Kenwood Road Chairman of the Board, U.S. Shoe Corporation
Suite D100
Cincinnati, Ohio 45242
V. Anderson Coombe Director, Union Central; Chairman of the Board,
2503 Spring Grove Avenue The Wm. Powell Company
Cincinnati, Ohio 45214
William A. Friedlander Director, Union Central; Chairman,
36 East Fourth Street Bartlett & Co.
Cincinnati, Ohio 45202
William G. Kagler Director, Union Central; former Chairman of the
18 Hampton Court Board, Swallen's, Inc.; prior to November, 1995
Cincinnati, Ohio 45208 various executive positions with Skyline Chili,
Inc.
Lawrence A. Leser Director, Union Central; Chairman and CEO, The
P.O. Box 5380 E.W. Scripps Company; prior to August, 1994,
Cincinnati, Ohio 45202 President and CEO, The E.W. Scripps Company
Francis V. Mastrianna, Ph.D. Director, Union Central; Dean, College of
Slippery Rock University Information Science and Business
of Pennsylvania Administration, Slippery Rock University of
Slippery Rock, PA 16057 of Pennsylvania
Mary D. Nelson, FSA Director, Union Central; President, Nelson and
105 West Fourth Street Company
Cincinnati, Ohio 45202
Paul G. Pearson, Ph.D. Director, Union Central; President Emeritus,
5110 Bonham Road Miami University; prior to 1993, President,
Oxford, Ohio 45056 Miami University
Thomas E. Petry Director, Union Central; Chairman of the Board,
580 Walnut Street President and CEO, Eagle-Picher Industries, Inc
Cincinnati, Ohio 45202
Larry R. Pike* Chairman, President and Chief Executive Officer,
Union Central
Dudley S. Taft Director, Union Central; President, Taft
312 Walnut Street Broadcasting Company
Suite 3550
Cincinnati, Ohio 45202
John M. Tew, Jr., M.D. Director, Union Central; Professor and
506 Oak Street Chairman, Department of Neurosurgery,
Cincinnati, Ohio 45219 University of Cincinnati Medical Center, and
Member, Mayfield Neurological Institute
George L. Clucas* Senior Vice President, Union Central; Chairman,
President and Chief Executive Officer,
Carillon Advisers, Inc.
Charles W. Grover* Executive Vice President, Union Central;
prior to August, 1994, Vice President of
U.S. Marketing, Manufacturers Life Insurance
Company; prior to 1992, Vice President of
Marketing, State Mutual Life Insurance Company
Stephen R. Hatcher* Executive Vice President and Chief Financial
Officer, Union Central
John H. Jacobs* Executive Vice President, Union Central
Dale D. Johnson* Senior Vice President, Union Central
Gerald A. Lockwood* Senior Vice President and Corporate Actuary,
Union Central
David F. Westerbeck* Senior Vice President, General Counsel and
Secretary, Union Central
</TABLE>
* The principal business address of the person designated is
1876 Waycross Road, Cincinnati, Ohio 45240.
State Regulation
Union Central is subject to regulation by the Department of
Insurance of the State of Ohio, which periodically examines the
financial condition and operations of Union Central. Union
Central is also subject to the insurance laws and regulations of
all jurisdictions where it does business. The policy described
in this prospectus has been filed with and, where required,
approved by, insurance officials in those jurisdictions where it
is sold.
Union Central is required to submit annual statements of
operations, including financial statements, to the insurance
departments of the various jurisdictions where it does business
to determine solvency and compliance with applicable insurance
laws and regulations.
Additional Information
A registration statement under the Securities Act of 1933 has
been filed with the SEC relating to the offering described in
this prospectus. This prospectus does not include all the
information set forth in the registration statement. The omitted
information may be obtained at the SEC's principal office in
Washington, D.C. by paying the SEC's prescribed fees.
Experts
The financial statements of The Union Central Life Insurance
Company at December 31, 1994 and 1993 and for the years then
ended, appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon
such report given upon the authority of such firm as experts in
accounting and auditing.
Actuarial Matters
Actuarial matters included in this prospectus have been examined
by Kristal E. Hambrick, FSA, MAAA, of Union Central, whose
opinion is filed as an exhibit to the Registration Statement.
Litigation
No litigation is pending that would have a material effect upon
the separate account.
Legal Matters
Sutherland, Asbill & Brennan of Washington, D.C. has provided
advice on certain matters relating to the federal securities
laws.
Financial Statements
No financial statements of the separate account are included
herein because, as of the date of this Prospectus, the separate
account had not yet commenced operations, had no assets, and had
incurred no liabilities. The financial statements of Union
Central appear on the following pages. The financial statements
of Union Central should be distinguished from financial
statements of the separate account and should be considered only
as bearing upon Union Central's ability to meet its obligations
under the policies.
<PAGE>
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
BALANCE SHEETS
STATUTORY BASIS OF ACCOUNTING
(Unaudited)
<TABLE>
<CAPTION>
September 30
-----------------------------
ADMITTED ASSETS 1995 1994
- --------------- ---- ----
(000's Omitted)
<S> <C> <C>
Cash and Investments:
Bonds $ 2,494,553 $ 2,405,578
Common stocks in subsidiaries 23,765 27,361
Preferred and other common stoc 49,146 47,258
Mortgage loans 492,145 438,641
Real estate, including home office building 64,091 60,883
Policy loans 155,984 155,707
Cash and short-term investments 4,239 26,115
Other invested assets 34,034 24,537
----------- -----------
Total Cash and Investments 3,317,957 3,186,080
Deferred and uncollected premiums 12,379 10,249
Investment income due and accrued 43,504 37,198
Other admitted assets 17,894 15,445
Separate account assets 682,086 483,440
----------- -----------
Total Admitted Assets $ 4,073,820 $ 3,732,412
=========== ===========
LIABILITIES AND SURPLUS
- -----------------------
Policy and Contract Liabilities:
Reserves for life, accident and health policies $ 1,480,669 $ 1,411,497
Deposit funds 1,530,174 1,483,355
Policy claims 20,357 18,405
Interest maintenance reserve 21,871 32,600
Dividends payable to policyholders 15,849 15,867
----------- -----------
Total Policy and Contract Liabilities 3,068,920 2,961,724
Accrued commissions, expenses and taxes 22,825 22,307
Asset valuation reserve 45,697 34,195
Other liabilities 61,884 46,285
Separate account liabilities 679,493 479,691
----------- -----------
Total Liabilities 3,878,819 3,544,202
Total Surplus 195,001 188,210
---------- -----------
Total Liabilities and Surplus $ 4,073,820 $ 3,732,412
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
STATEMENTS OF INCOME AND CHANGES IN SURPLUS
STATUTORY BASIS OF ACCOUNTING
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
1995 1994
---- ----
(000's Omitted)
<S> <C> <C>
Premiums and Other Revenue:
Premium income $ 180,322 $ 206,612
Annuity and other fund deposits 300,869 249,353
Net investment income 189,290 175,882
Other income 3,761 3,912
----------- -----------
Total Premiums and Other Revenue 674,242 635,759
----------- -----------
Benefits Paid or Provided:
Benefits and dividends 476,403 441,827
Provision for future benefits 80,982 82,407
----------- -----------
Total Benefits Paid or Provided 557,385 524,234
----------- -----------
Insurance Expenses:
Operating expenses and commissions 78,338 80,862
Premium and other insurance taxes 6,484 7,370
----------- -----------
Total Insurance Expenses 84,822 88,232
----------- -----------
Gain from Operations before Federal Income
Tax and Net Realized Capital Losses 32,035 23,293
Federal income tax expense 15,635 9,436
----------- -----------
Gain from Operations
before Net Realized Capital Losses 16,400 13,857
Net realized capital gains (losses),
net of related taxes (tax credits)
(1995 - $(4,971); 1994 - $(3,122)
and excluding net transfers to the
interest maintenance reserve
(1995 - $(6,583); 1994 - $(5,778)) 870 (427)
---------- -----------
Net Income 17,270 13,430
Unrealized capital losses in subsidiaries 2,081 1,813
Other unrealized capital gains (losses) 957 (1,556)
Change in asset valuation reserve (10,892) (3,205)
Other changes, net (5,180) (297)
----------- ----------
Increase in Surplus 4,236 10,185
Surplus at the beginning of the period 190,765 178,025
----------- ----------
Surplus at the End of the Period $ 195,001 $ 188,210
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
STATUTORY BASIS OF ACCOUNTING
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
1995 1994
---- ----
(000's Omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Premium income $ 179,288 $ 207,130
Annuity and other fund deposits 300,869 249,353
Net investment income 180,740 171,569
Other income 3,857 3,835
Life and health claims paid (67,829) (72,154)
Surrender benefits and other
fund withdrawals paid (217,431) (179,725)
Dividends to policyholders paid (11,215) (11,088)
Other benefits to policyholders paid (108,427) (85,042)
Commissions, expenses, and premium
and other taxes paid (83,276) (89,176)
Transfers to separate accounts (70,526) (90,970)
Federal income taxes paid (15,995) (8,450)
Other items, net (4,593) 16,414
----------- -----------
Net Cash Provided by Operating Activities 85,462 111,696
----------- -----------
INVESTING ACTIVITIES
Sale, maturity, or repayment of investments 2,151,913 1,606,791
Purchase of investments (2,242,483) (1,716,415)
----------- -----------
Net Cash Used in Investing Activities (90,570) (109,624)
----------- -----------
Net (Decrease) Increase in Cash
and Short-Term Investments (5,108) 2,072
Cash and short-term investments
at beginning of the period 9,347 24,043
----------- -----------
Cash and Short-Term Investments
at End of the Period $ 4,239 $ 26,115
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS-
STATUTORY BASIS OF ACCOUNTING
(Unaudited)
ORGANIZATION
The Union Central Life Insurance Company (the Company) is a mutual life
insurance company chartered by the State of Ohio.
At September 30, 1995, the Company owned the following unconsolidated
subsidiaries wholly or in part: 1) Carillon Advisers, Inc., a registered
investment
advisor company, wholly owned; 2) Carillon Investments, Inc., a broker-dealer,
wholly-owned; 3) Carillon Marketing Agency, Inc., an insurance agency, 100%
owned; 4) Summit High Yield Fund, a high-yield bond mutual fund, 96.3% owned;
5) Manhattan Life Insurance Company, a mixed charter life insurance company of
which the Company owns 73% of the outstanding guarantee capital shares; and 6)
Carillon Capital Fund, a public allocation mutual fund, 40.2% owned. The
financial statements reflect the results of the Company's operations and the
appropriate equity in its subsidiaries as valued at September 30, 1995.
BASIS OF PRESENTATION
The information set forth in the balance sheets as of September 30, 1995 and
1994 and the statements of income and changes in surplus and of cash flow
for the nine months ended September 30, 1995 and 1994 is unaudited.
The information reflects all adjustments, consisting only of normal
recurring adjustments, that, in the opinion of management are necessary
to present fairly the financial position and results of operations of
the Company for the periods indicated. Results of operations for the
interim periods are not necessarily indicative of the results of
operations for the full year.
The accompanying financial statements have been prepared in conformity with
statutory accounting practices prescribed or permitted by the Ohio Insurance
Department. Such practices presently are regarded as generally accepted
accounting principles (GAAP) for mutual life insurance companies.
However, beginning in 1996, under the requirements of FASB
Interpretation 40, "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises",
as amended, financial statements prepared on the basis of statutory accounting
practices will no longer be described as prepared "in conformity with GAAP."
For further information, refer to the financial statements and footnotes thereto
included in the Company's audited financial statements for the years ended
December 31, 1994 and December 31, 1993.
<PAGE>
(Ernst & Young LLP Letterhead)
ERNST & YOUNG LLP 1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
Phone: 513 621 6454
Report of Independent Auditors
To the Board of Directors of
The Union Central Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of The
Union Central Life Insurance Company as of December 31, 1994 and 1993,
and the related statutory-basis statements of income and changes in
surplus, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position
of The Union Central Life Insurance Company at December 31, 1994 and
1993, and the results of its operations and changes in surplus and its
cash flows for the years then ended, in conformity with generally
accepted accounting principles and reporting practices prescribed or
permitted by the Ohio Insurance Department.
As described in note 10 in 1993, the Company changed its method of
accounting for postretirement benefits.
/S/ Ernst & Young LLP
February 10, 1995
<PAGE>
<PAGE> THE UNION CENTRAL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
STATUTORY BASIS OF ACCOUNTING
Years ended December 31, 1994 and 1993
CONTENTS
Page
Report of Independent Auditors 1
Balance Sheets - Statutory Basis of Accounting 2
Statements of Income and Changes in Surplus
- - Statutory Basis of Accounting 3
Statements of Cash Flows - Statutory Basis of Accounting 4
Notes to Financial Statements
- - Statutory Basis of Accounting 5
<PAGE>
<PAGE>
Financial Statements
Statutory Basis of Accounting
The Union Central Life
Insurance Company
Years ended December 31, 1994 and 1993
with Report of Independent Auditors
The Union Central Life Insurance Company
BALANCE SHEETS
STATUTORY BASIS OF ACCOUNTING
<TABLE>
<CAPTION>
December 31
-------------------
ADMITTED ASSETS 1994 1993
- --------------- ---- ----
(000's Omitted)
<S> <C> <C>
Cash and Investments:
Bonds $ 2,439,982 $ 2,309,012
Common stocks in subsidiaries 25,270 24,852
Preferred and other common stocks 46,333 21,906
Mortgage loans 443,586 477,063
Real estate, including home office building 60,916 51,351
Policy loans 156,098 157,917
Cash and short-term investments 9,347 24,043
Other invested assets 27,877 17,591
--------- ----------
Total Cash and Investments 3,209,409 3,083,735
Deferred and uncollected premiums 10,793 10,894
Investment income due and accrued 37,235 34,984
Other admitted assets 13,397 13,472
Separate account assets 509,492 391,312
----------- ----------
Total Admitted Assets $ 3,780,326 $ 3,534,397
=========== ===========
LIABILITIES AND SURPLUS
Policy and Contract Liabilities:
Reserves for life, accident and health policies $ 1,428,262 $ 1,364,180
Deposit funds 1,501,600 1,448,265
Policy claims 18,275 18,405
Interest maintenance reserve 30,046 40,253
Dividends payable to policyholders 15,661 15,526
----------- -----------
Total Policy and Contract Liabilities 2,993,844 2,886,629
Accrued commissions, expenses and taxes 21,677 23,191
Asset valuation reserve 34,804 30,990
Other liabilities 33,518 29,538
Separate account liabilities 505,718 386,024
----------- -----------
Total Liabilities 3,589,561 3,356,372
Total Surplus 190,765 178,025
----------- -----------
Total Liabilities and Surplus $ 3,780,326 $ 3,534,397
=========== ===========
</TABLE>
<PAGE>
<PAGE>
The Union Central Life Insurance Company
STATEMENTS OF INCOME AND CHANGES IN SURPLUS
STATUTORY BASIS OF ACCOUNTING
<TABLE>
<CAPTION>
Year Ended December 31
-------------------
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Premiums and Other Revenue:
Premium income $ 246,200 $ 251,936
Annuity and other fund deposits 391,305 311,799
Net investment income 236,874 241,891
Other income 4,548 4,498
----------- -----------
Total Premiums and Other Revenue 878,927 810,124
----------- -----------
Benefits Paid or Provided:
Benefits and dividends 607,772 649,176
Provision for future benefits 117,417 12,968
----------- -----------
Total Benefits Paid or Provided 725,189 662,144
----------- -----------
Insurance Expenses:
Operating expenses and commissions 108,144 110,173
Premium and other insurance taxes 9,563 10,305
----------- -----------
Total Insurance Expenses 117,707 120,478
----------- -----------
Gain from Operations before Federal Income
Tax and Net Realized Capital Losses 36,031 27,502
Federal income tax expense 13,649 5,709
----------- -----------
Gain from Operations
before Net Realized Capital Losses 22,382 21,793
Net realized capital losses,
net of related taxes (tax credits)
(1994 - $(3,976); 1993 - $20,848)
and excluding net transfers to
the interest maintenance reserve
(1994 - $(7,744); 1993 - $36,959) (1,785) (1,443)
----------- -----------
Net Income 20,597 20,350
Unrealized capital losses in subsidiaries (2,524) (6,345)
Other unrealized capital gains 455 2,320
Change in asset valuation reserve (3,814) (4,097)
Cumulative effect of the change in
accounting for postretirement benefits 0 (9,775)
Other changes, net (1,974) 3,260
----------- -----------
Increase in Surplus 12,740 5,713
Surplus at the beginning of the year 178,025 172,312
--------- -----------
Surplus at the End of the Year $190,765 $178,025
========== ===========
/TABLE
<PAGE>
The Union Central Life Insurance Company
STATEMENTS OF CASH FLOWS
STATUTORY BASIS OF ACCOUNTING
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Premium Income $246,007 $250,594
Annuity and other fund deposits 391,305 311,799
Net investment income 231,673 244,180
Other income 4,702 4,331
Life and health claims paid (91,517) (83,865)
Surrender benefits and other fund
withdrawals paid (264,087) (328,406)
Dividends to policyholders paid (15,099) (15,633)
Other benefits to policyholders paid (114,448) (116,013)
Commissions, expenses, and premium and
other taxes paid (117,965) (118,327)
Transfers to separate accounts (115,806) (103,029)
Federal income taxes paid (6,312) (5,674)
Other items, net (305) (2,698)
----------- -----------
Net Cash Provided by Operating Activities 148,148 37,259
----------- -----------
INVESTING ACTIVITIES
Sale, maturity, or repayment of investments 1,775,029 3,351,779
Purchase of investments (1,937,873) (3,372,904)
----------- -----------
Net Cash Used in Investing Activities (162,844) (21,125)
----------- -----------
Net (Decrease) Increase in Cash
and Short-Term Investments (14,696) 16,134
Cash and short-term investments
at beginning of the year 24,043 7,909
----------- -----------
Cash and Short-Term Investments
at End of the Year $9,347 $24,043
=========== ===========
/TABLE
<PAGE>
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Union Central Life Insurance Company (the Company) is a mutual
life insurance
company chartered by the State of Ohio.
At December 31, 1994, the Company owned the following unconsolidated
subsidiaries wholly or in part: 1) Carillon Advisers, Inc.,
a registered investment advisor company, wholly owned;
2) Carillon Investments, Inc., a broker-dealer, wholly-
owned; 3) Carillon Marketing Agency, Inc., an insurance agency,
100% owned; 4) Summit High Yield Fund, a high-yield bond mutual fund,
99.8% owned; 5) Manhattan Life Insurance Company, a mixed charter
life insurance company of which the Company
owns 73% of the outstanding guarantee capital shares;
and 6) Carillon Capital Fund, a public allocation mutual fund, 48% owned.
The financial statements reflect the
results of the Company's operations and the appropriate equity in its
subsidiaries as valued at December 31, 1994. Further information
about the investments and operations of the subsidiaries may be
found in notes 5 and 6.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
statutory accounting practices prescribed or permitted by the Ohio Insurance
Department. Such practices presently are regarded as generally accepted
accounting principles (GAAP) for mutual life insurance companies.
However, beginning in 1996, under the requirements of FASB Interpretation 40,
"Applicability of Generally Accepted Accounting Principles to
Mutual Life Insurance and Other Enterprises", as
amended, financial statements prepared on the basis of statutory accounting
practices will no longer be described as prepared "in conformity with GAAP."
Significant accounting practices are as follows:
Investments
Investments are stated at values prescribed by the National Association of
Insurance Commissioners (NAIC) which are as follows: bonds not backed by
other loans are stated at amortized cost using the interest method,
and loan-backed bonds and structured securities are stated at amoritized
cost using the interest method
including anticipated prepayments at the date of purchase. Significant
changes in estimated cash flows from the original purchase assumptions
are accounted for using the composite method. Prepayment assumptions
for loan-backed bonds and structured securities were obtained from broker
dealer survey values or internal estimates.
These assumptions are consistent with the current interest rate and economic
environment. The prospective adjustment method is used to value all
securities except for interest only securities which are valued using the
retrospective method.
Preferred stocks are stated at cost and investments in stocks of
unconsolidatedsubsidiaries and affiliates in which the Company has an
interest of 20% or more are reported equal to the Company's proportionate
share of the equity in the underlying statutory-basis net assets for
insurance subsidiaries plus the admitted portion of
goodwill, and equal to the Company's proportionate share of the
GAAP-basis net assets for noninsurance subsidiaries. Goodwill is
amortized on a straight-line basis over ten years. Investment real
estate or property acquired in satisfaction
of debt are stated at depreciated cost less encumbrances, and other
investments are stated on the equity basis. Mortgage loans are stated
at the unpaid principal balance less unamortized discounts.
Short-term investments are investments with
maturities of one year or less at the date of acquisition, and are valued at
cost which approximates market. Policy loans are stated at the aggregate
unpaid principal balance.
Realized investment gains and losses are determined using the specific
identification basis. For securities carried at market value, unrealized
gains and
losses resulting from differences between the cost and carrying value of
investments are credited or charged directly to unassigned surplus.
As prescribed by the NAIC, the Asset Valuation Reserve (AVR) is computed in
accordance with a prescribed formula and represents a provision for possible
fluctuations in the value of bonds, equity securities, mortgage loans, real
estate, and other invested assets. The AVR
is reported as a liability rather than as a
valuation allowance or an appropriation of surplus and changes to the AVR are
charged or credited directly to unassigned surplus.
Based on a formula prescribed by the NAIC,
the Company defers a portion of realized
gains and losses on sales of fixed income investments, principally fixed
maturities, attributable to changes in the general level of interest rates and
amortizes those deferrals into income over the remaining period to maturity
according to the Grouped Method, as allowed by the NAIC; the net deferral is
reported as the Interest Maintenance Reserve (IMR) in the balance sheets.
Real Estate
Real estate is valued at cost less accumulated depreciation. The value of
real estate acquired through foreclosure is recorded at the lower of
cost or net
realizable value. Net realizable value for real estate is determined based
upon
fair value of a property, which may take into consideration a number of
factors,
including; (i) discounted cashflows; (ii) sales of comparable properties;
(iii)
geographic location of property and related market conditions; and (iv)
disposition
costs. Subsequent to foreclosure, the value of the property is evaluated and
written down, if appropriate, to reflect any additional amounts considered
unrecoverable upon sale. Depreciation expense is determined by the declining
balance method for acquisitions or renovations prior to 1990 and by the
straight
line method for acquisitions or renovations beginning in 1990. At the time of
the sale, the difference between the sales price and the carrying value is
recorded as a realized gain or loss.
Real estate owned and occupied by the Company is included in investments, and
investment income and operating expenses include rent for the Company's
occupancy of its owned properties.
Nonadmitted Assets
In accordance with statutory requirements, certain assets, designated as
nonadmitted assets, are excluded from the balance sheet and are charged
directly
to surplus. Nonadmitted assets consist primarily of advances to agents,
furniture
and equipment, application software, and accrued income on certain securities
in default. The net change in these assets during the year is reflected as a
change in surplus.
Reserves for Life, Accident and Health Policy Benefits
Life, annuity, and accident and health benefit reserves are developed using
accepted actuarial methods and are determined based on published tables using
statutorily specified interest rates and valuation methods that will provide in
the aggregate, reserves that are greater than or equal to the minimum amounts
required by the Ohio Insurance Department or guaranteed policy cash values.
Deposit Funds
The liability for deposit funds is generally established at the policyholders'
accumulated cash values plus amounts providing for guaranteed interest, less
applicable surrender charges.
Dividends to Policyholders
All of the Company's life insurance policies contain dividend payment provisions
which enable the policyholder to participate in the earnings of the Company.
Dividend payments are approved by the Company's Board of Directors on an annual
basis. Dividends to policyholders are reflected in the statements of income at
amounts estimated to be paid or credited to policyholders during the subsequent
year on the policy anniversary dates. Amounts recorded in 1994 and 1993
totalled $15,234,000 and $15,552,000, respectively.
Policy Claims
Policy claim reserves represent the estimated ultimate net cost of all reported
and unreported claims incurred through December 31, 1994. The reserves for
unpaid claims are estimated using individual case-basis valuations and
statistical analyses. These estimates are subject to the effects of trends in
claim severity
and frequency. Although considerable variability is inherent in such estimates,
management believes that the reserves for claims are adequate. The estimates
are continually reviewed and adjusted as necessary as experience develops or
new information becomes known; such adjustments are included in current
operations.
Separate Accounts
Separate account assets and liabilities reported in the accompanying financial
statements represent funds that are separately administered, principally for
annuity contracts, and for which the contractholders rather than the Company
bears the investment risk. Separate account contractholders have no claim
against the
assets of the general account of the Company. Separate account investments are
carried at market value. Investment income and gains and losses from these
accounts accrue directly to contractholders and are not included in the
accompanying financial statements.
Recognition of Premium Revenues and Related Costs
For ordinary life insurance contracts and accident and health insurance
contracts,
premiums are recognized as revenues when premiums are due. For universal life
insurance contracts and deposit funds, revenues are recognized when premiums are
received. Commissions and other costs applicable to the acquisition of new
business, primarily underwriting and policy issue costs, are charged to
operations as incurred.
Reinsurance
Reinsurance premiums, and claims are accounted for on bases consistent with
those
used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums, benefits, and the reserves for policy and
contract liabilities are reported net of reinsured amounts.
Income Taxes
Deferred income taxes are not provided for differences between the statutory and
taxable income.
Reclassifications
Previously reported amounts for 1993 have in some instances been reclassified to
conform to the 1994 presentation.
<PAGE>
<PAGE>
NOTE 2 - INVESTMENTS
The cost or amortized cost and the fair, or comparable, value of bonds are
summarized as follows:
<TABLE>
<CAPTION>
December 31, 1994
-----------------
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
--------- ---------- ---------- -----
(000's Omitted)
<S> <C> <C> <C> <C>
U.S. treasury securities and obligations
of U.S. government corporations
and agencies $ 23,553 $ 6 $ (262) $ 23,297
Public utilities securities 175,758 655 (9,196) 167,217
Corporate securities and other 719,394 4,425 (39,147) 684,672
Mortgage-backed securities and
collateralized mortgage obligations 1,496,871 2,949 (190,416) 1,309,404
Debt securities issued by foreign
governments 24,406 239 (4,832) 19,813
---------- ---------- ---------- ----------
Total $2,439,982 $ 8,274 $ (243,853) $2,204,403
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
-----------------
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
--------- ---------- ---------- -----
(000's Omitted)
<S> <C> <C> <C> <C>
U.S. treasury securities and obligations
of U.S. government corporations
and agencies $ 1,906 $ 132 $ -- $ 2,038
Public utilities securities 174,317 9,194 (1,324) 182,187
Corporate securities and other 710,898 45,162 (4,238) 751,822
Mortgage-backed securities and
collateralized mortgage obligations 1,395,419 47,158 (12,315) 1,430,262
Debt securities issued by foreign
governments 26,472 3,030 -- 29,502
---------- ---------- ---------- ----------
Total $2,309,012 $ 104,676 (17,877) $2,395,811
========== ========== ========== ==========
</TABLE>
The majority of the fair values for publicly traded bonds, except collateralized
mortgage obligations (CMO's), were obtained from an independent bond pricing
service. Fair values for CMO's and private placement bonds were obtained from
independent securities broker dealers. The remaining fair values were based on
values obtained from independent securities broker dealers or
based on values for comparable, publicly offered bonds of the same rate,
maturity and quality.
<PAGE>
<PAGE>
The cost or amortized cost and estimated fair value of
the Company's investment in fixed maturities at
December 31, 1994, by contractual maturity are as follows:
<TABLE>
<CAPTION>
Cost or
Amortized Fair
Cost Value
--------- -----
(000's Omitted)
<S> <C> <C>
Due in one year or less $ 4,244 $ 4,297
Due after one year
through five years 95,595 94,373
Due after five years
through ten years 369,448 349,058
Due after ten years 160,454 148,938
---------- ----------
Subtotal 629,741 596,666
Mortgage-backed securities 1,496,871 1,309,404
Other securities with
multiple repayment dates 313,370 298,333
---------- ----------
Total $2,439,982 $2,204,403
========== ==========
</TABLE>
The expected maturities in the foregoing table may differ from contractual
maturities because certain borrowers have the right to call or prepay
obligations with or without call or prepayment penalties.
At December 31, 1994 and 1993, the Company held unrated or less-than-investment
grade corporate bonds of $92,975,000 and $129,457,000, respectively, with an
aggregate fair value of $83,505,000 and $129,450,000, respectively. Those
holdings amounted to 3.8% and 5.6%, respectively, of the Company's
investments in bonds and
less than 2.5% and 3.7%, respectively, of the Company's total admitted assets.
The holdings of less-than-investment grade bonds are widely diversified and
of satisfactory quality based on the Company's investment policies and credit
standards.
Proceeds, gross realized gains, and gross realized losses from the sales and
maturities of investments in debt securities follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Proceeds $1,726,486 $3,287,399
Gross realized gains 26,423 79,925
Gross realized losses 37,623 22,991
</TABLE>
At December 31, 1994 and 1993, investments in bonds with an admitted asset value
of $1,846,000 and $1,844,000, respectively, were on deposit with state insurance
departments to satisfy regulatory requirements.
The Company sponsors two mutual funds, the investments in which are carried at
market value, as follows:
<TABLE>
<CAPTION>
December 31,
------------
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Carillon Capital Fund $ 19,939 $ 19,653
Summit High Yield Fund 24,933 0
-------- --------
Total $ 44,872 $ 19,653
======== ========
</TABLE>
The Company's equity investments in preferred stock are carried at cost or
amortized cost. At December 31, 1994, the carrying value was $1,352,000 and the
fair value was $2,098,000. At December 31, 1993, the carrying value was
$2,200,000 and the fair value was $2,206,000.
The Company has no material off-balance sheet risk.
Unrealized gains and losses on investments in preferred stocks and
subsidiaries are reported directly in surplus and do not affect net income.
At December 31, 1994,
the Company had gross unrealized gains of $610,000 and gross unrealized losses
of $3,134,000 on these investments.
Mortgage loans are stated at their aggregate unpaid
balances on the balance sheet, less unamortized discounts.
The mortgage loan portfolio is well diversified both
geographically and by property type, as shown in the following tables:
<TABLE>
<CAPTION>
December 31, 1994
-----------------
Principal Percent of
Region Balance Principal
- ------ --------- ----------
(000's Omitted)
<S> <C> <C>
New England and Mid-Atlantic $ 54,665 12.3 %
South Atlanti 54,657 12.3
North Central 117,564 26.5
South Central 39,810 9.0
Mountain 53,699 12.1
Pacific 123,191 27.8
-------- -------
Total $443,586 100.0 %
======== ========
Property Type
- -------------
Apartment and residential $ 96,477 21.8%
Warehouses and industrial 68,387 15.4
Retail and shopping center 133,396 30.1
Offices 145,199 32.7
Other 127 0.0
-------- ------
Total $443,586 100.0%
======== ======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
-----------------
Principal Percent of
Region Balance Principal
- ------ --------- ----------
(000's Omitted)
<S> <C> <C>
New England and Mid-Atlantic $ 60,333 12.7 %
South Atlantic 61,909 13.0
North Central 141,820 29.7
South Central 42,460 8.9
Mountain 53,078 11.1
Pacific 117,463 24.6
-------- -----
Total $477,063 100.0%
======== ======
Property Type
- -------------
Apartment and residential $105,572 22.1%
Warehouses and industrial 82,344 17.3
Retail and shopping center 144,324 30.3
Offices 144,658 30.3
Other 165 0.0
-------- ------
Total $477,063 100.0%
======== ======
</TABLE>
At December 31, 1994, the average size of an individual mortgage loan was
approximately $2,451,000. The Company's policy is to obtain a first mortgage
lien and to require a loan to value ratio of less than 75% at acquisition.
At December 31, 1994, approximately 97.5% of loans were current as to
payment terms and 2.0%
were in process of foreclosure. Included in mortgage loans are two loans
with an aggregate principal balance of $6,775,000 that were non-income
producing for the twelve month period ending December 31, 1994. The Company had
mortgage reserves
(the voluntary reserves and the mortgage component of the asset valuation
reserve) of $4,989,000 and $6,630,000 at December 31, 1994 and 1993,
respectively. Real estate consists of the home office property, investment
real estate under
lease, and foreclosed real estate. The cost of these properties totalled
$79,163,000, accumulated depreciation as of December 31, 1994 was $18,247,000,
and the total net book value was $60,916,000. The net book value of
foreclosed real
estate was $36,948,000 and $26,395,000 at December 31, 1994 and 1993,
respectively.
Major categories of net investment income by class of investment are
summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Income:
Fixed maturities $179,442 $175,079
Preferred stocks 31 210
Common stocks in subsidiaries 5,219 2,740
Mortgage loans 41,814 49,821
Real estate * 9,673 6,802
Policy loans and liens 9,596 9,703
Short-term investments 1,188 4,882
Other invested assets 2,544 1,955
Amortization of interest
maintenance reserve 2,462 1,374
-------- --------
Gross investment income 251,969 252,566
-------- --------
Expenses:
Depreciation 2,236 1,958
Other 12,859 8,717
-------- --------
Total investment expenses 15,095 10,675
-------- --------
Net investment income $236,874 $241,891
======== ========
* Includes amounts for the occupancy of company-owned property of
$3,425,000 and $3,420,000 in 1994 and 1993, respectively.
</TABLE>
NOTE 3 - REINSURANCE
In the ordinary course of business, the Company assumes and cedes reinsurance
with other insurers and reinsurers. These arrangements provide greater
diversification of business and limit the maximum net loss potential on
large or hazardous risks.
These reinsured risks are treated in the financial statements as risks for
which the Company is not liable. Accordingly, policy liabilities and accruals,
including incurred but not reported claims, are reported in the financial
statements net of reinsurance assumed and ceded. A contingent liability exists
with respect to the amount of such reinsurance in the event that the
reinsuring companies are unable to meet their obligations.
The Company retains the risk for varying amounts of
individual or group insurance written up to a maximum of $1,000,000 on any
one life or $4,000 per month disability risk and reinsures the balance.
<PAGE>
Reinsurance transactions with other insurance companies for the years ended
December 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1994
-----------------
Direct Assumed Ceded Net
------ ------- ----- ---
(000's Omitted)
<S> <C> <C> <C> <C>
Life insurance in force $ 25,958,093 $ 103,557 $ 3,774,748 $ 22,286,902
============ =========== =========== ============
Premiums and other
considerations:
Life $ 199,345 $ 494 $ 15,677 $ 184,162
Annuity 31,425 0 0 1,425
Health 31,268 8,830 9,485 30,613
----------- ----------- ----------- -----------
Total $ 262,038 $ 9,324 $ 25,162 $ 246,200
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
-----------------
Direct Assumed Ceded Net
------ ------- ----- --
(000's Omitted)
<S> <C> <C> <C> <C>
Life insurance in force $ 25,942,800 $ 103,734 $ 3,765,977 $22,280,557
============ =========== =========== ===========
Premiums and other
considerations:
Life $ 199,680 $ 728 $ 17,053 $ 183,355
Annuity 33,315 0 0 33,315
Health 35,384 9,395 9,513 35,266
---------- ---------- ---------- -----------
Total $ 268,379 $ 10,123 $ 26,566 $ 251,936
=========== =========== ========== ===========
</TABLE>
Amounts recoverable from reinsurers for paid losses were $720,000 and $2,073,000
at December 31, 1994 and 1993, respectively and they are included in other
assets in the financial statements. Benefits paid or provided were reduced
by $4,285,000 and $3,738,000 at December 31, 1994 and 1993, respectively,
for estimated recoveries under reinsurance treaties. The liabilities for
future policy benefits were also reduced due to reinsurance treaties by
$12,783,000 and $14,075,000 at December 31, 1994 and 1993, respectively.
The Company had ceded 22.5% of a block of ordinary life insurance under a
coinsurance/modified coinsurance agreement in 1988. The amount of
life insurance inforce ceded under the agreement was $169,660,000 and
$181,643,000 at December 31, 1994 and 1993, respectively.
The net effect of this reinsurance ceded transaction
was to reduce the Company's gain from operations by $2,103,000 and $2,143,000 in
1994 and 1993, respectively.
The Company, nor any of its related parties control, either directly or
indirectly,any reinsurers in which the Company conducts business,
except that the Company does
assume an immaterial amount of business from its insurance subsidiary Manhattan
Life Insurance Company. No policies issued by the Company have been
reinsured with
a foreign company which is controlled, either directly or indirectly, by a
party not primarily engaged in the business of insurance.
The Company has not entered into any reinsurance agreements in which the
reinsurer
may unilaterally cancel any reinsurance for reasons other than nonpayment of
premiums or other similar credits. The Company does not have any reinsurance
agreements in effect in which the amount of losses paid or accrued through
December 31, 1994 would result in a payment to the reinsurer of amounts
which, in the
aggregate and allowing for offset of mutual credits from other reinsurance
agreements with the same reinsurer, exceed the total direct premiums collected
under the reinsured policies.
<PAGE>
<PAGE>
NOTE 4 - FEDERAL INCOME TAX
Federal income taxes are calculated under both the regular tax system and the
alternative minimum tax (AMT) system, and the tax payable is the higher of
the two calculated amounts. The tax rate used in the regular tax calculation
increased from 34% to 35% for the Company effective January 1, 1993 due to
passage of the Omnibus Budget Reconciliation Act of 1993. Federal income
tax expense at December 31, 1993 was based on the regular tax system
with utilization of the remaining AMT
credit of $3,335,000 which had been carried over from prior years.
The AMT credit
represents the excess of alternative minimum tax over regular tax from
prior years when the Company was taxed based on the alternative minimum tax.
In 1994, there
were no net operating losses remaining to carry forward and utilize against
taxable income. In the event of future net losses,
the Company has $44,904,000 available
in the carryback period for recoupment.
The tax allocated to the realized capital
gains or losses in the statement of income is based on the tax basis realized
capital gains or losses plus bad debt losses.
An analysis of the primary components of the total income tax on
operations follows ($000):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Regular tax on statutory gain from operations $ 12,611 $ 9,626
Ownership differential tax 0 (3,974)
Policy acquisition costs 3,130 3,434
Minimum tax credit 0 (3,335)
Reserve adjustments 584 (880)
Other, net (2,676) 838
--------- --------
Total tax expense - operations $ 13,649 $ 5,709
========= ========
</TABLE>
The allocation of tax at December 31, 1994 and 1993 is as follows ($000):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Operations $ 13,649 $ 5,709
Net realized capital gains 194 947
-------- -------
Total tax recorded in the Statement of Operations 13,843 6,656
Tax allocated to the IMR (4,170) 19,901
--------- ---------
Total federal income tax expense $ 9,673 $ 26,557
========= =========
</TABLE>
As a mutual life insurance company, Union Central Life is subject to the
differential earnings rate ("DER") calculation. A "tentative" DER amount is
determined annually based upon a rate published by the Internal Revenue
Service ("IRS"). The IRS also publishes a "recomputed" DER rate
in the year following the release of the tentative rate.
These DER's are applied to a mutual life company's
equity base, as adjusted, to determine the reduction in the company's
deduction for policyholders dividends.
The Company's policy is to adjust its tax liability in
the year in which "recomputed" DER rates are published by the IRS.
NOTE 5 - INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
In 1991, the Company owned approximately 73% of the outstanding common stock of
Manhattan National Corporation (MNC), an insurance holding company that
owned 100% of the outstanding guarantee capital shares of The
Manhattan Life Insurance Company (MLIC).
At December 31, 1991, MNC was liquidated. MNC shareholders received prorata
distributions of cash, guarantee capital shares of MLIC, and an interest in a
liquidating trust (MNC Liquidating Trust). As a result, the Company
obtained 73% of the outstanding guarantee capital shares of MLIC and of the
MNC Liquidating Trust. The investment in MLIC guarantee capital shares is
recorded in the balance
sheet at $24,739,000 and $24,235,000, respectively, at December 31, 1994
and 1993.
This value represents 73% of the statutory-basis net assets of MLIC, plus
unamortized goodwill of $948,000 and $1,922,000, respectively, at
December 31, 1994 and 1993.
Statutory-basis financial information of the Company's insurance subsidiary
(MLIC) is summarized below:
<TABLE>
<CAPTION>
December 31
-----------
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Balance Sheets
Investments $ 437,483 $ 441,994
Other assets 14,897 16,313
--------- ---------
Total assets $ 452,380 $ 458,307
========= =========
Insurance reserves $ 405,262 $ 410,225
Liabilities 14,447 17,440
Surplus 32,671 30,642
--------- ---------
Total liabilities and surplus $ 452,380 $ 458,307
========= =========
Statements of Operations
Revenues $ 79,169 $ 79,228
Benefits, expenses and taxes (75,365) (81,456)
Net realized capital losses (2,448) (2,887)
--------- ---------
Net income (loss) 1,356 (5,115)
Dividends 0 (607)
Other changes in surplus 674 (2,184)
--------- ---------
Increase (decrease) in surplus $ 2,030 $ (7,906)
========= =========
</TABLE>
In 1993, the Company proposed a plan to eliminate the minority interest in
MLIC's guarantee capital shares. A special committee of independent directors
of MLIC has been formed to consider the fairness of this proposal
which involves using a reverse stock split to reduce all
outstanding minority shares to fractional shares
payable in cash. The Company would become the sole remaining holder of
the capital shares. The Company expects to seek New York
Insurance Department approval to advance funds necessary to complete
the reverse stock split in the form of a
subordinate debenture. Assuming that the capital shares are valued at
the current
price being offered of $5.125 per share, approximately $4,655,000 will
be required to pay for the minority shares. The proposal is
subject to approval of MLIC's
guarantee capital shareholders, as well as its Board of Directors.
The proposal
is currently being reviewed by the New York Insurance Department and their
independent consultants.
The MNC Liquidating Trust was fully liquidated as of September 30, 1994. The
Company's share was valued at the lower of historical cost or
net realizable value and totalled $8,807,000 at December 31, 1993.
Assets of the trust consisted
primarily of commercial mortgage loans. Interest income totalling $640,000 and
$411,000 from the trust is included in the statements of income in 1994
and 1993, respectively.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company transacts business with certain companies that are affiliated
through common ownership.
During 1994 and 1993, the Company provided facilities and certain
data processing, accounting, legal, administrative, and executive
services to various subsidiaries (primarily MLIC) for fees totalling
$4,427,000 and $4,328,000 in 1994 and 1993,
respectively. At December 31, 1994, the Company had a $1,273,000
balance due from affiliates.
The Company received the following dividends from its subsidiaries
and affiliates in 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Carillon Advisers, Inc. $ 1,250 $ 990
Carillon Investments, Inc. 400 225
Manhattan Life Insurance Company 142 584
Carillon Cash Reserves, Inc. 0 38
Carillon Capital Fund 2,334 903
Summit High Yield Fund 1,093 0
-------- --------
Total $ 5,219 $ 2,740
======== ========
</TABLE>
On a monthly average basis, the Company invested $6,974,000 for the first
three months in 1993 in Carillon Cash Reserves, Inc., an affiliated
money market mutual fund. The Company withdrew all investment
from Carillon Cash Reserves, Inc. at the end of March, 1993.
In addition, the Company had combined investments in two
affiliated mutual funds (Carillon Capital Fund and Summit High Yield Fund) of
$44,872,000 and $19,653,000 at December 31, 1994 and 1993, respectively.
NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES
Leases
The Company leased a portion of its computer software from a bank under
a series of agreements that expired in 1994. Payments under these
leases totalled $2,765,000 and 3,687,000 in 1994 and 1993, respectively.
The Company leased office space for various field agency offices with
lease terms of varying duration from 1 to 15 years.
Some of these leases include escalation clauses which vary with
levels of operating expense. Rental expense under these
leases totalled $2,414,000 and $2,374,000 in 1994 and 1993, respectively.
The Company also leases furniture and equipment under leases which
expire in 2001. Rental expense under these leases totalled $470,000 each in
1994 and 1993.
The Company accounts for all leases as operating leases. At December 31, 1994,
the future minimum lease payments for all noncancelable operating leases are as
follows:
<TABLE>
<CAPTION>
Year Amount
----- ------
(000's Omitted)
<C> <C>
1995 $ 2,806
1996 2,572
1997 1,970
1998 1,380
1999 1,154
After 1999 3,350
-------
Total $ 13,232
========
</TABLE>
Other Commitments
At December 31, 1994, the Company has outstanding agreements to fund 9
mortgages totalling $15,765,000 in early 1995. In addition,
the Company has committed to invest $21.4 million in limited
partnerships during the years 1995 to 1998. These
transactions are in the normal course of business for the Company.
Litigation
In the normal course of business, the Company is party to various claims and
litigation primarily arising from claims made under insurance policies and
contracts. Those actions are considered by the Company in estimating the policy
and contract liabilities. The Company's management believes that the resolution
of those actions will not have a material adverse effect on the Company's
financial position or results of operations.
Guaranty Fund Assessments
The economy and other factors have caused an increase in the number of insurance
companies that are under regulatory supervision. This circumstance is
expected to result in an increase in assessments by state guaranty funds,
or voluntary payments by solvent insurance companies, to fund policyholder
losses or liabilities of insurance companies that become insolvent.
These assessments may be deferred or forgiven under most guaranty laws
if they would threaten an insurers financial strength and, in certain
instances, may be offset against future premium taxes.
The Company provided for future assessments due to companies which have become
insolvent by charging $1,074,000 directly to operations in 1994 and $4,000,000
directly to surplus in 1993. The estimated liability of $3,323,000 at
December 31, 1994 was based on data provided by the National
Organization of Life and Health Insurance Guaranty Associations.
NOTE 8 - ANNUITY RESERVES
The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal (with adjustment), subject to discretionary
withdrawal (without adjustment), and not subject to discretionary
withdrawal provisions are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1994
-----------------
Amount Percent
------ -------
(000's Omitted)
<S> <C> <C>
Subject to discretionary withdrawal
(with adjustment):
With market value adjustment $ 501,914 23.7%
At book value less surrender charge 112,531 5.3
At market value 183,554 8.7
------- -----
Total 797,999 37.7
Subject to discretionary withdrawal
(without adjustment):
At book value with minimal or no charge or adjustment 1,170,190 55.3
Not subject to discretionary withdrawal 148,162 7.0
----------- ------
Total annuity reserves and deposit fund
liabilities - none reinsured $ 2,116,351 * 100.0%
=========== ======
* Includes: deposit funds ($1,501,600); premiums on deposit ($974)
that are included in other liabilities; annuities and supplementary contracts
with life contingencies ($111,863) that are included in reserves for life,
accident and health policies; and annuities reported in the separate
account liability ($501,914).
</TABLE>
NOTE 9 - EMPLOYEE BENEFITS
The Company has pension plans covering substantially all of its employees and
agents. Pension expense was determined according to regulations as specified by
ERISA and subsequent amendments. The amounts funded were $1,887,000 and
$1,976,000 in 1994 and 1993, respectively. The Company's policy is to
charge contributions to expense in the year they were contributed or accrued.
Total pension reserves for the Company's employee pension plan are included
in the liability for deposit funds on the balance sheets.
A summary of the accumulated plan benefits as determined by the Plan's actuaries
and plan net assets are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(000's Omitted)
<S> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested $ 61,844 $ 54,674
Nonvested 6,497 4,849
-------- --------
Total $ 68,341 $ 59,523
======== ========
Net assets available for benefits $ 68,546 $ 63,748
======== ========
</TABLE>
The actuarial present value of accumulated plan benefits was determined using
assumed interest rates which varied from 6.00% to 8.50%. The actuarial present
value of accumulated plan benefits does not reflect the actual benefits that
will be paid on retirement, but rather the liability that would exist if
the plans were terminated on the valuation date. Therefore, net assets are
held in excess of the actuarial present value of accumulated plan benefits
as part of the funding process that considers future plan benefits.
The Company has a contributory savings plan for employees meeting certain
service requirements which qualifies under Section 401(k) of the Internal
Revenue Code. This plan allows eligible employees to contribute up to
certain prescribed limits of their pre-tax compensation, with the
Company matching 50% of the first 6% of participants' contributions.
The Company's matching contributions to this plan were $993,000
and $762,000 for 1994 and 1993, respectively.
NOTE 10 - POSTRETIREMENT BENEFITS
The Company provides certain health care and life insurance benefits for its
eligible retired employees. Substantially all of the Company's employees may
become eligible for these benefits if they reach normal retirement age while
working for the Company. Prior to 1993, the cost of retiree health care and
life insurance benefits was recognized as expense as benefits were provided.
In 1993, the Company changed its method of accounting for the costs of
postretirement benefit plans other than pensions to an accrual method, and
elected to recognize the transition obligation for retirees and fully
eligible or vested employees in statutory surplus in 1993. The
cumulative effect of recognizing this transition obligation as of
January 1, 1993 was to decrease surplus by $9,775,000.
Postretirement benefit costs for the years ended December 31, 1994 and 1993
were $765,000 and $1,188,000, respectively, and include the expected
cost of such benefits for newly eligible or vested employees, interest cost,
and gains and losses arising from differences between actuarial
assumptions and actual experience. The Company paid benefits in cash of
$822,000 and $808,000, respectively, in 1994 and 1993.
At December 31, 1994 and 1993, the unfunded postretirement benefit obligation
for retirees and other fully eligible or vested plan participants was
$9,167,000 and $9,231,000, respectively, and is included in other
liabilities. An additional $5,501,000 and $5,460,000 was pre-funded in
Voluntary Employee Benefit Associations (VEBAs) at December 31, 1994
and 1993, respectively. The discount rate used in
determining the accumulated postretirement benefit obligation 7.25% as of
December 31, 1993 and 8.25% as of December 31, 1994. The 1995 health care cost
trend rate is 11.7% graded to 6.95% over 13 years.
The health care cost trend rate assumption has an insignificant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the postretirement
benefit obligation as of December 31, 1994 by $93,000 and the interest cost and
estimated eligibility cost components of the net periodic postretirement benefit
cost by $9,000 and less than $1,000, respectively.
NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported in the balance
sheet for these instruments approximate their fair values.
Investment securities: Fair values for bonds and preferred stock
are based on quoted market prices, where available, which may
differ from NAIC fair values. If quoted market prices are not
available, fair values are estimated using values obtained from
independent securities broker dealers or quoted market prices of
comparable instruments. The fair values of common stock in
Company sponsored mutual funds are based on quoted market prices
and are recognized in the balance sheet.
Mortgage loans: The fair values for commercial and residential
mortgages in good standing are estimated using discounted cash
flow analysis using interest rates currently being offered for
similar loans to borrowers with similar credit ratings in
comparison with actual interest rates and maturity dates. Fair
values for mortgages with potential loan losses are based on
discounted cash flow analysis of the underlying properties.
Policy loans: Management is unable to ascertain the estimated
life of the policy loan portfolio. Due to the excessive costs
which would be incurred to determine this information, management
considers the estimation of its fair value to be impracticable.
The nature of a policy loan insures that the outstanding loan
balance will be fully recoverable because the balance owed to the
Company is always equal to or lower than the cash value of the
insurance policy owed to the policyholder. Policy loans are
stated at their aggregate unpaid balance on the balance sheet.
Investment contracts: Fair values for the Company's liabilities
under investment-type insurance contracts are estimated using
discounted cash flow calculations, based on interest rates
currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
The carrying amounts and fair values of the Company's mortgage loans
are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
(000's Omitted)
Commercial mortgages $ 443,586 $ 446,757 $ 476,854 $491,692
Residential mortgage 0 0 209 209
--------- --------- --------- ---------
$ 443,586 $ 446,757 $ 477,063 $ 491,901
========= ========= ========= =========
/TABLE
<PAGE>
The carrying amounts and fair values of the Company's liabilities for
investment-type insurance contracts (deposit funds) are as follows:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
(000's Omitted)
Group annuities $ 947,514 $ 937,924 $ 952,396 $ 949,158
Single premium deferred
annuities 331,260 325,928 298,209 292,780
Variable annuities 147,327 144,118 121,007 120,846
Supplementary contracts 60,561 60,289 60,297 58,784
Traditional annuities 8,932 8,414 3,962 3,737
Other 6,006 6,006 12,394 12,394
----------- ----------- ---------- -----------
Total $ 1,501,600 $ 1,428,679 $ 1,448,265 $ 1,437,699
=========== =========== =========== ===========
</TABLE>
The Company's other insurance contracts are excluded from SFAS 107 disclosure
requirements. However, the fair values of liabilities under all insurance
contracts are taken into consideration in the Company's overall management of
interest rate risk, which minimizes exposure to changing interest rates
through the matching of investment maturities with amounts due under
insurance contracts. Additional data with respect to fair value of the
Company's investments is disclosed in Note 2.
NOTE 12 - PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company, which is domiciled in Ohio, prepares its statutory financial
statements in accordance with accounting practices prescribed or permitted by
the Ohio Insurance Department. Prescribed statutory accounting practices
include a variety of publications of the NAIC, as well as state laws,
regulations, and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed.
Such practices may differ from state to state, may differ from company to
company within a state, and may change in the
future. The NAIC currently is in the process of recodifying statutory
accounting practices, the result of which is expected to constitute the
only source of "prescribed" statutory accounting practices.
Accordingly, that project, which is expected to be completed in 1996,
will likely change, to some extent, prescribed
statutory accounting practices, and may result in changes to the accounting
practices that the Company uses to prepare its statutory financial statements.
The Company obtained approval during 1989 from the Ohio Insurance Department
to record the appraisal value of its mineral rights as an admitted asset.
This value is being depleted on the straight line basis by reducing net
investment income over a ten-year period, and depletion expense
amounted to $486,000 in 1994 and 1993. The value of the mineral rights
after accumulated depletion was $2,431,000 at December 31, 1994.
The Company is amortizing the goodwill associated with the acquisition of MLIC
using the straight-line method over a ten year period in accordance with NAIC
guidelines. There is no specific statutory guidance which addresses the
accounting treatment of the costs associated with the reverse stock split.
To be consistent with the accounting for goodwill, the Company capitalizes
all costs incurred in connection with the MLIC reverse stock split.
To be conservative, the Company writes-off the capitalized costs of
the reverse stock split by charging surplus in
the year the costs are incurred. The capitalized costs associated with the
reversestock split which were written off totalled $487,000 in 1994 and
$872,000 in 1993.
NOTE 13 - LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
Activity in the liability for unpaid accident and health claims and claim
adjustment expense is summarized as follows:
<TABLE>
1994 1993
---- ----
(000's omitted)
<S> <C> <C>
Balance as of January 1, net of reinsurance
recoverables of $446 and $512 $ 84,898 $ 75,998
Incurred related to:
Current year 35,602 29,339
Prior years (8,669) (1,332)
------- -------
Total incurred 26,933 28,007
------- -------
Paid related to
Current year 11,165 4,664
Prior years 13,939 14,443
------ ------
Total paid 25,104 19,107
------ ------
Balance as of December 31, net of reinsurance
recoverables of $738 and $446 $ 86,727 $ 84,898
======== ========
</TABLE>
As a result of changes in estimates of insured events in prior years, the
provision of claims and claim adjustment expenses, net of reinsurance
recoveries of $738,000 and $446,000 in 1994 and 1993, respectively,
decreased by $8,669,000 in 1994 and $1,332,000 in 1993 due to higher
than expected rates of claim terminations.
NOTE 14 - SEPARATE ACCOUNTS
Following is a reconciliation of net transfers to the Separate Accounts:
<TABLE>
<CAPTION>
December 31, 1994
-----------------
(000's Omitted)
<S> <C>
Transfers as reported in the summary of operations
of the Separate Accounts Statement:
Transfers to the Separate Accounts $ 182,664
Transfers from the Separate Accounts (68,101)
---------
Net transfers to the Separate Accounts 114,563
Reconciling adjustments:
Charges for investment management,
administration, and contract guarantees 5,165
Interest and gain on seed money 339
---------
Net transfers to Separate Accounts $ 120,067
=========
</TABLE>
<PAGE>
APPENDIX A
TABLE OF APPLICABLE PERCENTAGES
Attained
Age Percentage
- ---- ----------
0-40 250%
41 243%
42 236%
43 229%
44 222%
45 215%
46 209%
47 203%
48 197%
49 191%
50 185%
51 178%
52 171%
53 164%
54 157%
55 150%
56 146%
57 142%
58 138%
59 134%
60 130%
61 128%
62 126%
63 124%
64 122%
65 120%
66 119%
67 118%
68 117%
69 116%
70 115%
71 113%
72 111%
73 109%
74 107%
75-90 105%
91 104%
92 103%
93 102%
94 101%
95+ 100%
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
PART II - OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby
undertakes to file with the Securities and Exchange Commission such
supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority
conferred in that section.
RULE 484 UNDERTAKING
Reference is made to the Amended Articles of Incorporation and Code of
Regulations of The Union Central Life Insurance Company (the "Code of
Regulations"), filed as an exhibit to this Registration Statement.
Specifically, Article VII of the Code of Regulations provides that
Depositor shall, to the full extent permitted by the General
Corporation Law of Ohio, indemnify any person who
is or was a director or officer of the Depositor and whom it may
indemnify pursuant thereto. The Depositor may, within the sole discretion
of its Board of Directors, indemnify in whole or in part any other
person whom it may indemnify pursuant thereto.
Section 1701.13 of the Ohio General Corporation Law provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, other than an action by
or in the right of the corporation, by reason of the fact that he
is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, member, manager, or
agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise,
against expenses, including attorney's fees, judgments,
fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit,
or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, if he had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of it self, create a presumption that the
person did not act in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect
to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person
who was or is a party, or is threatened to made a party, to any
threatened, pending, or completed action or suit by or in the
right of the corporation to procure a judgement in its favor, by
reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at
the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification
shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged to
be liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, the court of common pleas
or the court in which such action or suit was brought determines,
upon application, that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against a
director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee,
member, manager, or agent has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred
to in division (E)(1) or (2) of this section, or in defense of
any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the action, suit,
or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this
section, unless ordered by a court, shall be made by the
corporation only as authorized in the specific case, upon a
determination that indemnification of the director, trustee,
officer, employee, member, manager, or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) or (2) of this section.
Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or threatened
with the action, suit, or proceeding referred to in division
(E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this section is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than
an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for the
corporation or any person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action, suit,
or proceeding referred to in division (E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened
or brought the action or suit by or in the right of the corporation
under division (E)(2) of this section, and, within ten days after
receipt of such notification, such person shall
have the right to petition the court of common pleas or the court in which such
action or suit was brought to review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation
state, by specific reference to this division, that the provisions of
this division do not apply to the corporation and unless the only
liability asserted against a director in an
action, suit, or proceeding referred to in division (E)(1) or (2) of this
section is pursuant to section 1701.95 of the Revised Code, expenses,
including attorney's
fees, incurred by a director in defending the action, suit, or
proceeding shall be paid by the corporation as they are incurred,
in advance of the final disposition of the action, suit, or proceeding,
upon receipt of an undertaking by or on behalf of the director in which
he agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure
to act involved an act or omission undertaken with deliberate intent
to cause injury to the corporation or undertaken with reckless
disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director, trustee,
officer, employee, member, manager, or agent in defending any action, suit, or
proceeding referred to in division (E)(1) or (2) of this section, may be paid by
the corporation as they are incurred, in advance of the final disposition of the
action, suit, or proceeding, as authorized by the directors in the specific
case, upon the receipt of an undertaking by or on behalf of the director,
trustee, officer, employee, member, manager, or agent to repay such amount,
if it ultimately is determined that he is not entitled to be indemnified by
the corporation.
(6) The indemnification authorized by this section shall not be exclusive
of, and shall be in addition to, any other rights granted to those
seeking indemnification under the articles, the regulations, any
agreement, a vote of shareholders or
disinterested directors, or otherwise, both as to action in their official
capacities and as to action in another capacity while holding their offices or
positions, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, member, manager or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish similar
protection, including, but not limited to, trust funds, letters of credit,
or self-insurance, on behalf of or for any person who is or was a
director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, trustee,
employee, member, manager, or agent of another corporation, domestic
or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise,
against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or
not the corporation would have the power to indemnify him against such
liability under this section. Insurance may be purchased from or
maintained with a person in which the corporation has financial
interest.
(8) The authority of a corporation to indemnify persons pursuant to division
(E)(1) or (2) of this section does not limit the payment of expenses as they are
incurred, indemnification, insurance, or other protection that may be provided
pursuant to divisions (E)(5), (6), and (7) of this section. Divisions (E)(1)
and (2) of this section do not create any obligation to repay or return
payments made by the corporation pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes all
constituent entities in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee,
trustee, member, manager, or agent of such a constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability company,
or a partnership, joint venture, trust, or other enterprise, shall stand
in the same position under this section with respect to the new or
surviving corporation as he would if he had served the new or surviving
corporation in the same capacity.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification may be against public policy as expressed
in the Act and may be, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than payment
by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
REPRESENTATIONS PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rule 6e-3(T) under the Investment Company
Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Policies described in the
Prospectus.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risk charge is within the
range of industry practice for comparable flexible or scheduled contracts.
(3) Registrant has concluded that there is a reasonable likelihood that
the distribution financing arrangement of the Carillon Life Account will benefit
the Separate Account and Policy owners and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation.
(4) Carillon Life Account will invest only in management investment
companies which have undertaken to have a board of directors, a majority of whom
are not interested persons of the company, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk charge contained
in other variable life insurance contracts. Registrant undertakes to keep and
make available to the Commission on request the documents used to support the
representation in paragraph (2) above.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement consists of the following papers and
documents:
The facing sheet.
A reconciliation and tie of the information shown in the prospectus with
the items of Form N-8B-2.
The prospectus consisting of ___ pages.
The Undertaking to File Reports.
The Rule 484 Undertaking.
The signatures.
Written consents of the following persons:
John F. Labmeier, Esq.
Kristal E. Hambrick, FSA, MAAA
Sutherland, Asbill & Brennan
Ernst & Young LLP
The following exhibits:
1.A. (1) Resolutions Establishing Carillon Life Account *
(2) None
(3)(a) Form of Underwriting Agreement
(b) Form of Selling Agreement
(c) Form of Sales Representatives Agent Agreement
(4) None
(5)(a) Specimen of Policy
(b) Riders and Endorsements **
(6) Amended Articles of Incorporation and Code of Regulations
of The Union Central Life Insurance Company *
(7) None
(8) None
(9)(a) Participation Agreement
- Scudder Variable Life Investment Fund
(b) Participation Agreement - TCI Portfolios, Inc.
(c) Participation Agreement - MFS Variable Insurance Trust
(10) Form of Application for Policy *
2. See Exhibit 3.(i)
3.(i) Opinion and Consent of John F. Labmeier, Esq.,
As to the Legality of the Securities Being Registered
(ii) Opinion and Consent of Kristal E. Hambrick, FSA, MAAA,
As to Actuarial Matters Pertaining to the Securities
Being Registered
4. None
5. Inapplicable
6. Consent of Sutherland, Asbill & Brennan
7. Powers of Attorney **
8. Notice of Withdrawal Right for Policies
9. Consent of Ernst & Young LLP
10. Memorandum describing Certain Procedures,
filed pursuant to Rule 6e-3(T)(b)(12)(iii)
* Incorporated by reference to the Registrant's initial registration
statement on Form S-6 (File No. 33-94858), filed July 21, 1995.
** In addition to exhibit items filed herewith, additional items
are incorporated by reference to the Registrant's initial
registration statement on Form S-6 (File No. 33-94858), filed July 21, 1995.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Carillon Life Account, has duly caused Pre-
Effective Amendment No. 1 to this Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized
in the City of Cincinnati and the State of Ohio, on the 28th day of
November, 1995.
CARILLON LIFE ACCOUNT
(Registrant)
THE UNION CENTRAL LIFE INSURANCE COMPANY
(Depositor)
ATTEST:/s/John F. Labmeier
By: /s/ Larry R. Pike
[Name:] Larry R. Pike
[Title:] Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
Pre-Effective Amendment No. 1 to this Registration Statement has
been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- -------
<S> <C> <C>
/s/ Larry R. Pike Chairman, President and 11/28/95
Larry R. Pike Chief Executive Officer
/s/ Stephen R. Hatcher Executive Vice President 11/28/95
Stephen R. Hatcher and Chief Financial Officer
/s/ Philip G. Barach Director 11/28/95
Philip G. Barach
/s/ V. Anderson Coombe Director 11/28/95
V. Anderson Coombe
/s/ William A. Friedlander Director 11/28/95
William A. Friedlander
/s/ William G. Kagler Director 11/28/95
William G. Kagler
/s/ Lawrence A. Leser Director 11/28/95
Lawrence A. Leser
/s/ Francis V. Mastrianna, Ph.D. Director 11/28/95
Francis V. Mastrianna, Ph.D
/s/ Mary D. Nelson, FSA Director 11/28/95
Mary D. Nelson, FSA
/s/ Paul G. Pearson, Ph.D. Director 11/28/95
Paul G. Pearson, Ph.D.
/s/ Thomas E. Petry Director 11/28/95
Thomas E. Petry
/s/ Dudley S. Taft Director 11/28/95
Dudley S. Taft
/s/ John M. Tew, Jr., M.D. Director 11/28/95
John M. Tew, Jr., M.D.
</TABLE>
* Copies of powers of attorney authorizing David F. Westerbeck,
John F. Labmeier, and John M. Lucas, and each of them singly, to
sign the Registration Statement and amendments thereto on behalf of
the Directors of The Union Central Life Insurance Company have been
filed with the Registration Statement and Pre-Effective Amendment
No. 1 thereto.
<PAGE>
EXHIBIT INDEX
PAGE
Exhibit 1.A (3)(a) Form of Underwriting Agreement
Exhibit 1.A (3)(b) Form of Selling Agreement
Exhibit 1.A (3)(c) Form of Sales Representatives Agent Agreement
Exhibit 1.A.(5)(a) Specimen of Policy
Exhibit 1.A.(5)(b) Riders and Endorsements
Exhibit 1.A (9)(a) Participation Agreement - Scudder Variable
Life Investment Fund
Exhibit 1.A (9)(b) Participation Agreement - TCI Portfolios, Inc.
Exhibit 1.A (9)(c) Participation Agreement - MFS Variable
Insurance Trust
Exhibit 3.(i) Opinion and Consent of John F. Labmeier, Esq., As
to the Legality
of the Securities Being Registered
Exhibit 3.(ii) Opinion and Consent of Kristal E. Hambrick, FSA,
MAAA, As to
Actuarial Matters Pertaining to the Securities Being
Registered
Exhibit 6 Consent of Sutherland, Asbill & Brennan
Exhibit 7 Power of Attorney
Exhibit 8 Notice of Withdrawal Right for Policies
Exhibit 9 Consent of Independent Auditors
Exhibit 10 Memorandum describing Certain Procedures, filed
pursuant
to Rule 6e-3(T)(b)(12)(iii)
PRINCIPAL UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this ___ day of __________, l985, by and
between Carillon Investments, Inc. (hereinafter the "Underwriter") and The Union
Central Life Insurance Company (hereinafter the "UC"), on its own behalf and on
behalf of Carillon Life Account (hereinafter the "Account"), a separate account
of the UC, as follows:
WHEREAS, the Account was established under authority of a resolution of
UC's Board of Directors on July 10, l995, in order to set aside and invest
assets attributable to certain variable annuity contracts
(hereinafter "Contracts") issued by UC;
WHEREAS, UC has registered the Account as unit investment trusts under the
Investment Company Act of l940 (the "1940 Act") and has registered the Contracts
under the Securities Act of l933;
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of l934, as amended (the "1934 Act"), and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, UC and the Account desire to have the Contracts sold and
distributed through the Underwriter and the Underwriter is willing to sell and
distribute such Contracts under the terms stated herein;
NOW THEREFORE, the parties hereto agree as follows:
1. UC grants to the Underwriter the right to be, and the Underwriter
agrees to serve as, distributor and principal underwriter of the Contracts
during the term of this agreement. The Underwriter agrees to use
its best efforts to solicit applications for the Contracts, and to
undertake, at its own expense, to provide all sales services
relative to the Contracts and otherwise to perform all
duties and functions which are necessary and proper for the distribution
of the Contracts.
2. All premiums for Contracts shall be remitted promptly in full together
with such application, forms and any other required documentation to UC. Checks
or money orders in payment of premiums shall be drawn to the order of "The Union
Central Life Insurance Company".
3. The Underwriter agrees to offer the Contracts for sale in accordance
with the prospectus therefor then in effect. The Underwriter is not authorized
to give any information or to make any representations concerning the Contracts
other than those contained in the current prospectus therefor filed with the
Securities and Exchange Commission or in such sales literature as may be
authorized by UC.
4. On behalf of the Account, UC shall furnish the Underwriter with copies
of all prospectuses, financial statements and other documents which the
Underwriter reasonably requests for use in connection with the distribution of
the Contracts. The Underwriter may be required to reimburse UC for the cost of
prospectuses used in connection with the sale of Contracts for which the
Underwriter shall receive compensation under paragraph l0 hereafter.
5. The Underwriter represents that it is duly registered as a broker-
dealer under the 1934 Act and is a member in good standing of the NASD and, to
the extent necessary to offer the Contracts, shall be registered or otherwise
qualified under the securities laws of any state or other jurisdiction. The
Underwriter shall be responsible for carrying out its sales and underwriting
obligations hereunder in continued compliance with the NASD Rules of Fair
Practice and federal and state securities laws and regulations.
Without limiting the generality of the foregoing, the Underwriter
agrees that it shall be fully responsible for:
(a) ensuring that no person shall offer or sell the Contracts on its
behalf until such person is duly registered as a representative of the
Underwriter, duly licensed and appointed by UC, and appropriately licensed,
registered or otherwise qualified to offer and sell such Contracts under the
federal securities laws and any applicable securities laws of each
state or other jurisdiction in which such Contracts may be
lawfully sold, in which UC is licensed to sell the Contracts and
in which such persons shall offer or sell the Contracts; and
(b) training, supervising, and controlling of all such persons for
purposes of complying on a continuous basis with the NASD Rules of Fair Practice
and with federal and state securities law requirements applicable in connection
with the offering and sale of the Contracts. In this connection, the
Underwriter shall:
(1) conduct such training (including the preparation and utilization
of training materials) as in the opinion of the Underwriter is necessary to
accomplish the purposes of this Agreement;
(2) establish and implement reasonable written procedures for
supervision of sales practices of agents, representatives or brokers selling the
Contracts; and
(3) take reasonable steps to ensure that its associated persons
shall not make recommendations to an applicant to purchase a Contract and shall
not sell a Contract in the absence of reasonable grounds to believe that the
purchase of the Contract is suitable for such applicant.
6. Notwithstanding anything in this Agreement to the contrary, the
Underwriter or UC may enter into sales agreements with other independent broker-
dealers who are members of the NASD for the sale of the Contracts. All such
sales agreements entered into by UC or the Underwriter shall provide that each
independent broker-dealer will assume full responsibility for continued
compliance by itself and its associated persons with the NASD Rules of Fair
Practice and applicable federal and state securities laws. All associated
persons of such independent broker-dealers soliciting applications for the
Contracts shall be duly and appropriately licensed or appointed for the sale of
the Contracts under the insurance laws of the applicable states or jurisdictions
in which such Contracts may be lawfully sold.
7. UC shall apply for the proper insurance licenses in the appropriate
states or jurisdictions for the designated persons associated with the
Underwriter or with other independent broker-dealers which have entered into
agreements with the Underwriter for the sale of the Contracts, provided that UC
reserves the right to refuse to appoint any proposed registered representative
as an agent or broker, and to terminate an agent or broker once appointed.
8. UC and the Underwriter shall cause to be maintained and preserved for
the periods prescribed, such accounts, books and other documents as are required
of it by the 1940 Act and any other applicable laws and regulations. The books,
accounts and records of UC, the Accounts, and the Underwriter as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The Underwriter shall
cause UC to be furnished with such reports as UC may reasonably request for the
purpose of meeting its reporting and recordkeeping requirements under the
insurance laws of the State of Ohio and any other applicable states or
jurisdictions.
9. The Underwriter shall have the responsibility for paying (i) all
commissions or other fees to its associated persons which are due for the sale
of the Contracts, and (ii) any compensation to other independent broker-dealer
and their associated persons due under the terms of any sales agreements between
the Underwriter and such broker-dealers.
l0. The Underwriter shall be compensated for its distribution services in
the amount of not more than ___% of all purchase payments accepted by UC on the
Contracts covered hereby. Any compensation paid to the Underwriter in
connection with a Contract must be returned to UC if the Contract
is tendered for redemption within 20 days after issuance of the Contract.
ll. The services of the Underwriter to the Account hereunder are not to
be deemed exclusive and the Underwriter shall be free to render similar services
to others so long as its services hereunder are not impaired or interfered with
thereby.
12. (a) This Agreement may be terminated by either party hereto upon 60
days written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party to
the other party hereto in the event of bankruptcy or insolvency of such party to
which notice is given.
(c) This Agreement may be terminated at any time upon the mutual written
consent of the parties hereto.
(d) This Agreement shall automatically be terminated in the event of its
assignment.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including premiums or contributions subsequently received for Contracts in
effect at the time of termination or issued pursuant to
applications received by UC prior to termination.
13. This Agreement shall be subject to the provisions of the 1940 Act and
the 1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, including such exemptions from the 1940 Act as the
Securities and Exchange Commission may grant, and the terms hereof shall be
interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transaction exempted from section 15(b)(2) of the 1940 Act.
The Underwriter shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of the Accounts, present or future, any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws or regulations.
14. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
15. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunder duly authorized and seals to be
affixed, as of the day and year first above written.
THE UNION CENTRAL LIFE INSURANCE COMPANY
Attest:
By: _____________________________________
CARILLON INVESTMENTS, INC.
Attest:
By: _____________________________________
CARILLON INVESTMENTS, INC.
BROKER-DEALER AGREEMENT
AGREEMENT by and between CARILLON INVESTMENTS, INC., ("Carillon"), a registered
broker-dealer with the Securities and Exchange Commission under the Securities
Exchange Act of l934 and a member of the National Association of Securities
Dealers, Inc. ("NASD"); and ______________________________________________
("Broker-Dealer"), also a registered broker-dealer with the Securities and
Exchange Commission under the Securities Exchange Act of l934 and a member of
the NASD.
I. INTRODUCTION
WHEREAS, Carillon is the principal underwriter of certain variable contracts
("Contracts") issued by The Union Central Life Insurance Company ("Union
Central"), which Contracts are registered under the Securities Act of l933; and
WHEREAS, Union Central has authorized Carillon to enter into agreements with
other broker-dealers for the distribution of the Contracts; and
WHEREAS, Broker-Dealer wishes to participate in the distribution of the
Contracts.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
II. APPOINTMENT OF BROKER-DEALER
A. APPOINTMENT
Carillon hereby appoints Broker-Dealer as its agent for the solicitation of
applications for the purchase of the Contracts, and Broker-Dealer accepts such
appointment subject to the terms and conditions set forth herein.
III. AUTHORITIES AND DUTIES OF BROKER-DEALER
A. CONTRACTS
The contracts issued by Union Central to which this Agreement applies are listed
in Schedule I. Schedule I may be amended from time to time by Carillon.
Carillon, in its sole discretion and without notice to Broker-Dealer, may
suspend sales of any Contracts.
B. LICENSING REPRESENTATIVES
Broker-Dealer shall take reasonable steps to qualify its registered
representatives ("Representatives") to sell the Contracts under the applicable
insurance laws. Broker-Dealer shall fulfill all requirements set forth in
Section VI, in conjunction with the submission of licensing/appointment papers
for all applicants as insurance agents of Union Central. All such
licensing/appointment papers should be submitted to Union Central by Broker-
Dealer.
C. SECURING APPLICATIONS
All applications for Contracts shall be made on application forms supplied by
Carillon and all payments collected by Broker-Dealer or any Representative of
Broker-Dealer shall be remitted promptly in full, together with such application
forms and any other required documentation, directly to Union Central at the
address indicated on such application or to such other address as Carillon may,
from time to time, designate in writing. Broker-Dealer shall review all such
applications for completeness. Broker-Dealer agrees that it will not accept any
Contract purchase payment other than the first such payment and then only if
such payment is in the form of a check or money order made payable to
"The Union Central Life Insurance Company." All applications are subject
to acceptance or rejection by Union Central in its sole discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Contracts, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any contract
owner or anyone else having an interest in the Contracts, is the property of
Union Central, and shall be transmitted immediately in accordance with the
administrative procedures of Union Central without any deduction or offset for
any reason, including by example but not limitation, any deduction or offset for
compensation claimed by Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and supervision of
all Representatives associated with Broker-Dealer who are engaged directly or
indirectly in the offer or sale of the Contracts and all such persons shall be
subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Contracts.
Broker-Dealer will cause
the Representatives to be trained in the sale of the Contracts; will use its
best efforts to cause such Representatives to qualify under applicable
federal and state laws to engage in the sale of the Contracts; and will
cause such Representatives to be registered representatives of
Broker-Dealer before such Representatives engage in the solicitation of
applications for the Contracts and will cause such Representatives to limit
solicitation of applications for the Contracts to jurisdictions where
Carillon has authorized such solicitation.
Broker-Dealer shall cause such Representatives' qualifications to be certified
to the satisfaction of Carillon and shall notify Carillon if any Representative
ceases to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a Registered
Representative's Agent Agreement with Union Central before a Representative
shall be permitted to solicit applications for the sale of the Contracts.
Carillon shall cause Union Central to furnish Broker-Dealer with copies of
the Registered Representative's Agent Agreement for execution by the
Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS
Broker-Dealer shall fully comply with the requirements of the NASD and of the
Securities Exchange Act of l934 and all other applicable federal or state laws
and will establish such rules and procedures as may be necessary to cause
diligent supervision of the securities activities of the Representatives.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
Carillon and shall immediately notify such Representative that he or she is no
longer authorized to sell the Contracts, and Broker-Dealer shall take whatever
additional action may be necessary to terminate the sales activities of such
Representative relating to the Contracts.
I. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Contracts and such other material as Carillon
determines to be necessary or desirable for use in connection with sales of the
Contracts.
J. REPRESENTATIONS
Broker-Dealer acknowledges that neither it nor its Representatives are
authorized to make any representations concerning the Contracts in
connection with the offer and sale thereof other than representations
contained in the prospectuses filed pursuant to the Securities Act of
l933 or in sales materials approved by Carillon relating to such Contracts.
IV. COMPENSATION
A. SERVICE FEES AND COMMISSIONS
Service Fees and Commissions payable to Broker-Dealer in connection with the
Contracts shall be paid by Carillon to Broker-Dealer. Carillon will provide
Broker-Dealer with a copy of the current Service Fee and Commission Schedule
(see Schedule I). These fees and commissions will be paid as a percentage
of premiums or purchase payments (premiums and purchase payments are
hereinafter referred to collectively as "Payments") received in cash or
other legal tender and accepted by Union Central on applications obtained
by the various Representatives of Broker-Dealer. Upon termination of this
Agreement, all compensation to Broker-Dealer hereunder shall cease;
however, Broker- Dealer shall continue to be liable
for any chargebacks or for any other amounts advanced by or otherwise due
Carillon hereunder.
B. TIME OF PAYMENT
Carillon shall pay any compensation due Broker-Dealer within fifteen (15) days
after the end of the calendar month in which Payments upon which such
compensation is based are accepted by Union Central.
C. AMENDMENT OF SCHEDULES
Carillon may, upon at least ten (10) days prior written notice to Broker-Dealer,
change the Service Fee and Commission Schedule. Any such change shall be by
written amendment of the particular schedule or schedules and shall apply to
compensation due on applications received by Union Central after the effective
date of such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or offer to
rebate all or any part of a Payment on any Contract issued by Union Central, or
if Broker-Dealer or any Representative of Broker-Dealer shall withhold any
Payment on any Contract issued by Union Central, the same will be grounds for
immediate termination of this Agreement by Carillon. If Broker-Dealer or any
Representative of Broker-Dealer shall at any time induce or endeavor to induce
any owner of any Contract issued hereunder to discontinue Payments or to
relinquish any such Contract except under circumstances where there are
reasonable grounds for believing the Contract is not suitable for such person,
any and all compensation due Broker-Dealer hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer the right
to incur any indebtedness on behalf of Carillon. Broker-Dealer hereby
authorizes Carillon to set off liabilities of Broker-Dealer to Carillon
against any and all amounts otherwise payable to Broker-Dealer by Carillon.
V. GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of the conditions
of this Agreement shall not be construed as a waiver of any of the conditions,
but the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
B. LIMITATIONS
No party other than Union Central shall have the authority to make, alter, or
discharge any Contract issued by Union Central. No party other than Union
Central shall have the authority to waive any forfeiture or extend the time of
making any Payments. No party other than Union Central shall have the authority
to enter into any proceeding in a court of law or before a regulatory agency in
the name of or on behalf of Union Central. No party other than Union Central
shall have authority to alter the forms which Carillon may prescribe or
substitute other forms in place of those prescribed by Carillon. No party other
than Carillon shall have authority to enter into any proceeding in a court
of law or before a regulatory agency in the name of or on behalf of Carillon.
C. FIDELITY BOND
Broker-Dealer assigns any proceeds received from its fidelity bonding company to
Union Central or to Carillon, as their interest may appear, to the extent of
their loss due to activities covered by the bond. If there is any deficiency
amount, whether due to a deductible or otherwise, Broker-Dealer shall promptly
pay Carillon such amount on demand and Broker-Dealer hereby indemnifies and
holds harmless Carillon from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This agreement shall be binding on and shall inure to the benefit of the parties
to it and their respective successors and assigns provided that Broker-Dealer
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of Carillon.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
F. INDEMNIFICATION
(a) Carillon agrees to indemnify and hold harmless Broker-Dealer, its
Representatives, officers, directors and employees against any and all losses,
claims, damages or liabilities to which they may become subject under the
Securities Act of l933, the Securities Exchange Act of l934, or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact or any omission to state a material fact required to be stated or
necessary to make the statements made not misleading in the registration
statement for the Contracts or for the shares of Carillon Fund, Inc. ("Fund")
filed pursuant to the Securities Act of l933 or any prospectus included as a
part thereof, as from time to time amended and supplemented, or any
advertisement or sales literature approved in writing by Carillon pursuant to
Section V, paragraph J of this Agreement.
(b) Broker-Dealer agrees to indemnify and hold harmless Carillon and Union
Central, their Representatives, officers, directors and employees against any
and all losses, claims, damages or liabilities to which they may become
subject under the Securities Act of l933, the Securities Exchange Act
of l934, or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon: (i) any oral or written misrepresentation by Broker-Dealer
or its Representatives, officers, directors, employees or agents unless such
misrepresentation is contained in the registration statement for the Contracts
or Fund shares, any prospectus included as a part thereof, as from time to time
amended and supplemented, or any advertisement or sales literature approved in
writing by Carillon pursuant to Section V, paragraph J of this Agreement, (ii)
the failure of Broker-Dealer or its Representatives, officers, directors,
employees or agents to comply with any applicable provisions of this Agreement,
or (iii) any act by Broker-Dealer or its Representatives, officers, directors,
employees or agents not approved by Carillon or Union Central.
G. NOTICES
All notices or communications shall be sent to the address shown in Section VII
of this Agreement or to such other address as the party may request by giving
written notice to the other.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the laws of
the State of Ohio.
I. AMENDMENT OF AGREEMENT
Carillon reserves the right to amend this Agreement at any time. The submission
of an application by Broker-Dealer after notice of any such amendment has been
sent by Carillon shall constitute agreement by the Broker-Dealer to any such
amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement, circular
or any document relating to the Contracts or relating to Union Central unless
such advertisement, circular or document shall have been approved in writing by
Carillon.
K. COMPLAINTS AND INVESTIGATIONS
Broker-Dealer and Carillon agree to cooperate fully in the event of any
regulatory investigation, inquiry or proceeding, judicial proceeding or customer
complaint involving the Contracts. In furtherance of the foregoing, (i) Broker-
Dealer will notify Carillon of any such investigation, inquiry, proceeding, or
complaint involving the Contracts or affecting the ability of Broker-Dealer to
perform pursuant to this Agreement within five (5) days of Broker-Dealer's
obtaining knowledge of same, (ii) Carillon will notify Broker-Dealer of any such
investigation, inquiry, proceeding, or complaint involving Contracts distributed
by Broker-Dealer within five (5) days of Carillon's obtaining knowledge of same,
and (iii) in the case of a customer complaint, Carillon and Broker-Dealer each
will consult with the other prior to sending any written response with respect
to such complaint.
L. TERMINATION
This agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated immediately if Carillon or Broker-Dealer
shall cease to be registered broker-dealers under the Securities Exchange Act of
l934 and members of the NASD. Termination shall not affect the obligations of
the parties under paragraph F of Section V of this Agreement or the liability of
Broker-Dealer for any charge backs or for any other amounts advanced by or
otherwise due Carillon hereunder.
VI. CERTIFICATION WITH RESPECT TO REPRESENTATIVES
Broker-Dealer hereby certifies to Carillon that all the following requirements
will be fulfilled in conjunction with the submission of licensing/appointment
papers for all applicants as agents of Union Central submitted by Broker-Dealer.
Broker-Dealer will, upon request, forward proof of compliance with same to Union
Central in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare
that each applicant is personally known to us, has been examined by us, is
known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as an agent for
Union Central. We vouch for each applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
and each applicant is presently registered as an NASD registered
representative.
3. We certify that all educational requirements have been met for the
specific state in which each applicant is requesting a license, and that
all such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Union Central are those
of the applicant and the securities registration is a true copy of the
original.
5. We hereby warrant that the applicant is not applying for a license with
Union Central in order to place insurance chiefly and solely on his life
or the lives of his relatives.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance interest
of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent of
Union Central until duly licensed therefor. No applicants have been given
a contract or furnished supplies, nor have any applicants been permitted
to write, solicit business, or act as an agent in any capacity, and they
will not be so permitted until the certificate of authority or license
applied for is received.
VII. ADDRESS FOR NOTICES
Carillon Investments, Inc.
P.O. Box 40409
Cincinnati, OH 45240
__________________________
__________________________
__________________________
This Agreement shall be effective upon execution by Carillon.
__________________________
By: ____________________________________________________
Name and Title
Date:__________________
CARILLON INVESTMENTS, INC.
BY: ____________________________________________________
Name and Title
Date:__________________
<PAGE>
SCHEDULE I
Service Fee and Commission Schedule
This Service Fee and Commission Schedule is attached to and made a part of the
Broker-Dealer Agreement entered into between Carillon Investments, Inc.
("Carillon") and ______________________________ ("Broker-Dealer").
Fees and Commissions will be paid as a percentage of Premiums or Purchase
Payments (hereinafter referred to collectively as "Payments") received in cash
or other legal tender and accepted by The Union Central Life Insurance Company
("Union Central") on applications obtained by the various registered
representatives of the Broker-Dealer.
Carillon will pay to the Broker-Dealer an amount determined by the Schedule
shown below, in full satisfaction of all amounts due under this Schedule.
VARIABLE UNIVERSAL LIFE - CARILLON LIFE ACCOUNT
___________________________________________
[ ]
If, for any reason, Union Central or Carillon refunds any Payment on any
Contracts secured through the Broker-Dealer, then Carillon reserves the right to
charge back and recover any Service Fees and Commissions paid, with respect to
such Payment, from the Broker-Dealer. Also, the Broker-Dealer must return to
Union Central any Service Fees and Commissions paid if the Contract is tendered
for redemption within the "free look" period.
CARILLON INVESTMENTS, INC.
President
<PAGE>
<PAGE>
Schedule A
CARILLON INVESTMENTS, INC.
Compensation Schedule
This Compensation Schedule is attached to and made a part of the Sales
Representative's Agent Agreement ("Agreement") entered into by and among The
Union Central Life Insurance Company ("UC"), Carillon Investments, Inc.
("Carillon"), and the Registered Representative ("Representative"). It replaces
and supersedes all prior schedules.
Compensation on premiums received by UC while this Agreement is in force
will be paid in accordance with the following:
I. INDIVIDUAL VARIABLE ANNUITY (FORM UC 2617)
Compensation: 3 1/2% of all Contract premiums received by UC.
First-year compensation and renewal service fee compensation for the
Variable Annuity are paid at the same rate.
Renewal service fee compensation will continue to be paid as long as UC
continues to receive premiums and the Representative is under contract to
Carillon and UC. If renewal premiums are increased or decreased, the
compensation paid will vary accordingly.
The Representative shall not be entitled to any compensation based on
premiums received by UC after termination of this Agreement.
II. INDIVIDUAL VARIABLE UNIVERSAL LIFE (FORM UC 8703)
Compensation:
A. New Sales
- 50% first-year commission on planned period premium paid up to
target
- 2% commission on other first-year premiums
B. Renewals
- 2% renewal commission on all planned periodic premiums or
additional premiums (lump sums) paid in years 2-10; for year 11 and later for
the life of the policy there is a 2% service fee.
Notwithstanding the last sentence in Paragraph 5 of this Agreement to the
contrary, any compensation paid to the Representative after termination of this
Agreement shall be in accordance with the terms of the agent's contract with UC
in effect at the time of sale.
III. Carillon reserves the right to adjust, modify or change any provisions for
compensation. It also reserves the right to charge back compensation paid to the
Representative on premiums refunded to the applicant/owner.
CARILLON INVESTMENTS, INC.
President
UC 2971 12-95
SALES REPRESENTATIVES
AGENT AGREEMENT
This Agreement is made and entered into this _____ day of__________________,
19_, by and among THE UNION CENTRAL LIFE INSURANCE COMPANY ("UCL"), CARILLON
INVESTMENTS, INC ("Carillon"), and ________________________________________
(Name of Registered Representative) of ____________________________ (City,
State) ("Representative").
IN CONSIDERATION OF and subject to the terms and conditions set forth
below, the parties agree as follows:
1. UCL appoints the Representative as its agent for the solicitation of
applications for and sales of certain insurance and annuity contracts of UCL
("Contracts") which are deemed to be securities under the Securities Act of
1933 and which are described in Schedule A attached hereto. Carillon
authorizes the Representative to represent it in the sale of the Contracts.
2. The Representative:
(a) When soliciting for sales or selling the Contracts, shall at
all times be associated with Carillon as an NASD Registered Representative,
and, if the particular jurisdiction requires, shall be licensed or registered
as a securities agent of Carillon.
(b) When soliciting for sales or selling the Contracts, shall at
all times be validly licensed, registered or appointed by UCL as a variable
annuity (or variable contract) agent in accordance with the jurisdictional
requirements of the place where the solicitations take place.
(c) May solicit for and sell the Contracts any place the Contracts
are filed with or approved for sale by the governmental authorities having
jurisdiction, provided the Representative, Carillon and UCL are all validly
licensed, registered or otherwise qualified, as required for the solicitation
and sales of the Contracts.
3. The Representative shall comply strictly with: (a) the laws, rules
and regulations of all state or local governmental jurisdictions in which the
Representative solicits applications for and sells the Contracts; (b) the
laws, rules and regulations of the SEC; (c) the rules of the NASD; (d) the
rules of Carillon; and (e) the rules of UCL. The Representative understands
that failure to comply with such laws, rules and regulations may result in
disciplinary action against the Representative by the SEC, a state or other
local regulatory agency that has jurisdiction, the NASD, Carillon and UCL.
Before any solicitations or sales of the Contracts are made, the
Representative shall become familiar with and abide by the laws, rules and
regulations of all of the above mentioned agencies or parties as are currently
in effect and as they may be changed from time to time.
4. The Representative agrees that he will not engage in any employment
by, or representation of, any issuer of, or dealer in, securities other than
those offered by Carillon, unless he first obtains the written consent of
Carillon. Carillon reserves the right to revoke such written consent at any
time.
5. The Representative shall be entitled to receive compensation from
Carillon, in accordance with Schedule A attached hereto, based on all premiums
received by UCL while this Agreement is in force, from applicants pursuant to
applications for the Contracts issued by UCL, provided such applications were
obtained by the Representative. The Representative shall not be entitled to
any compensation based on premiums received by UCL after termination of this
Agreement.
6. The Representative shall have all applications for the Contracts
accurately completed and reviewed and signed by the applicant and shall
promptly submit the applications to UCL through Carillon, together with all
premiums received from applicants without any reductions. The Representative
shall cause all checks or orders to be made payable to "The Union Central Life
Insurance Company." The Representative shall also comply with any other
application procedures that may be established by Carillon and/or UCL which
may be in effect from time to time and of which the Representative is
notified.
7. Carillon and/or UCL, each in their sole discretion, may elect not to
approve or accept any applications or premiums remitted by the Representative
and may refund an applicant's premiums to the applicant. In the event such
refunds are made and if the Representative has received compensation based on
an applicant's premium that is refunded the Representative shall promptly
repay such compensation to Carillon. If repayment is not promptly made,
Carillon may at its sole option deduct any amounts due it from the
Representative from future compensation otherwise payable to the
Representative, either pursuant to this Agreement or any other agreement for
compensation between the Representative and Carillon and/or UCL.
8. THE REPRESENTATIVE SHALL NOT MAKE ANY STATEMENTS CONCERNING THE
CONTRACTS EXCEPT THOSE THAT ARE CONTAINED IN THE CURRENT PROSPECTUSES AND
SALES LITERATURE APPROVED BY CARILLON AND/OR UCL, AND SHALL NOT SOLICIT FOR
APPLICATIONS OR MAKE SALES THROUGH THE USE OF MAILINGS, ADVERTISEMENTS,
WRITTEN CORRESPONDENCE OR OTHER METHODS OF CONTACT UNLESS THE MATERIAL AND
METHOD HAS THE PRIOR WRITTEN APPROVAL OF CARILLON.
9. The Representative has the sole responsibility for developing
prospects for sales and is free to determine, subject to any applicable
regulatory requirements, to whom, where and how solicitations and sales shall
be made. The Representative is not required to devote any particular portion
of the Representative's time to developing Contracts business.
10. The Representative agrees to the following:
(a) That nothing herein shall be construed to create the
relationship of employer and employee between UCL and/or Carillon and the
Representative or any of the Representative's employees or agents.
(b) That for tax reporting purposes the Representative shall be
considered as self-employed. Unless the Representative is on a separate salary
arrangement, no tax deductions will be made except as required by state and
federal laws and regulations.
(c) To keep accurate records of all transactions on behalf of
Carillon and UCL. All books and accounts, documents, vouchers, letters, files
and all other books, cards, or papers connected with business shall belong to
Carillon and shall be available anytime to its authorized representatives for
examination. The Representative shall furnish Carillon, on forms provided by
Carillon, accurate statements showing such information on the Representative's
operation as may be required by UCL and/or by Carillon from time to time.
(d) To hold in trust all premiums collected for or received on
behalf of Carillon and/or UCL. No such premiums shall be used by the
Representative for any personal or other purposes whatsoever but shall
immediately be turned over to Carillon or its authorized representative. Any
misappropriation of funds shall result in immediate termination of this
Agreement and unconditional forfeiture of all the Representative's interests
and rights hereunder accrued or to accrue.
11. The Representative shall have no authority to, nor shall the
Representative represent as having the authority to, nor shall the
Representative do any of the following:
(a) Hold himself or herself out as an employee, partner or joint
venturer or associate of Carillon and/or UCL.
(b) Hold himself or herself out as a representative of Carillon
and/or UCL in any other manner or for any other purposes except as
specifically agreed in this Agreement and/or any other agreement in effect
between the Representative and Carillon and/or UCL.
(c) Alter, modify, waive, change any of the terms, rates,
conditions of the advertisements, promotional material, or contracts of
Carillon and/or UCL in any respect.
(d) Insert any advertising with respect to Carillon and/or UCL in
any publication whatsoever, or distribute any circulars or promotional
literature without prior written authority of Carillon and/or UCL, or write
any letters to any publications regarding Carillon and/or UCL without first
obtaining prior written authorization from Carillon and/or UCL.
(e) Collect or authorize any other person to collect any premiums
or payments on behalf of Carillon and/or UCL whatsoever except those premiums
that are authorized by Carillon and/or UCL to be collected.
(f) Bind either Carillon and/or UCL on any application or
contract.
(g) Misrepresent or omit important facts in any application or
supplemental material.
12. Carillon and UCL shall have a first lien on, and the right to use
and apply, all compensation of any kind payable to the Representative, his or
her executors, administrators and/or assigns accrued or to accrue to secure
any existing or future indebtedness due Carillon and/or UCL from the
Representative, however arising, and any existing or future advances to the
Representative whether or not such advances be considered indebtedness. Any
assignments (subject to acceptance by Carillon and UCL), if any, shall attach
to the Representative's interest in this Agreement only after the liens
hereinbefore provided shall have been fully satisfied or due on demand. This
includes any charge back of compensation which is annualized for which UCL
does not receive the full first-year premium.
13. Neither this Agreement nor any of its benefits may be pledged,
encumbered, assigned or transferred by the Representative, either in whole or
in part, in any manner, nor may the Representative change the agent of record
for a Contract, without the prior written consent of Carillon and UCL.
14. This Agreement may be terminated without cause by Carillon, UCL, or
the Representative upon five (5) days' prior written notice, and automatically
terminates if the Representative dies or ceases to be validly licensed,
appointed or NASD registered.
15. Upon termination of this Agreement, any prospectus, applications or
other material and supplies furnished by Carillon and/or UCL shall be promptly
returned to Carillon and/or UCL.
16. Carillon and UCL reserve the right to unilaterally adjust, modify or
change any and all terms of this Agreement, including provisions for compensa-
tion of any kind. Any such adjustment, modification or change shall take
effect upon notification of the Representative. The submission of an
application by the Representative after notice of any such amendment has been
sent shall constitute agreement to any such amendment.
17. This Agreement is entire, and constitutes the sole understanding of
the parties with respect to solicitation and sales of the Contracts. Any and
all prior representations, statements and/or agreements between the parties
are merged herein.
18. The forbearance or neglect of Carillon and/or UCL to insist upon the
strict compliance by the Representative with any of the provisions of this
Agreement, whether continuing or not, shall not be construed as a waiver of
any of Carillon and/or UCL's rights or privileges hereunder. No waiver of any
right or privilege of Carillon and/or UCL arising from any default or failure
of performance by the Representative shall affect Carillon and/or UCL's rights
or privileges in the event of a further default or failure of performance.
19. All notices required hereunder shall be in writing and sent by
United States mail to Carillon and UCL at: P.O. Box 179, Cincinnati, Ohio
45201, or by Carillon and/or UCL to the last known address of the
Representative. All notices required hereunder shall be deemed given when
deposited in the United States mail. Each party shall promptly notify the
other parties of any change in address where notices hereunder are to be sent.
20. This Agreement shall be governed by the laws of the State of Ohio.
21. This Agreement shall be effective upon execution by Carillon.
Approved and Accepted:
CARILLON INVESTMENTS, INC.
By ___________________________________________
(Signature and Title) (Date)
THE UNION CENTRAL LIFE INSURANCE COMPANY
/s/ Larry R. Pike
President
______________________________________________
Registered Representative
(Signature) (Date)
UC 2972 2-90
The
Union Central
Life Insurance Company
Founded in 1867...A Mutual Company...P.O. Box 40888, Cincinnati,
Ohio 45240
INSURED: JOHN DOE
POLICY NUMBER: 01234567
POLICY DATE: JANUARY 1, 1996
ISSUE DATE: JANUARY 1, 1996
WE PROMISE to pay the death benefit to the beneficiary if the
INSURED dies prior to the MATURITY DATE, subject to the terms of
this policy.
WE PROMISE to pay the CASH VALUE, less any loan and loan
interest, to the OWNER on the MATURITY DATE if the INSURED is
living on that date.
THE DURATION OR AMOUNT OF THE DEATH BENEFIT MAY BE FIXED OR MAY
VARY depending on the investment experience and the death benefit
option selected. The death benefit is described in the death
benefit section.
THE CASH VALUE IS VARIABLE, when based on the investment
experience of the SEPARATE ACCOUNT and may increase or decrease
without limit. There is no guaranteed CASH VALUE.
LOOK AT THE APPLICATION FORMS. This policy is issued based on
payment of the initial premium and the answers in the application
(see copy attached). If all answers are not true and complete,
this policy may be affected.
PLEASE READ THIS POLICY CAREFULLY. This policy is a legal
contract between YOU and Union Central.
20-DAY RIGHT TO EXAMINE THE POLICY. It is important to Union
Central that YOU are satisfied with this policy. YOU have 20
days after YOU receive it, or 45 days after the application is
signed by the OWNER, whichever is later, to review the policy.
If YOU are not satisfied, YOU may send it back to us or give it
to our agent. In such case, this policy will be void from the
beginning. WE will refund the greater of any premiums paid less
partial cash surrenders or the ACCOUNT VALUE, within 7 days after
this policy is returned. Notification of the right to examine
period will be sent with the policy when it is issued.
Signed for The Union Central Life Insurance Company at
Cincinnati, Ohio
David F. Westerbeck Larry R. Pike
Secretary President
Flexible Premium Adjustable Variable Life Insurance
Flexible Premiums Payable During Life of Insured to Maturity Date
Death Benefit Payable at Death of Insured Prior to Maturity Date
Cash Value Payable on Maturity Date
Period of Coverage not Guaranteed
Participating
UC 8703
7/95<PAGE>
<PAGE>
POLICY GUIDE
- -----------------------------------------------------------------
- ------------
Account Value......................................... 12
Accumulation Unit..................................... 10
Addition, Deletion, or Substitution of Investments.... 10
Age and Sex........................................... 21
Annual Report......................................... 19
Assignment............................................ 21
Beneficiary........................................... 6
Cash Surrender......................................... 12
Cash Value....................................... 12
Computations...................................... 21
Conformity with Laws.......................... 20
Continuation of Insurance........................... 18
Conversion to a Fixed Policy...................... 20
Cost of Insurance................................ 16
Crediting of Accumulation Units................. 9
Death Benefit.................................... 7
Death Benefit Changes............................ 8
Death Benefit Options.......................... 7
Definitions.................................... 4
Dividends....................................... 17
Entire Contract.................................. 18
Grace Period.................................... 14
Guaranteed Account.............................. 11
Guaranteed Account Interest Rate................ 11
How Death Benefit is Paid...................... 7
Incontestability................................... 19
Insulation................................ 18
Interest Credits and Effect on Investment Performance.. 16
Interest Rate.................................. 17
Limitations on Transfers from the Guaranteed Account.. 15
Loans................................................... 15
Loan Interest........................................... 15
Making Payments......................................... 18
Monthly Administrative Charge........................... 17
Monthly Deductions...................................... 17
Mortality and Expense Risk Charge....................... 17
Net Investment Factor.................................. 10
Ownership.............................................6
Ownership of Assets.................................... 18
Partial Cash Surrender................................... 13
Policy Changes......................................... 19
Policy Cost Factors.................................... 17
Policy Schedule........................................ 3
Premiums................................................ 13
Reinstatement........................................... 20
Reliance.............................................. 19
Separate Account....................................... 9
Subaccounts............................................ 9
Suicide................................................ 19
Surrender Charge........................................ 12
Taxes.................................................... 20
Termination............................................... 20
Transfers................................................. 14
Valuation Date and Valuation Period.................... 9
Variable Account...................................... 9<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Minimum Planned Minimum
Specified Specified Periodic Monthly
Benefit Amount Amount Premium Premium
<S> <C> <C> <C> <C>
Variable Adjustable Life $[100,000.00] $[50,000.00] $[ 750.00] $[ 62.50]
Annual
Death Benefit Option A Applies.
Initial Premium: $[ 750.00]
</TABLE>
# It is possible that coverage will expire prior to the maturity date
shown where either premiums paid, investment experience or interest
credited is insufficient to continue coverage to such date. Please
refer to Maturity Date Definition on page 4.
SUMMARY CONTINUES ON NEXT PAGE.
- ------------------------------------------------------------------
Insured: JOHN DOE Maturity Date: January 1, 2061#
Policy Number: 01234567 Policy Date: January 1, 1996
Age and Sex: 35, MALE Issue Date: January 1, 1996
Rate Class: STANDARD NONTOBACCO
UC 8703 - 3 -<PAGE>
<PAGE>
Schedule Page
- -----------------------------------------------------
MAXIMUM MONTHLY COST OF INSURANCE
Rate Standard
Class Nontobacco
- -------- -------------
Attained
Age
35 $ .14
36 $ .15
37 $ .16
38 $ .17
39 $ .18
40 $ .19
41 $ .21
42 $ .22
43 $ .24
44 $ .26
45 $ .28
46 $ .30
47 $ .32
48 $ .35
49 $ .38
50 $ .41
51 $ .45
52 $ .49
53 $ .54
54 $ .59
55 $ .65
56 $ .72
57 $ .79
58 $ .87
59 $ .96
60 $ 1.06
61 $ 1.17
62 $ 1.29
63 $ 1.44
64 $ 1.60
65 $ 1.78
66 $ 1.97
67 $ 2.18
68 $ 2.41
69 $ 2.65
70 $ 2.93
Note: Rates are per $1,000 Risk Amount.
SUMMARY CONTINUES ON NEXT PAGE.
- ----------------------------------------------------------------------
- -----
Insured: JOHN DOE Policy Number: 01234567
Guaranteed Interest Rate for the Guaranteed Account: 4.0% ANNUALLY,
0.327374% MONTHLY
Basis of Values: 1980 CSO MALE NONSMOKER
UC 8703 - 3A -<PAGE>
<PAGE>
Schedule Page
- ----------------------------------------------------------------------
- --------
MAXIMUM MONTHLY COST OF INSURANCE
Rate Standard
Class Nontobacco
- ------ --------------
Attained
Age
- --------
71 $ 3.30
72 $ 3.62
73 $ 4.04
74 $ 4.52
75 $ 5.04
76 $ 5.59
77 $ 6.18
78 $ 6.79
79 $ 7.44
80 $ 8.16
81 $ 8.97
82 $ 9.90
83 $ 10.95
84 $ 12.12
85 $ 13.37
86 $ 14.70
87 $ 16.08
88 $ 17.50
89 $ 18.97
90 $ 20.51
91 $ 22.17
92 $ 23.99
93 $ 26.07
94 $ 28.78
95 $ 32.82
96 $ 39.64
97 $ 53.07
98 $ 83.33
99 $ 83.33
Note: Rates are per $1,000 Risk Amount.
SUMMARY CONTINUES ON NEXT PAGE.
- ----------------------------------------------------------------------
- -------
Insured: JOHN DOE Policy Number: 01234567
Guaranteed Interest Rate for the Guaranteed Account: 4.0% ANNUALLY,
0.327374% MONTHLY
Basis of Values: 1980 CSO MALE NONSMOKER
UC 8703 - 3A -<PAGE>
<PAGE>
Schedule Page
- ----------------------------------------------------------------------
- --------
TABLE OF MAXIMUM EXPENSE CHARGES
(1) Sales Charge: [4.00]% of each premium paid during the first
ten policy
years and [2.00]% of each premium paid thereafter.
(2) Premium Tax Charge: [2.50]% of each premium paid.
(3) Mortality and Expense Risk Charge:
Equal on an annual basis to the following percentage of the
average daily net assets of the VARIABLE ACCOUNT:
[0.75]% during the first 10 policy years
[0.25]% thereafter
(4) Monthly Administrative Charge:
During the first policy year: $[25] per month
Thereafter: Current: $[ 5] per month
Guaranteed: $[10] per month
(5) Transfer Charge:
Current: $[ 0] for the first [12] transfers per policy year;
$[10] for each subsequent transfer in the policy year
Guaranteed: $[15] per transfer
(6) Surrender Charges:
The surrender charge is the sum of the Sales
Surrender Charge and the Administrative Surrender Charge.
Sales Surrender Charge:
The lesser of cumulative premiums paid as of the
date of the surrender or $[1,026.00], times the following factor:
[26]% for surrenders made during the first [ 5]
policy years, decreasing by [0.2167]% per month until it reaches
zero at the end of the [15]th policy year.
Administrative Surrender Charge:
$[350.00] for surrenders made during the first [ 5]
policy years, decreasing by $[ 2.92] per month until it reaches
zero at the end of the [15]th policy year.
- -------------------------------------------------------------------
Insured: JOHN DOE Policy Number: 01234567
UC 8703 -3B-
<PAGE>
<PAGE>
Schedule Page
- -----------------------------------------------------------
Initial Net Premium Allocation:
Subaccounts: [Carillon Bond 25]%
[Carillon Capital 25]
[Carillon Equity 0]
[MFS Growth with Income 0]
[MFS High Income 0]
[Scudder Capital Growth 0]
[Scudder International 0]
[Scudder Money Market 0]
[TCI Growth 0]
[Union Central Guaranteed Account: 50]
Separate Account: [Carillon Life Account]
Minimum premium allocation to any SUBDIVISION or the GUARANTEED
ACCOUNT:
[ 5% of the premium payment]
All allocations must be in whole percentages
Minimum guaranteed period: [3] years from the POLICY DATE
Minimum increase in SPECIFIED AMOUNT:$[ 5,000], or if less, the amount
determined under any rider provision
Minimum decrease in SPECIFIED AMOUNT: $[ 5,000]
Minimum transfer amount: $[100], or the entire balance in the account
if less
Maximum transfer amount per policy year from the GUARANTEED ACCOUNT:
[20]% of the amount in the GUARANTEED ACCOUNT at the
beginning of the POLICY YEAR
Minimum loan amount: $[ 500]
Minimum partial cash surrender amount: $[ 500]
- --------------------------------------------------------------------
Insured: JOHN DOE Policy Number: 01234567
UC 8703 - 3C -<PAGE>
<PAGE>
ENDORSEMENT
FEDERAL TAX GUIDELINES ENDORSEMENT
THE FEDERAL TAX GUIDELINES CURRENTLY STATE THAT THE DEATH BENEFIT MUST
BE AT LEAST 250% OF THE ACCOUNT VALUE UNTIL THE ANNUAL DATE WHEN THE
INSURED IS AGE 41. BEGINNING ON THIS DATE, THIS PERCENTAGE CHANGES IN
ACCORDANCE WITH THE FOLLOWING TABLE:
<TABLE>
<CAPTION>
ATTAINED ATTAINED
AGE PERCENTAGE AGE PERCENTAGE
<C> <C> <C> <C>
41 243% 61 128%
42 236 62 126
43 229 63 124
44 222 64 122
45 215 65 120
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75-90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 101
60 130 95 and over 100
</TABLE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
/S/ David F. Westerbeck /s/ Larry R. Pike
David F. Westerbeck Larry R. Pike
Secretary President
UC E-97-2<PAGE>
<PAGE>
This is a Variable Adjustable Life Insurance policy. WE will pay the
death benefit if the INSURED dies while this policy is in force,
subject to the terms of the policy.
DEFINITIONS
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(Defined terms appear in italics throughout this policy)
ACCOUNT VALUE
Means the sum of your interest in the GUARANTEED ACCOUNT, the VARIABLE
ACCOUNT and the LOAN ACCOUNT. How to calculate the ACCOUNT VALUE is
found in the Account Value provision.
ACCUMULATION UNIT
Means the unit of measure that is used to calculate the value of your
interest in the SEPARATE ACCOUNT.
AGE
Means the INSURED'S AGE as of the birthday nearest to the date on
which AGE is determined.
ANNUAL DATE
Means the same date each year as the POLICY DATE.
CASH VALUE
Means the ACCOUNT VALUE of this policy less the surrender charge, if
any, shown in the SCHEDULE.
GUARANTEED ACCOUNT
Means this policy's value which is part of the assets of The Union
Central Life Insurance Company other than those assets in any of its
SEPARATE ACCOUNTS and the LOAN ACCOUNT.
INSURED
Means the INSURED named on the SCHEDULE. The INSURED may or may not
be the OWNER.
ISSUE DATE
Means the date from which the suicide and contestable periods start.
LOAN ACCOUNT
Means a portion of the ACCOUNT VALUE which is collateral for loan
amounts. The LOAN ACCOUNT is described in the Loans provision.
MATURITY DATE
Means the latest date to which coverage may continue. There is no
relationship between the planned periodic premium and the MATURITY
DATE. The planned periodic premium may not continue the policy in
force to the MATURITY DATE, even if it is paid as scheduled. The
period for which the policy will continue will depend on:
1. the amount, timing, and frequency of premium
payments; and
2. changes in the SPECIFIED AMOUNT and death benefit
options; and
3. changes in current interest credits for amounts in
the GUARANTEED ACCOUNT and LOAN ACCOUNT; and
4. the effect of investment performance, positive or
negative, on amounts in the VARIABLE ACCOUNT; and
5. changes in the cost of insurance and costs for
riders, if any; and
6. partial cash surrenders and loans.
MINIMUM MONTHLY
Means the amount that must be paid on a cumulative basis to keep this
policy in force
PREMIUM
during the minimum guaranteed period as shown in the SCHEDULE.
MONTHLY DATE
Means the same date of each month as the POLICY DATE.
NET PREMIUM
Means the total premium paid reduced by the premium expense charges
shown in the SCHEDULE.
NOTICE
Means information WE have received at our Home Office which is
written, is signed by YOU, and acceptable to us.
OWNER
Means the OWNER named in the application, unless changed.
POLICY DATE
Means the date from which policy months, years and anniversaries are
measured.
PORTFOLIO or FUND PORTFOLIO
Means the separate investment fund in which the SEPARATE ACCOUNT
invests.
PROOF
Means evidence satisfactory to us of insurability or for other matters
such as WE may require.
RISK AMOUNT
Means the amount by which the death benefit exceeds the ACCOUNT VALUE.
SCHEDULE
Means the policy SCHEDULE or the supplemental policy SCHEDULE most
recently sent to YOU by us.
SEPARATE ACCOUNT
Means the SEPARATE ACCOUNT of The Union Central Life Insurance
Company, identified in the SCHEDULE. The SEPARATE ACCOUNT is divided
into several SUBACCOUNTS.
SPECIFIED AMOUNT or INITIAL SPECIFIED AMOUNT
Means the SEPCIFIED AMOUNT or the INITIAL SPECIFIED AMOUNT
shown in the SCHEDULE.
SUBACCOUNT(S)
Means one or more of the SUBACCOUNTS of the SEPARATE ACCOUNT. Each
SUBACCOUNT is invested in a different FUND PORTFOLIO. The SUBACCOUNTS
are shown in the SCHEDULE.
SUBDIVISION
Means the portion of your VARIABLE ACCOUNT which is invested in a
specific SUBACCOUNT.
WE and YOU
"WE," "us" or "our" means The Union Central Life Insurance Company.
"YOU" or "your" means the OWNER of this policy.
VARIABLE ACCOUNT
Means this policy's value which is invested in one or more
SUBACCOUNTS.
OWNERSHIP
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OWNERSHIP
While the INSURED is living, YOU have all rights in this policy. Your
rights will be subject to any assignment, and to the rights of any
irrevocable beneficiary. If YOU die before the INSURED, the successor
OWNER named in the application is the new OWNER. If there is no
successor OWNER, then your estate becomes the new OWNER.
A change of OWNER may be made at any time by NOTICE to us. It will
take effect on the date NOTICE is received. WE will record the
change. Unless there are no surviving primary or contingent
beneficiaries, a change of OWNER does not change the beneficiary. YOU
may exercise the following rights while the INSURED is living:
1. the right to change the SPECIFIED AMOUNT;
2. the right to change the premium payment;
3. the right to assign the policy;
4. the right to change the OWNER or beneficiary;
5. the right to receive any dividends;
6. the right to terminate this policy;
7. the right to make loans;
8. the right to make surrenders;
9. the right to make transfers; and
10. the right to change NET PREMIUM allocations.
BENEFICIARY
- --------------------------------------------------------------------
BENEFICIARY
The beneficiary will receive the death benefit when the INSURED dies.
The primary and any contingent beneficiaries are named in the
application. If no primary beneficiary is living when the INSURED
dies, WE will pay to the contingent beneficiary. If no contingent
beneficiary is living when the INSURED dies, WE will pay YOU or your
estate.
Unless the beneficiary designation provides otherwise, WE will follow
these rules:
1. WE will pay equal shares when more than one beneficiary of
the same class is to share the funds.
2. No revocable beneficiary has rights in this policy until the
INSURED dies.
3. An irrevocable beneficiary cannot be changed without his or
her consent.
4. The interest of any beneficiary is subject to the rights of
any assignee shown on our records.
5. When beneficiaries are not shown by name (such as
"children"), WE may find who they are from sworn statements and not
wait for court records.
YOU may change the beneficiary at any time before the INSURED dies by
NOTICE to us. Any change must be approved by us. If approved, it
will take effect on the date the NOTICE was signed by you. WE will
not be liable for any payments WE make or actions WE take before the
change is approved.
Unless otherwise provided, if any beneficiary dies within 30 days
after the INSURED dies as the result of a common disaster, WE will pay
the death benefit as if that beneficiary died first.
DEATH BENEFIT
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DEATH BENEFIT
WE will pay the death benefit proceeds as described in the Making
Payments provision upon receipt of PROOF that the INSURED died while
this policy was in force, and other PROOF that WE may require in order
to investigate the claim. When the proceeds are paid in a lump sum,
WE will include interest from the INSURED'S date of death to the
payment date. The rate will not be less than required by law.
Proceeds will include:
1. the death benefit in force as of the end of the VALUATION
PERIOD during which death occurs;
less
2. any loan and loan interest as of the date of death.
The death proceeds during the grace period are described in the Grace
Period provision.
DEATH BENEFIT OPTIONS
The death benefit will be one of the following two options, as
selected on the application unless subsequently changed.
OPTION A
The death benefit is the greater of: (1) the SPECIFIED AMOUNT
which includes the ACCOUNT VALUE; or (2) the ACCOUNT VALUE times the
appropriate percentage from the Federal Tax Guidelines Endorsement.
OPTION B
The death benefit is the greater of: (1) the ACCOUNT VALUE
plus the SPECIFIED AMOUNT; or (2) the ACCOUNT VALUE times the
appropriate percentage from the Federal Tax Guidelines Endorsement.
The SCHEDULE shows the SPECIFIED AMOUNT and whether the ACCOUNT VALUE
is included in the SPECIFIED AMOUNT.
HOW THE DEATH BENEFIT IS PAID
The death benefit will be paid:
1. in a lump sum; or
2. in any other way agreeable to YOU and us.
Before the INSURED dies, YOU may choose how the benefit is to be paid.
If YOU have not made a choice before the INSURED dies, the beneficiary
may choose how the benefit is to be paid.
DEATH BENEFIT CHANGES
You may change the death benefit option or SPECIFIED AMOUNT by NOTICE
to us. Any change is subject to the following conditions;
1. A decrease of the SPECIFIED AMOUNT may be requested on or
after one year from the POLICY DATE. A decrease of the SPECIFIED
AMOUNT will be effective on the MONTHLY DATE following NOTICE to us.
Any reduction will be in the following order:
a. against the most recent increase of the SPECIFIED
AMOUNT;
b. against the next most recent increases;
c. against the INITIAL SPECIFIED AMOUNT.
The minimum amount of any decrease is shown in the SCHEDULE.
WE may send a new SCHEDULE following a decrease.
2. An increase of the SPECIFIED AMOUNT may be requested on or
after one year from the POLICY DATE. Any increase of the SPECIFIED
AMOUNT that is not guaranteed will require PROOF and is subject to our
underwriting limits. An approved increase will have an effective date
as shown in the SCHEDULE. The minimum amount of any increase is shown
in the SCHEDULE.
3. Any increase of the SPECIFIED AMOUNT will be subject to
surrender charges as shown in the SCHEDULE for the increase.
4. A change in the death benefit option may be requested on or
after one year from the POLICY DATE. A change in the death benefit
option may require a change in the SPECIFIED AMOUNT and/or the total
death benefit.
a. The option may be changed to include the ACCOUNT
VALUE in the SPECIFIED AMOUNT (Option B to Option A), by
NOTICE to us. The effective date of change will be the
MONTHLY DATE following our receipt of the NOTICE. Unless
otherwise requested by NOTICE to us, a change to Option A
from Option B will not change the SPECIFIED AMOUNT and the
death benefit will be reduced by the amount of the ACCOUNT
VALUE.
b. The option may be changed to exclude the ACCOUNT
VALUE from the SPECIFIED AMOUNT (Option A to Option B), by NOTICE to
us. In such case, the SPECIFIED AMOUNT will be reduced by the amount
of the ACCOUNT VALUE so that the death benefit is not increased as of
the date of change. The effective date of change will be the MONTHLY
DATE following our receipt of the NOTICE.
5. The SPECIFIED AMOUNT after any requested change must not be
less than the MINIMUM SPECIFIED AMOUNT stated in the SCHEDULE.
6. The RISK AMOUNT will be automatically adjusted as necessary
for this policy to qualify for federal tax treatment as a life
insurance policy.
Guidelines are provided in the Federal Tax Guidelines
Endorsement attached to this policy.
VARIABLE ACCOUNT PROVISIONS
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SEPARATE ACCOUNT
The SEPARATE ACCOUNT is shown in the SCHEDULE. It is a unit
investment trust registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. It is
established under the laws of Ohio. The assets in the SEPARATE
ACCOUNT are kept separate from our general assets and assets of other
SEPARATE ACCOUNTS.
SUBACCOUNTS
The SEPARATE ACCOUNT is divided into SUBACCOUNTS, each of which
invests in a different PORTFOLIO
CREDITING OF ACCUMULATION UNITS
WE will credit NET PREMIUMS allocated to the VARIABLE ACCOUNT in the
form of variable accumulation units. The number of variable
ACCUMULATION UNITS to be credited to this policy for each SUBDIVISION
of the VARIABLE ACCOUNT will be determined by dividing the NET
PREMIUMS allocated to each SUBDIVISION of the VARIABLE ACCOUNT by the
ACCUMULATION UNIT value for the corresponding SUBACCOUNT as of the end
of the VALUATION PERIOD during which the premium is received. In the
case of the initial premium, units will be credited on the later of
these dates:
1. the POLICY DATE; or
2. the date WE receive the premium.
ACCUMULATION UNITS are credited when amounts are transferred into a
SUBACCOUNT. ACCUMULATION UNITS are deducted when the monthly
deduction is assessed or when amounts are partially surrendered or
transferred, including transfer charges, out of a SUBACCOUNT.
VARIABLE ACCOUNT
At any time prior to the MATURITY DATE, the VARIABLE ACCOUNT of this
policy equals the sum for all SUBDIVISIONS of the VARIABLE ACCOUNT of
(1) times (2) where:
1. equals the number of ACCUMULATION UNITS credited to a
SUBDIVISION of the VARIABLE ACCOUNT; and
2. equals the value of the appropriate ACCUMULATION UNIT.
VALUATION DATE AND VALUATION PERIOD
A VALUATION DATE is any date on which the New York Stock Exchange is
open for trading and WE are open for business. The assets of each
SUBACCOUNT will be valued on each VALUATION DATE. A VALUATION PERIOD
is a period beginning with the close of business on a VALUATION DATE
and ending at the close of business for the next VALUATION DATE.
ACCUMULATION UNIT
The value of a variable accumulation unit for each SUBACCOUNT was
arbitrarily set at $10 when funds were first credited to the
respective SUBACCOUNT. The variable accumulation unit value for any
subsequent VALUATION PERIOD is determined by multiplying the variable
accumulation unit value for the immediately preceding VALUATION PERIOD
by the "net investment factor" for the VALUATION PERIOD for which the
value is being determined. The value of a variable accumulation unit
may increase or decrease from one VALUATION PERIOD to the next.
NET INVESTMENT FACTOR
The net investment factor is an index that measures the investment
performance of a SUBACCOUNT from one VALUATION PERIOD to the next.
The net investment factor for each Subaccount for any VALUATION PERIOD
is determined by dividing (1) by (2) and subtracting (3) from the
result, where:
1. is the net result of:
a. the net asset value per share of a PORTFOLIO share
held in the SUBACCOUNT determined as of the end of the current
VALUATION PERIOD, plus
b. the per share amount of any dividend or capital gain
distributions made by the PORTFOLIO on shares held in the SUBACCOUNT
if the "exdividend" date occurs during the current VALUATION PERIOD,
plus or minus
c. a per share charge or credit for any taxes incurred
by or reserved for in the SUBACCOUNT, which is determined by
us to have resulted from the maintenance of the SUBACCOUNT;
and
2. is the net result of:
a. the net asset value per share of a PORTFOLIO share
held in the SUBACCOUNT determined as of the end of the
immediately preceding VALUATION PERIOD (adjusted for an
"exdividend"), plus
or minus
b. the per share charge or credit for any taxes reserved
for the immediately preceding VALUATION PERIOD; and
3. is a factor representing the charges deducted from the
SUBACCOUNTS on a daily basis for mortality and expense risks. Such
factor is equal on an annual basis to the amount shown in the
SCHEDULE.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
WE reserve the right, subject to compliance with applicable law, to
make additions to, deletions from, or substitution for the PORTFOLIO
shares that are held by the SEPARATE ACCOUNT or that the SEPARATE
ACCOUNT may purchase. WE reserve the right to eliminate the shares of
any of the eligible PORTFOLIOS and to substitute shares of another
PORTFOLIO, or of another open-end, registered investment company, if
the shares of an eligible PORTFOLIO are no longer available for
investment, or if in our judgment further investment in any eligible
PORTFOLIO should become inappropriate in view of the purposes of the
SEPARATE ACCOUNT. WE will not substitute any shares attributable to
your interest in a SUBACCOUNT without NOTICE to YOU and prior approval
of the Securities and Exchange Commission, to the extent required by
the Investment Company Act of 1940. Nothing contained herein shall
prevent the SEPARATE ACCOUNT from purchasing other securities for
other series or classes of policies, or from effecting a conversion
between series or classes of policies on the basis of requests made by
OWNERS.
WE reserve the right to establish additional SUBACCOUNTS, each of
which would invest in a new PORTFOLIO, or in shares of another open-
end investment company. WE also reserve the right to eliminate
existing SUBACCOUNTS.
In the event of any such substitution or change, WE may, by
appropriate endorsement, make such changes in this and other policies
as may be necessary or appropriate to reflect such substitution or
change. If deemed by us to be in the best interest of persons having
voting rights under the policies, the SEPARATE 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.
The investment policy of the SEPARATE ACCOUNT will not be changed
without the approval of the Insurance Commissioner of the state of
Ohio. If required, the approval process is on file with the
Commissioner of the state in which this policy is issued.
GUARANTEED ACCOUNT PROVISIONS
- -----------------------------------------------------------
GUARANTEED ACCOUNT
The GUARANTEED ACCOUNT of this policy at any time equals:
1. the total of all NET PREMIUMS allocated to the GUARANTEED
ACCOUNT; plus
2. the total of all amounts transferred to the GUARANTEED
ACCOUNT from the VARIABLE ACCOUNT or the LOAN ACCOUNT; plus
3. interest; minus
4. the total of all amounts transferred from the GUARANTEED
ACCOUNT to the VARIABLE ACCOUNT (including the transfer charge) and
the LOAN ACCOUNT;
minus
5. the total of all monthly deductions attributable to the
GUARANTEED ACCOUNT; minus
6. the total of all partial surrenders from the GUARANTEED
ACCOUNT.
GUARANTEED ACCOUNT INTEREST RATE
The guaranteed interest rate used in the calculation of the GUARANTEED
ACCOUNT is shown in the SCHEDULE. Interest in excess of the
guaranteed rate may be used in the calculation of the GUARANTEED
ACCOUNT at such increased rates and in such a manner as WE may
determine. Different excess rates may apply to premium allocations or
transfers made to the GUARANTEED ACCOUNT on different dates.
POLICY VALUES
- -----------------------------------------------------------------
This policy has an ACCOUNT VALUE and a CASH VALUE that, during the
life of the INSURED, may be used for your benefit. A description of
how the ACCOUNT VALUE and CASH VALUE are determined and how they may
be used is as follows:
ACCOUNT VALUE
The ACCOUNT VALUE is the sum of your interest in the GUARANTEED
ACCOUNT, the VARIABLE ACCOUNT, and the LOAN ACCOUNT. The ACCOUNT VALUE
on each VALUATION DATE after the POLICY DATE will be:
1. the ACCOUNT VALUE on the prior VALUATION DATE, less any
partial cash surrender paid since the prior VALUATION DATE; plus
2. interest on amounts allocated to the GUARANTEED ACCOUNT and
the LOAN ACCOUNT; plus or minus
3. the positive or negative investment experience on amounts
allocated to the VARIABLE ACCOUNT, as reflected by the change in value
of the ACCUMULATION UNITS; plus
4. any NET PREMIUMS for the policy received since the prior
VALUATION DATE;
less
5. any monthly deduction due if the VALUATION DATE is a MONTHLY
DATE; and
6. any transfer charges assessed.
The ACCOUNT VALUE on the POLICY DATE of this policy is the initial NET
PREMIUMS received for this policy less the monthly deduction made as
of the POLICY DATE.
CASH VALUE
The CASH VALUE of this policy is:
1. the ACCOUNT VALUE of this policy; less
2. the surrender charge, if any, shown in the SCHEDULE.
SURRENDER CHARGE
WE will deduct the surrender charge from the ACCOUNT VALUE:
1. on the date this policy is surrendered for cash; or
2. on the date a grace period ends without sufficient premium
being paid.
The surrender charge is shown in the SCHEDULE.
CASH SURRENDER
You may surrender this policy for the cash surrender value by NOTICE
to us. The cash surrender value is the CASH VALUE less any loan and
loan interest. WE will pay proceeds as described in the Making
Payments provision. If the payment is delayed for more than 10 days,
interest will be paid on the cash surrender value for amounts from the
GUARANTEED ACCOUNT from the date of the request for withdrawal to the
date of payment, at the annual rate of interest required by law.
PARTIAL CASH SURRENDER
You may surrender part of this policy for cash by NOTICE to us,
subject to any loan and the minimum SPECIFIED AMOUNT of this policy.
The minimum amount of any partial cash surrender is shown in the
SCHEDULE. The amount surrendered will be deducted from the CASH
VALUE. The deduction will be made from the VARIABLE ACCOUNT and the
GUARANTEED ACCOUNT in proportion to the amounts in each account,
unless YOU request deduction from specific SUBACCOUNTS. Under Benefit
Option A, the SPECIFIED AMOUNT will be reduced by the amount
surrendered but not below the minimum SPECIFIED AMOUNT as shown in the
SCHEDULE. Partial cash surrender proceeds will be paid as described
in the Making Payments provision.
PREMIUMS
- --------------------------------------------------------------
PAYMENT OF PREMIUM
Premiums are payable during the lifetime of the INSURED until the
MATURITY DATE. The initial premium is the amount paid on or before
delivery of this policy. YOU may make other premium payments at any
time. Any premium payment must be less than any maximum amount WE may
set.
The planned periodic premium is stated in the SCHEDULE. YOU may
change the amount of the planned periodic premium and the frequency of
premium payment. WE may limit the amount of any increase of such
premiums. If a premium would require an increase in RISK AMOUNT under
item (6) in the Death Benefit Changes provision, WE may refuse to
accept the premium, or may underwrite the increase and invest the
premium in the Money Market SUBACCOUNT during the underwriting period.
Premium payments after the initial payment must be made to our Home
Office. A receipt signed by our President or Secretary will be
provided upon request.
ALLOCATION OF PREMIUM
You determine the allocation of the NET PREMIUMS between the
GUARANTEED ACCOUNT and the VARIABLE ACCOUNT. NET PREMIUMS may be
allocated totally to the GUARANTEED ACCOUNT, totally to the VARIABLE
ACCOUNT, or partially to both accounts. The minimum amount of any NET
PREMIUMS that can be allocated to the GUARANTEED ACCOUNT or any
SUBDIVISION of the VARIABLE ACCOUNT is shown in the SCHEDULE.
If part or all of the NET PREMIUMS are allocated to the VARIABLE
ACCOUNT, then YOU must further allocate that portion of NET PREMIUMS
among one or more SUBDIVISIONS of the VARIABLE ACCOUNT. To the extent
that NET PREMIUMS are allocated to the VARIABLE ACCOUNT, the ACCOUNT
VALUE will be subject to the investment experience of that account.
Premiums that are allocated to the GUARANTEED ACCOUNT will be credited
with a minimum guaranteed interest rate, as described in the
GUARANTEED ACCOUNT provision.
When the premiums are received by us, the NET PREMIUMS will be
allocated in accordance with the NET PREMIUMS allocation percentages
shown in the application. No allocation will be made prior to the
POLICY DATE. All NET PREMIUMS credited to this policy prior to the
end of the Right to Examine period will be allocated to the Money
Market SUBACCOUNT. At the end of the Right to Examine period, the
ACCOUNT VALUE will be reallocated to the various SUBACCOUNTS and the
GUARANTEED ACCOUNT in accordance with the original allocation
instructions. YOU may change the allocation of subsequent premiums at
any time, without charge, by giving written NOTICE.
GRACE PERIOD
Starting on the MONTHLY DATE when the CASH VALUE, less any loans and
loan interest, is less than the monthly deduction for the policy month
to follow, a grace period will be given. WE will mail YOU written
NOTICE if there is not enough CASH VALUE to keep this policy in force,
and the amount of premium due. The amount of premium due is the
amount which is required to keep the policy in force during the grace
period. This NOTICE will be sent to your last known address and to
any assignee of record. The grace period ends 61 days from the date
of mailing of the NOTICE.
If the premium due is not paid within the grace period, all insurance
stops and the policy terminates without value. If the INSURED dies
during the grace period, the proceeds paid on death will be equal to
the death benefit immediately prior to the start of the grace period,
less loans and loan interest and less overdue monthly deductions as of
the date of death.
During the minimum guaranteed period shown in the SCHEDULE, the
policy will remain in force and will not begin the grace period if the
sum of the premiums paid to date, less any partial cash surrenders,
loans and loan interest, equals or exceeds the MINIMUM MONTHLY PREMIUM
times the number of policy months since the POLICY DATE. The MINIMUM
MONTHLY PREMIUM is shown in the SCHEDULE.
TRANSFERS
- --------------------------------------------------------------
TRANSFERS
You may transfer amounts between the GUARANTEED ACCOUNT and
SUBDIVISIONS of the VARIABLE ACCOUNT or among SUBDIVISIONS at any time
after the Right to Examine period. The transfer will be made as of
the end of the valuation period during which WE receive the request.
Such transfers will be effected such that the ACCOUNT VALUE on the
date of transfer will not be affected by the transfer, except for the
deduction of the transfer charge. The minimum transfer amount is
shown in the SCHEDULE. The transfer must be at least for the minimum
amount, or, if less, the entire amount in the GUARANTEED ACCOUNT or a
SUBDIVISION each time that a transfer is made. If, after the
transfer, the amount remaining in the GUARANTEED ACCOUNT or any
SUBDIVISION of the VARIABLE ACCOUNT from which the transfer is made is
less than $25, then the entire amount will be transferred instead of
the requested amount. A transfer charge shown in the SCHEDULE will be
imposed for each transfer. The charge will be deducted from the
account(s) from which the transfer is made on a pro rata basis.
WE reserve the right to limit the number or frequency of transfers in
the future.
LIMITATIONS ON TRANSFERS FROM THE GUARANTEED ACCOUNT
Transfers from the GUARANTEED ACCOUNT are limited in total for any
policy year to no more than the amount shown in the SCHEDULE.
LOANS
- --------------------------------------------------------------
LOANS
You may obtain a loan from the CASH VALUE of this policy. The most WE
will loan is:
1. 90% of the ACCOUNT VALUE in the VARIABLE ACCOUNT; plus
2. 100% of the ACCOUNT VALUE in the Guaranteed Account; less
3. any applicable surrender charges; less
4. any loan interest to the next ANNUAL DATE.
You may ask for a loan at any time after the first policy year while
the policy is not in the grace period. The minimum amount of any loan
is shown in the SCHEDULE. This policy will be assigned to us as
security for any loan. Loan proceeds will be paid as described in the
Making Payments provision. WE may require YOU to sign a loan
agreement.
A loan may be paid back in full or in part at any time.
LOAN INTEREST
Each year WE will set the annual loan interest rate. The rate will
never be more than the maximum permitted by law. The rate will not be
changed more often than once a year. The rate for a policy year may
not exceed a maximum limit which is the greater of:
1. the Published Monthly Average for the calendar month ending
two months before the ANNUAL DATE at the beginning of the policy year;
or
2. the guaranteed minimum interest rate applicable to the
GUARANTEED ACCOUNT, plus 1%.
Published Monthly Average means:
1. Moody's Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc. or any
successor to that service;
or
2. if the average is no longer published, a substantially
similar average, established by regulation issued by the Insurance
Supervisory Official of the state in which the policy is delivered.
If the maximum limit for a policy year is at least .5% higher than the
rate set for the previous year, WE may increase the rate to no more
than that limit. If the maximum limit for a policy year is at least
.5% lower than the rate set for the previous year, WE will reduce the
rate to at least that limit.
WE will notify YOU of the initial rate of interest when the loan is
made. WE will notify YOU at least 30 days in advance of any increase
in the rate for an existing loan.
Interest accrues daily from the date of the loan. Interest is due on
each ANNUAL DATE and on the date the loan is repaid. Interest not
paid when due will be added to the loan.
This policy will not terminate in a policy year as a result of a
change in the loan interest rate during that policy year until the
time at which it would otherwise have terminated if there had been no
change during the year.
INTEREST CREDITS AND EFFECT ON INVESTMENT PERFORMANCE
At the time any loan is issued, an amount equal to the loan is
transferred out of the VARIABLE ACCOUNT and the GUARANTEED ACCOUNT
into a LOAN ACCOUNT as collateral for the loan. This transfer is made
in proportion to the ACCOUNT VALUES in each account, unless YOU
request transfer from specific SUBACCOUNTS. The LOAN ACCOUNT will be
credited with interest which will be at least equal to the guaranteed
interest rate for the Guaranteed Account shown in the SCHEDULE. WE
may, at our sole discretion, credit a higher rate. At the time any
unpaid loan interest is due, the amount of unpaid interest which
exceeds the interest credits is transferred into the LOAN ACCOUNT from
the ACCOUNT VALUE in the VARIABLE ACCOUNT and the GUARANTEED ACCOUNT
in proportion to the ACCOUNT VALUE in each account. If loan
repayments are made, the amount of the LOAN ACCOUNT equivalent to the
amount of loan repayment made is transferred to the VARIABLE ACCOUNT
and GUARANTEED ACCOUNT based on the proportions in the current premium
allocation instructions. A loan, whether or not repaid, will have a
permanent effect on the death benefit and POLICY values because the
investment results of the SUBACCOUNTS of the SEPARATE ACCOUNT and
current interest rates credited on ACCOUNT VALUE in the GUARANTEED
ACCOUNT will apply only to the non-loaned portion of the ACCOUNT
VALUE.
POLICY FACTORS
- -------------------------------------------------------------
COST OF INSURANCE
The maximum cost of insurance rate is determined for each SPECIFIED
AMOUNT by the INSURED'S sex, age, and rate class, as shown in the
SCHEDULE. A cost of insurance rate less than the maximum cost of
insurance rate may be used at our option.
If the SPECIFIED AMOUNT includes the ACCOUNT VALUE (Option A) and the
SPECIFIED AMOUNT has been increased, the ACCOUNT VALUE will first be
considered part of the INITIAL SPECIFIED AMOUNT. If the ACCOUNT VALUE
is greater than the INITIAL SPECIFIED AMOUNT, it will be part of any
additional SPECIFIED AMOUNT in order of the increases.
The SCHEDULE shows which death benefit option has been chosen. The
cost of insurance for a policy month is (1) times the result of (3)
less (2) where:
1. is the cost of insurance rate per $1;
2. is the ACCOUNT VALUE at the beginning of the policy month
less any deduction other than for cost of insurance due at the
beginning of the month; and
3. is the death benefit divided by (1 divided by the monthly
guaranteed interest rate applicable to the GUARANTEED ACCOUNT).
MONTHLY ADMINISTRATIVE CHARGE
The monthly administrative charge is shown in the SCHEDULE.
MONTHLY DEDUCTION
The monthly deduction is a charge made against the ACCOUNT VALUE each
policy month. It is:
1. the cost of insurance and the cost for any policy riders;
plus
2. the monthly administrative charge.
The monthly deduction is due on each MONTHLY DATE, beginning on the
POLICY DATE. The deduction is made against the ACCOUNT VALUE in each
subdivision of the VARIABLE ACCOUNT and the GUARANTEED ACCOUNT in
proportion to the total amounts in these accounts.
MORTALITY AND EXPENSE RISK CHARGE
As compensation for assuming the mortality and expense risks, a charge
is deducted on a daily basis from the SUBACCOUNTS at an effective
annual rate shown in the SCHEDULE.
INTEREST RATE
The interest rate to be applied in the ACCOUNT VALUE calculation for
amounts in the GUARANTEED ACCOUNT is described in the Guaranteed
Account Provisions. Interest credited to amounts in the LOAN ACCOUNT
are described in the Loans section.
POLICY COST FACTORS
WE bear the mortality and expense risks of this policy. WE may change
the excess interest rates. WE may change the cost of insurance rates
and monthly administrative charges up to the maximum guaranteed
amounts stated in this policy. Any changes will be determined
according to the procedures and standards on file with the Insurance
Department. Changes will be made by class and will be based on
changes in future expectations for elements such as investment
earnings, mortality, persistency and expenses. Policy cost factors
will be reviewed every one to five years and, within these limits,
whenever factors for new issues are changed.
DIVIDENDS
As long as this policy is in force, YOU will receive any dividends
declared by us. It is anticipated that no dividends will be declared.
You have these options:
1. take the dividends in cash; or
2. use the dividends to increase the ACCOUNT VALUE; or
3. use the dividends to increase the ACCOUNT VALUE and increase
the SPECIFIED AMOUNT by the amount equal to the dividend divided by
the net single premium at the attained AGE of the INSURED.
You may choose any option or change options by NOTICE to us. If none
is chosen, the second option, to increase ACCOUNT VALUE only, will be
used.
The net single premium referred to in option (3) is for endowment
insurance to the MATURITY DATE. Such net single premium is based on
the mortality table and guaranteed annual interest rate for the
GUARANTEED ACCOUNT shown in the SCHEDULE.
CONTINUATION OF INSURANCE
WE will use the CASH VALUE, less any loan and loan interest, to
continue this policy until the earlier of the end of the grace period,
as specified in the Grace Period provision, or the MATURITY DATE.
GENERAL PROVISIONS
- --------------------------------------------------------------------
INSULATION
The assets of the SEPARATE ACCOUNT which are equal to reserves and
other liabilities are not chargeable with liabilities arising out of
any other business WE may conduct.
OWNERSHIP OF ASSETS
WE shall have exclusive and absolute ownership and control of the
assets, including the assets of the SEPARATE ACCOUNT.
MAKING PAYMENTS
WE may defer the payment of any CASH VALUE or policy loan or transfer
for a period of up to six months from the date of request if such
payment or transfer is based on the GUARANTEED ACCOUNT. WE will not
defer any amounts needed to pay premiums for other policies in force
with us.
Proceeds under the policy that are attributable to the VARIABLE
ACCOUNT are generally payable within seven days after WE receive
NOTICE and any additional requirements are met. WE may defer payments
or transfers out of the VARIABLE ACCOUNT if:
1. the New York Stock Exchange is closed on other than customary
weekend or holiday closings; or
2. trading on the New York Stock Exchange is restricted as
determined by the SEC; or
3. an emergency exists, as determined by the SEC, as a result of
which disposal or valuation of assets is not reasonably practicable;
or
4. the SEC by order permits deferral for the protection of
OWNERS.
ENTIRE CONTRACT
This policy is a legal contract that YOU have entered into with us.
The entire contract consists of:
1. this policy;
2. any riders;
3. any endorsements;
4. the attached copy of the application, and any amendments or
supplemental applications; and
5. any applicable SCHEDULE(S).
Any change in the contract must be written and signed by our
President, a Vice President, the Secretary, or the Assistant
Secretary. No one else may bind us.
Statements made in the application, in the absence of fraud, are
representations and not warranties. No such statements will be used
in defense of a claim under this policy unless contained in a written
application and unless a copy of such statement is part of this
policy.
RELIANCE
WE have issued this policy based on the answers in the application and
supplemental applications. WE have assumed all such answers to be
true and complete. If any are not, WE may, subject to the
Incontestability provision, have the right to void the policy and send
back all premiums.
INCONTESTABILITY
Except for disability benefits, in the absence of fraud, WE will not
contest this policy after it has been in force while the INSURED is
alive for two years from the ISSUE DATE, nor will WE contest any
increased benefits later than two years after the effective date for
such increased benefits. If YOU did not request the increase or if
evidence of insurability was not required, WE will not contest the
increase. As used herein, increased benefits shall include any
favorable policy changes requested by you. If this policy is
reinstated, the incontestable period will start over again beginning
on the reinstatement date, but only for statements made in the
application for reinstatement.
SUICIDE
For the first two full years from the ISSUE DATE, WE will not pay if
the INSURED commits suicide (while sane or insane). WE will terminate
this policy and give back the premiums paid, less any loan, loan
interest, and any partial surrender. WE will not pay any increases in
benefits that are subject to evidence of insurability if the INSURED
commits suicide (while sane or insane) within two years after the
effective date for such increases. In these instances, prior to
determining the death benefit, WE will return to the CASH VALUE the
monthly deductions for the increases.
POLICY CHANGES
This policy is a flexible life insurance policy. Changes can be made
in the death benefit option, premium payments and riders by sending us
a written request. Whenever one of these changes is made, WE will
send YOU a supplemental SCHEDULE that will describe the new amount and
new charges.
ANNUAL REPORT
At least once a year WE will send YOU an annual report showing the
current ACCOUNT VALUE, CASH VALUE, amount of interest credited to
amounts in the GUARANTEED ACCOUNT, change in value of amounts in the
VARIABLE ACCOUNT, premiums paid, loans, partial cash surrenders,
expense charges and cost of insurance charges since the prior report.
Any other information required by the Insurance Department of the
applicable state will also be included in the annual report.
You may request other information about this policy, including a
hypothetical illustration of policy benefits and values. WE may make
a reasonable charge to provide this information.
TERMINATION
This policy will terminate and all insurance will stop:
1. as of the end of the VALUATION PERIOD during which WE receive
NOTICE from you; or
2. when the INSURED dies; or
3. on the MATURITY DATE; or
4. when a required premium is not received before the end of its
grace period.
REINSTATEMENT
You may put this policy back in force by NOTICE to us if:
1. the INSURED gives us PROOF within five years after the date
insurance stopped and before the MATURITY DATE; and
2. payment is made of enough premium to cover past monthly
deductions not
made; and
3. interest on any loan amount which is reinstated is paid at
the annual rate applicable to policy loans during the period of lapse,
from the date insurance stopped; and
4. payment is made of enough premium to keep this policy in
force for two months; and
5. the policy had not been surrendered for its CASH VALUE.
CONVERSION TO A FIXED POLICY
You may elect to convert this policy to a fixed policy:
1. at any time within 24 months of the ISSUE DATE, or
2. within 60 days of the later of notification of a change in
the investment policy of the SEPARATE ACCOUNTor the effective date of
such change.
This election will be executed by transferring all VARIABLE ACCOUNT
values into the GUARANTEED ACCOUNT without charge. After the date of
this election, NET PREMIUMS may not be allocated nor transfers made to
the VARIABLE ACCOUNT. The other terms and charges of this policy
continue to apply.
CONFORMITY WITH LAWS
WE reserve the right to make any changes without your consent which
are necessary to comply with any Federal or state statute, rule, or
regulation.
TAXES
WE reserve the right to deduct any taxes levied by any government
entity which, at our sole discretion, are determined to have resulted
from the establishment or maintenance or operation of the SEPARATE
ACCOUNT, or from the investment performance of the SEPARATE ACCOUNT.
AGE AND SEX
If the INSURED'S AGE or sex has been misstated, WE will make the
following adjustments:
1. If the misstatement becomes known after the death of the
INSURED, the death benefit amount will be adjusted to the correct
amount for the monthly deduction made for the month in which death
occurred.
2. If the misstatement becomes known during the lifetime of the
INSURED, the policy values will be adjusted to those based on the
correct monthly deductions since the POLICY DATE. If the policy value
is inadequate to cover the monthly deduction on the prior MONTHLY
DATE, the grace period shall be deemed to have started on such date,
and notification shall be sent to YOU at least 61 days prior to the
end of the grace period.
ASSIGNMENT
You may assign this policy by giving NOTICE. WE will not be
responsible for the validity of an assignment. WE will not be liable
for any payments WE make or actions WE take before WE receive NOTICE
of an assignment.
COMPUTATIONS
Calculations are based on the Mortality Table shown in the SCHEDULE.
Interest on amounts allocated to the GUARANTEED ACCOUNT is compounded
annually.
All of the values are the same or more than the minimums set by the
laws of the applicable state. If required, WE have filed a detailed
statement about this with your State Insurance Department. The method
used in calculating policy values will be based on actuarial
procedures that recognize the variable nature of the policy.
<PAGE>
Flexible Premium Adjustable Variable Life Insurance
Flexible Premiums Payable During Life of Insured to Maturity Date
Death Benefit Payable at Death of Insured Prior to Maturity Date
Cash Value Payable on Maturity Date
Period of Coverage not Guaranteed
Participating
UC 8703 7/95
THE UNION CENTRAL LIFE INSURANCE COMPANY
("the Company")
INSURANCE EXCHANGE RIDER
BENEFIT. While this rider is in force, this policy may be exchanged for a
new policy on the life of a substitute insured.
CONDITIONS. The new policy on the life of the substitute insured will become
effective on the date of exchange subject to receipt by the Company of:
(1) a written application for insurance in a form acceptable to the
Company, signed by the owner of
this policy and the substitute insured; and
(2) proof that the owner of this policy has a satisfactory insurable
interest in the life of the substitute insured; and
(3) proof of the insurability of the substitute insured satisfactory
to the Company; and
(4) proof of the release of any lien against or assignment of this
policy, or written approval by the lienholder or assignee of the
exchange of policies; and
(5) proof of surrender and release of this policy; and
(6) payment of any amount due for the exchange; and
(7) written consent of any irrevocable beneficiary.
The date of exchange will be the monthly date of this policy next
following satisfaction of the conditions stated above. This policy and rider
will be in force only to the end of the day prior to the date of exchange.
TERMS OF NEW POLICY. The policy date of the new policy shall be the same
policy date as this policy, or the annual date of this policy immediately
following the date of birth of the substitute insured, if later. The new
policy may be any adjustable life insurance policy issued by the Company at
the time of exchange. The cost of insurance rates for the new policy will be
the same as rates for similar policies regularly issued by the Company on the
effective date of the new policy at the age of the substitute insured on the
birthday nearest the policy date of the new policy. The new policy will be
subject to any loan on this policy.
The amount of the new policy shall not be greater than the amount of
this policy. The initial cash value of the new policy will be the same as the
cash value of this policy on the date of exchange.
NEW POLICY RIDERS. With the consent of the Company, riders for additional
benefits may be attached to the new policy. Proof of insurability may be
required.
CONTESTABLE AND SUICIDE PERIOD. The new policy shall be deemed modified so
that the time periods of suicide and incontestability shall be measured from
the issue date of the new policy, which shall be the same date as the date of
exchange.
CONTRACT. This rider is made a part of the policy, and is based on the
application for this rider.
TERMINATION. This rider shall terminate:
(1) when this policy terminates; or
(2) on the anniversary of this policy nearest the Insured's 65th
birthday.
ISSUE DATE. The issue date and policy date of this rider is shown in the
application.
Signed for the Company at Cincinnati, Ohio
/s/ David F. Westerbeck /s/ Larry R. Pike
David F. Westerbeck Larry R. Pike
Secretary President
UC 8361 5-90
FIRST AMENDMENT
to the
PARTICIPATION AGREEMENT
This First Amendment, dated September 30, 1993 by and between The
Union Central Life Insurance Company (the "Company") and Scudder
Variable Life Investment Fund (the "Fund"), is as follows:
WHEREAS, the Company and the Fund are parties to a Participation
Agreement dated February 18, 1992 (the "Agreement").
WHEREAS, the Company and the Fund now desire to modify the
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto
agree as follows:
1. Shares of the Fund shall be made available as an underlying
investment medium for any separate account of the Company upon
written notice duly given to the Fund in accordance with the terms
of Section 10 of the Agreement.
2. The opening paragraph of the Agreement is hereby amended as
follows:
PARTICIPATION AGREEMENT (the "Agreement") made by and between
SCUDDER VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts
business trust created under a Declaration of Trust dated March 15,
1985, as amended, with a principal place of business in Boston,
Massachusetts and The Union Central Life Insurance Company, an Ohio
corporation (the "Company"), with a principal place of business in
Cincinnati, Ohio on behalf of the Carillon Account, a separate
account of the Company, and any other separate account of the
Company, as designated by the Company from time to time, upon
written notice to the Fund in accordance with Section 10 herein
(each, an "Account").
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
THE UNION CENTRAL LIFE INSURANCE COMPANY
By: /s/ John F. Labmeier
Name: John F. Labmeier
Title: 2nd Vice President
SCUDDER VARIABLE LIFE INVESTMENT FUND
By: S/S David B. Watts
Name: David B. Watts
Title: President
<PAGE>
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and between
SCUDDER VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts
business trust created under a Declaration of Trust dated March 15,
1985, as amended, with a principal place of business in Boston,
Massachusetts and The Union Central Life Insurance Company, an Ohio
corporation (the "Company"), with a principal place of business in
Cincinnati, Ohio on behalf of the Carillon Account (the "Account"),
a separate account of the Company.
WHEREAS, the Fund acts as the investment vehicle for the
separate accounts established for variable life insurance policies
and variable annuity contracts (collectively referred to herein as
"Variable Insurance Products") to be offered by insurance companies
which have entered into participation agreements substantially
identical to this Agreement ("Participating Insurance Companies")
and their affiliated insurance companies; and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares of beneficial interest ("Shares"), and
additional series of Shares may be established, each designated a
"Portfolio" and representing the interest in a particular managed
portfolio of securities; and
WHEREAS, it is in the best interest of Participating Insurance
Companies to make capital contributions if required so that the
annual expenses of each Portfolio of the Fund in which a
Participating Insurance Company is a shareholder will not exceed a
fixed percentage of the Portfolio's average annual net assets; and
WHEREAS, the Parties desire to evidence their agreement as to
certain other matters,
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter contained, the parties
hereto agree as follows:
1. Additional Definitions.
For the purposes of this Agreement, the following definitions
shall apply:
(a) The "expenses of a Portfolio" for any fiscal year shall
mean the expenses for such fiscal year as shown in the Statement of
Operations (or similar report) certified by the Fund's independent
public accountants;
(b) A "Portfolio's average daily net assets" for each fiscal
year shall mean the sum of the net asset values determined
throughout the year for the purpose of determining net asset value
per Share, divided by the number of such determinations during such
year;
(c) The Company's "Required Contribution" on behalf of the
Account in respect of a Portfolio for any fiscal year shall mean an
amount equal to the expenses of that Portfolio for such year minus
the below-indicated percentage of that Portfolio's average daily
net assets for the year:
Managed International Portfolio . . . . . . 1.5%
Managed Natural Resources Portfolio . . . . 1.5%
Each other Portfolio. . . . . . . . . . . . 0.75%
multiplied by a fraction the denominator of which is the average
daily net assets of that Portfolio and the numerator of which is
the average daily net asset value of the Shares of that Portfolio
owned by the Account (referred to herein as a "Participating
Shareholder"). The Company's Required Contribution in respect of a
Portfolio shall be pro-rated based on the number of business days
on which this Agreement is in effect for periods of less than a
fiscal year.
(d) The "average daily net asset value of the Shares of the
Portfolio" owned by the Account for any fiscal year of the Fund
shall mean the greater of (i) $500,000 or (ii) the sum of the
aggregate net asset values of the Shares so owned determined during
the fiscal year, as of each determination of the net asset value
per Share, divided by the total number of determinations of net
asset value during such year.
(e) "Shares" means shares of beneficial interest, without par
value, of any Portfolio, now or hereafter created, of the Fund.
2. Capital Contribution.
The Company on behalf of the Account shall, within sixty days
after the end of each fiscal year of the Fund, make a capital
contribution to the Fund in respect of each Portfolio equal to the
Required Contribution for that Portfolio for such year; provided,
however, that in the event that both clauses (i) and (ii) of
paragraph (d) of Section 1 of this Agreement or similar agreements
are applicable to different Participating Insurance Companies
during the same fiscal year, there shall be a proportionate
reduction of the Required Contribution of each Participating
Insurance Company to which said clause (ii) is applicable so that
the total of all required capital contributions to the Fund on
behalf of any Portfolio is not greater than the excess of the
expenses of that Portfolio for that fiscal year less the percentage
of that Portfolio's total expenses set forth in paragraph (c) of
Section 1 of this Agreement for such fiscal year.
3. Duty of Fund to Sell.
The Fund shall make its Shares available for purchase at the
applicable net asset value per Share by Participating Insurance
Companies and their affiliates and separate accounts on those days
on which the Fund calculates its net asset value pursuant to rules
of the Securities and Exchange Commission: provided, however, that
the Trustees of the Fund may refuse to sell Shares of any Portfolio
to any person, or suspend or terminate the offering of Shares of
any Portfolio, if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of
the Trustees, necessary in the best interest of the shareholders of
any Portfolio.
4. Requirement to Execute Participation Agreement; Requests.
Each Participating Insurance Company shall, prior to
purchasing Shares in the Fund, execute and deliver a participation
agreement in a form substantially identical to this Agreement.
The Fund shall make available, upon written request from the
Participating Insurance Company given in accordance with Paragraph
10, to each Participating Insurance Company which has executed an
Agreement and which Agreement has not been terminated pursuant to
Paragraph 8 (i) a list of all other Participating Insurance
Companies, and (ii) a copy of the Agreement as executed by any
other Participating Insurance Company. The Fund shall also make
available upon request to each Participating Insurance Company
which has executed an Agreement and which Agreement has not been
terminated pursuant to Paragraph 8, the net asset value of any
Portfolio of the Fund as of any date upon which the Fund calculates
the net asset value of its Portfolios for the purpose of purchase
and redemption of Shares.
5. Indemnification.
The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the
Securities Act of 1933 (the "Act") against any and all losses,
claims, damages, liabilities or litigation (including legal and
other expenses), arising out of the acquisition of any Shares by
any person, to which the Fund or such Trustees, officers or
controlling person may become subject under the Act, under any
other statute, at common law or otherwise, which (i) may be based
upon any wrongful act by the Company, any of its employees or
representatives, any affiliate of or any person acting on behalf of
the Company or a principal underwriter of its insurance products,
or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement
or prospectus covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading if such a statement
or omission was made in reliance upon information furnished to the
Fund by the Company, or (iii) may be based on any untrue statement
or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering insurance products
sold by the Company or any insurance company which is an affiliate
thereof, or any amendments or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, unless such statement or omission was made
in reliance upon information furnished to the Company or such
affiliate by or on behalf of the Fund; provided, however, that in
no case (i) is the Company's indemnity in favor of a Trustee or
officer or any other person deemed to protect such Trustee or
officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) is the Company to be liable under its
indemnity agreement contained in this Paragraph 5 with respect to
any claim made against the Fund or any person indemnified unless
the Fund or such person, as the case may be, shall have notified
the Company in writing pursuant to Paragraph 10 within a reasonable
time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon
the Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall
not relieve the Company from any liability which it has to the Fund
or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this Paragraph 5.
The Company shall be entitled to participate, at its own expense,
in the defense, or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if it elects to
assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Fund, to its officers and
Trustees, or to any controlling person or persons, defendant or
defendants in the suit. In the event that the Company elects to
assume the defense of any such suit and retain such counsel, the
Fund, such officers and Trustees or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case
the Company does not elect to assume the defense of any such suit,
the Company will reimburse the Fund, such officers and Trustees or
controlling person or persons, defendant or defendants in such
suit, for the reasonable fees and expenses of any counsel retained
by them. The Company agrees promptly to notify the Fund pursuant to
Paragraph 10 of the commencement of any litigation or proceedings
against it in connection with the issue and sale of any Shares.
The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act
against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) to which it or such
directors, officers or controlling person may become subject under
the Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by the Fund, any of its
employees or representatives or a principal underwriter of the
Fund, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement or prospectus covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading unless such statement
or omission was made in reliance upon information furnished to the
Fund by the Company or (iii) may be based on any untrue statement
or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering insurance products
sold by the Company, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission
was made in reliance upon information furnished to the Company by
or on behalf of the Fund; provided, however, that in no case (i) is
the Fund's indemnity in favor of a director or officer or any other
person deemed to protect such director or officer or other person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement
or (ii) is the Fund to be liable under its indemnity agreement
contained in this Paragraph 5 with respect to any claims made
against the Company or any such director, officer or controlling
person unless it or such director, officer or controlling person,
as the case may be, shall have notified the Fund in writing
pursuant to Paragraph 10 within a reasonable time after the summons
or other first legal process giving information of the nature of
the claim shall have been served upon it or upon such director,
officer or controlling person (or after the Company or such
director, officer or controlling person shall have received notice
of such service on any designated agent), but failure to notify the
Fund of any claim shall not relieve it from any liability which it
may have to the person against whom such action is brought
otherwise than on account of its indemnity agreement contained in
this Paragraph. The Fund will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense
of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Company, its
directors, officers or controlling person or persons, defendant or
defendants, in the suit. In the event the Fund elects to assume the
defense of any such suit and retain such counsel, the Company, its
directors, officers or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Fund does not
elect to assume the defense of any such suit, it will reimburse the
Company or such directors, officers or controlling person or
persons, defendant or defendants in the suit, for the reasonable
fees and expenses of any counsel retained by them. The Fund agrees
promptly to notify the Company pursuant to Paragraph 10 of the
commencement of any litigation or proceedings against it or any of
its officers or Trustees in connection with the issuance or sale of
any Shares.
6. Procedure for Resolving Irreconcilable Conflicts.
(a) The Trustees of the Fund will monitor the operations of
the Fund for the existence of any material irreconcilable conflict
among the interests of all the contractholders and policyowners of
Variable Insurance Products (the "Participants") of all separate
accounts investing in the Fund. An irreconcilable material conflict
may arise, among other things, from: (a) an action by any state
insurance regulatory authority; (b) a change in applicable
insurance laws or regulations; (c) a tax ruling or provision of the
Internal Revenue Code or the regulations thereunder; (d) any other
development relating to the tax treatment of insurers,
contractholders or policyowners or beneficiaries of Variable
Insurance Products; (e) the manner in which the investments of any
Portfolio are being managed; (f) a difference in voting
instructions given by variable annuity contractholders, on the one
hand, and variable life insurance policyowners, on the other hand,
or by the contractholders or policyowners of different
participating insurance companies; or (g) a decision by an insurer
to override the voting instructions of Participants.
(b) The Company will be responsible for reporting any
potential or existing conflicts to the Trustees of the Fund. The
Company will be responsible for assisting the Trustees in carrying
out their responsibilities under this Paragraph 6(b) and Paragraph
6(a), by providing the Trustees with all information reasonably
necessary for the Trustees to consider the issues raised. The Fund
will also request its investment adviser to report to the Trustees
any such conflict which comes to the attention of the adviser.
(c) If it is determined by a majority of the Trustees of the
Fund, or a majority of its disinterested Trustees, that a material
irreconcilable conflict exists involving the Company, the Company
shall, at its expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take
whatever steps are necessary to eliminate the irreconcilable
material conflict, including withdrawing the assets allocable to
some or all of the separate accounts from the Fund or any Portfolio
and reinvesting such assets in a different investment medium,
including another Portfolio of the Fund, offering to the affected
Participants the option of making such a change or establishing a
new funding medium including a registered investment company.
For purposes of this Paragraph 6(c), the Trustees, or the
disinterested Trustees, shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict. In
the event of a determination of the existence of an irreconcilable
material conflict, the Trustees shall cause the Fund to take such
action, such as the establishment of one or more additional
Portfolios, as they in their sole discretion determine to be in the
interest of all shareholders and Participants in view of all
applicable factors, such as cost, feasibility, tax, regulatory and
other considerations. In no event will the Fund be required by this
Paragraph 6(c) to establish a new funding medium for any variable
contract or policy.
The Company shall not be required by this Paragraph 6(c) to
establish a new funding medium for any variable contract or policy
if an offer to do so has been declined by a vote of a majority of
the Participants materially adversely affected by the material
irreconcilable conflict. The Company will recommend to its
Participants that they decline an offer to establish a new funding
medium only if the Company believes it is in the best interest of
the Participants.
(d) The Trustees' determination of the existence of an
irreconcilable material conflict and its implications promptly
shall be communicated to all Participating Insurance Companies by
written notice thereof delivered or mailed, first class postage
prepaid.
7. Voting Privileges.
The Company shall be responsible for assuring that its
separate account or accounts participating in the Fund shall use a
calculation method of voting procedures substantially the same as
the following: those Participants permitted to give instructions
and the number of Shares for which instructions may be given will
be determined as of the record date for the Fund shareholders'
meeting, which shall not be more than 60 days before the date of
the meeting. Whether or not voting instructions are actually given
by a particular Participant, all Fund shares held in any separate
account or sub-account thereof and attributable to policies will be
voted for, against, or withheld from voting on any proposition in
the same proportion as (i) the aggregate record date cash value
held in such sub-account for policies giving instructions,
respectively, to vote for, against, or withhold votes on such
proposition, bears to (ii) the aggregate record date cash value
held in the sub-account for all policies for which voting
instructions are received. Participants continued in effect under
lapse options will not be permitted to give voting instructions.
Shares held in any other insurance company general or separate
account or sub-account thereof will be voted in the proportion
specified in the second preceding sentence for shares attributable
to policies.
8. Duration and Termination.
This Agreement shall remain in force for the period ending
five years from the date of its execution (such date and any
anniversary of such date being hereinafter called a "Renegotiation
Date"), and from year to year thereafter provided that neither the
Company nor the Fund shall have given written notice to the other
within thirty (30) days prior to a Renegotiation Date that it
desires to renegotiate the amount of contribution to capital due
hereunder ("Renegotiation Notice"). If a Renegotiation Notice is
properly given as aforesaid and the Fund and the Company shall
fail, within sixty (60) days after the Renegotiation Date, either
to enter into an amendment to this Agreement or a written
acknowledgment that the Agreement shall continue in effect, this
Agreement shall terminate as of the one hundred twentieth day after
such Renegotiation Date. If this Agreement is so terminated, the
Fund may, at any time thereafter, automatically redeem the Shares
of any Portfolio held by a Participating Shareholder. This
Agreement may be terminated at any time, at the option of either of
the Company or the Fund, when neither the Company, any insurance
company nor the separate account or accounts of such insurance
company which is an affiliate thereof which is not a Participating
Insurance Company own any Shares of the Fund or may be terminated
by either party to the Agreement upon a determination by a majority
of the Trustees of the Fund, or a majority of its disinterested
Trustees, following certification thereof by a Participating
Insurance Company given in accordance with Paragraph 10 that an
irreconcilable conflict exists among the interests of (i) all
contractholders and policyholders of Variable Insurance Products of
all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund. Notwithstanding anything
to the contrary in this Agreement or its termination as provided
herein, the Company's obligation to make a capital contribution to
the Fund in accordance with this Agreement at the time in effect
shall continue (i) following a properly given Renegotiation Notice,
in the absence of agreement otherwise, until termination of this
Agreement, and (ii) (except termination due to the existence of an
irreconcilable conflict), following termination of this Agreement,
until the later of the fifth anniversary of the date of this
Agreement or the date on which the Company, its separate account(s)
or the separate account(s) of any affiliated insurance company owns
no Shares.
9. Compliance.
The Fund will comply with the provisions of Section 4240(a) of
the New York Insurance Law.
Each Portfolio of the Fund will comply with the provisions of
Section 817(h) of the Internal Revenue Code of 1986, as amended
(the "Code"), relating to diversification requirements for variable
annuity, endowment and life insurance contracts. Specifically, each
Portfolio will comply with either (i) the requirement of Section
817(h)(1) of the Code that its assets be adequately diversified, or
(ii) the "Safe Harbor for Diversification" specified in Section
817(h)(2) of the Code, or (iii) the diversification requirement of
Section 817(h)(1) of the Code by having all or part of its assets
invested in U.S. Treasury securities which qualify for the "Special
Rule for Investments in United States Obligations" specified in
Section 817(h)(3) of the Code.
The provisions of Paragraphs 6 and 7 of this Agreement shall
be interpreted in a manner consistent with any Rule or order of the
Securities and Exchange Commission under the Investment Company Act
of 1940, as amended, applicable to the parties hereto.
No Shares of any Portfolio of the Fund may be sold to the
general public.
10. Notices.
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party
set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Fund:
Scudder Variable Life Investment Fund
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn: David B. Watts
If to the Company:
The Union Central Life Insurance Company
P.O. Box 179
Cincinnati, OH 45201
Attn: John F. Labmeier
11. Massachusetts Law to Apply.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
12. Miscellaneous.
The name "Scudder Variable Life Investment Fund" is the
designation of the Trustees for the time being under a Declaration
of Trust dated March 15, 1985, as amended, and all persons dealing
with the Fund must look solely to the property of the Fund for the
enforcement of any claims against the Fund as neither the Trustees,
officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund. No Portfolio shall
be liable for any obligations properly attributable to any other
Portfolio.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13. Entire Agreement. This Agreement incorporates the entire
understanding and agreement among the parties hereto, and
supercedes any and all prior understandings and agreements between
the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
hereto as of the 18 day of FEB, 1992.
SEAL
SCUDDER VARIABLE LIFE INVESTMENT FUND
/s/ Kathryn L. Quirk
By: Kathryn L. Quirk
Vice President
SEAL
THE UNION CENTRAL LIFE INSURANCE COMPANY
/s/ Lothar A. Vasholz
By: Lothar A. Vasholz
Its: Executive Vice President
<PAGE>
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as of October
6, 1995 by and between THE UNION CENTRAL LIFE INSURANCE COMPANY (the "Company"),
TCI PORTFOLIOS, INC. (the "Issuer") and the investment adviser of the Issuer,
INVESTORS RESEARCH CORPORATION ("Investors Research").
WHEREAS, the Company offers to the public certain individual variable
universal life contracts and variable annuity contracts (the "Contracts"); and
WHEREAS, the Company wishes to offer as an investment option under the
Contracts, TCI Growth (the "Fund"), which is a series of mutual fund shares
registered under the Investment Company Act of 1940, as amended, and issued by
the Issuer; and
WHEREAS, on the terms and conditions hereinafter set forth, Investors
Research and the Issuer desire to make shares of the Fund available as an
investment option under the Contracts and to retain the Company to perform
certain administrative services on behalf of the Fund;
NOW, THEREFORE, the Company, the Issuer and Investors Research agree as
follows:
1. TRANSACTIONS IN THE FUND. Subject to the terms and conditions of
this Agreement, the Issuer will make shares of the Fund available to be
purchased, exchanged, or redeemed, by the Company on behalf of the Accounts
(defined in Section 6(a) below) through a single account at the net asset value
applicable to each order. The Fund's shares shall be purchased and redeemed on
a net basis in such quantity and at such time as determined by the Company to
satisfy the requirements of the Contracts for which the Fund serves as
underlying investment media. Dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the Fund.
2. ADMINISTRATIVE SERVICES. The Company shall be solely responsible
for providing all administrative services for the Contract owners. The Company
agrees that it will maintain and preserve all records as required by law to be
maintained and preserved, and will otherwise comply in all material respects
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of administrative services to the Contract owners.
3. PROCESSING AND TIMING OF TRANSACTIONS.
(a) The Issuer hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund shares from the
Contract owners. On each day the New York Stock Exchange (the "Exchange") is
open for business (each, a "Business Day"), the Company may receive instructions
from the Contract owners for the purchase or redemption of shares of the Fund
("Orders"). Orders received and accepted by the Company prior to the close of
regular trading on the Exchange (the "Close of Trading") on any given Business
Day and transmitted to the Issuer by 9:00 a.m. Central time on the next
following Business Day will be executed by the Issuer at the net asset value
determined as of the Close of Trading on the previous Business Day
("Day 1"). Any Orders received by the Company after the Close of Trading,
and all Orders that are transmitted to the Issuer after 9:00 a.m.
Central time on the next following Business Day, and all Orders that
are transmitted to the Issuer after 9:00 a.m. Central time on the
next following Business Day, will be executed by the Issuer
at the net asset value next determined following receipt of such Order. The day
as of which an Order is executed by the Issuer pursuant to the provisions set
forth above is referred to herein as the "Effective Trade Date". All Fund
shares shall be issued and transferred in book entry form only.
(b) By 5:30 p.m. Central time on each Business Day, Investors Research
will provide to the Company via facsimile or other electronic transmission
acceptable to the Company the Fund's net asset values, dividend and capital gain
information and, in the case of income funds, the daily accrual for interest
rate factor (mil rate), determined at the Close of Trading.
(c) By 9:00 a.m. Central time on each Business Day, the Company will
provide to Investors Research via facsimile or other electronic transmission
acceptable to Investors Research a report stating whether the Orders received by
the Company from Contract owners by the Close of Trading on the preceding
Business Day resulted in the Accounts being a net purchaser or net seller of
shares of the Fund. As used in this Agreement, the phrase "other electronic
transmission acceptable to Investors Research" includes the use of remote
computer terminals located at the premises of the Company, its agents or
affiliates, which terminals may be linked electronically to the computer system
of Investors Research, its agents or affiliates (hereinafter, "Remote Computer
Terminals").
(d) Upon the timely receipt from the Company of the report described in
(c) above, Investors Research will execute the purchase or redemption
transactions (as the case may be) at the net asset value computed as at the
Close of Trading on Day 1. Payment for net purchase transactions shall
be made by wire transfer by the Company to the custodial account designated
by the Fund on the Business Day next following the Effective Trade Date.
Such wire transfers shall be initiated by the Company's bank prior to
3:00 p.m. Central time and received by the Fund prior to 5:00 p.m.
Central time on the Business Day next following the Effective Trade Date.
If payments for a purchase Order is not timely received, such Order will
be executed at the net asset value next computed following receipt of
payment. Payments for net redemption transactions shall be made by
wire transfer by the Issuer to the account designated by the Company
within the time period set forth in the Fund's then-current prospectus;
PROVIDED, HOWEVER, Investors Research will use all reasonable efforts to
settle all redemptions on the Business Day next following the Effective Trade
Date. On any Business Day when the Federal Reserve Wire Transfer System
is closed, all communication and processing rules will be suspended for
the settlement of Orders. Orders will be settled on the next Business
Day on which the Federal Reserve Wire Transfer System is open and the
Effective Trade Date will apply.
4. PROSPECTUS AND PROXY MATERIALS.
(a) Investors Research shall provide to the Company, on behalf of the
Accounts, copies of the Issuer's proxy materials, periodic fund reports to
shareholders and other materials that are required by law to be sent to the
Issuer's shareholders. In addition, Investors Research shall provide the Company
with a sufficient quantity of prospectuses of the Fund to be used in conjunction
with the transactions contemplated by this Agreement, together with such
additional copies of the Issuer's prospectuses as may be reasonably requested by
Company. If requested by the Company in lieu thereof, Investors Research shall
provide such documentation (including a "camera ready" copy of its prospectus)
and other reasonable assistance as may be reasonably necessary in order for the
Company to have the prospectus for the Fund and the prospectus for the Contracts
printed together in a single document. The cost of preparing such combined
prospectus shall be borne by the Company. If the Company provides for pass-
through voting by the Contract owners, Investors Research will provide the
Company with a sufficient quantity of proxy materials for each Contract owner.
(b) The cost of preparing, printing and shipping of the prospectuses,
proxy materials, periodic fund reports and other materials of the Issuer to the
Company shall be paid by Investors Research; PROVIDED, HOWEVER, that if at any
time Investors Research or its agent reasonably deems the usage by the Company
of such items to be excessive, it may, prior to the delivery of any quantity of
materials in excess of what is deemed reasonable, request that the Company
demonstrate the reasonableness of such usage. If the Investors Research
believe the reasonableness of such usage has not been adequately demonstrated,
it may request that the Company pay the cost of printing
(including press time) and delivery of any excess copies of such materials.
Unless the Company agrees to make such payments,
Investors Research may refuse to supply additional materials
and this section shall not be interpreted as requiring delivery by Investors
Research or Issuer of any copies in excess of the number of copies required by
law.
(c) The cost of distribution, if any, of any prospectuses, proxy
materials, periodic fund reports and other materials of the Issuer to the
Contract owners shall be paid by the Company and shall not be the responsibility
of Investors Research or the Issuer.
5. COMPENSATION AND EXPENSES.
(a) The Company, on behalf of the Accounts, shall be the sole shareholder
of Fund shares purchased for the Contract owners pursuant to this Agreement (the
"Record Owners"). The Company and the Record Owners shall properly complete any
applications or other forms required by Investors Research or the Issuer.
(b) Investors Research acknowledges that it will derive a substantial
savings in administrative expenses, such as a reduction in expenses related to
postage, shareholder communications and recordkeeping, by virtue of having a
single shareholder account for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company,
Investors Research will pay the Company a fee (the "Administrative Services
fee") equal to 20 basis points (0.20%) per annum of the average aggregate amount
invested by the Company under this Agreement. No payment obligation shall arise
hereunder unless the Company's average aggregate investment in the Fund,
together with the average aggregate investment by all other separate accounts
of the Company in mutual funds managed or advised by Investors Research
(collectively, the "Total Relationship"), exceeds $10 million, and such
payment obligation shall be suspended with respect to any month during
which the Company's Total Relationship drops below $10 million.
(c) The parties understand that Investors Research customarily pays, out
of its management fee, another affiliated corporation for the type of
administrative services to be provided by the Company to the Contract owners.
The parties agree that the payments by Investors Research to the Company, like
Investors Research's payments to its affiliated corporation, are for
administrative services only and do not constitute payment in any manner for
investment advisory services or for costs of distribution.
(d) For the purposes of computing the payment to the Company
contemplated by this Section 5, the average aggregate amount invested
by the Accounts in the Fund over a one month period shall be computed
by totalling the Company's aggregate investment (share net asset
value multiplied by total number of shares of the Fund held by the Company)
on each Business Day during the month and dividing by the total number
of Business Days during such month.
(e) Investors Research will calculate the amount of the payment to be
made pursuant to this Section 5 at the end of each calendar quarter and will
make such payment to the Company within 30 days thereafter. The check for
such payment will be accompanied by a statement showing the
calculation of the
amounts being paid by Investors Research for the relevant month and such
other supporting
data as may be reasonably requested by the Company.
(f) In the event Investors Research reduces its management fee with
respect to the Fund after the date hereof, Investors Research may amend the
Administrative Services fee payable with regard to the Fund by providing the
Company 30 days' advance written notice of any such adjustment. The revised
Administrative Services fee shall become effective as of the latter of 30 days
from the date of delivery of the notice or the date prescribed in the notice.
6. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants that: (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Carillon Account and the Carillon Life Account (the "Accounts"), which are
separate accounts under Ohio Insurance law, and has registered the Accounts as
unit investment trusts under the Investment Company Act of 1940 (the "1940 Act")
to serve as an investment vehicles for the Contracts; (iii) each Contract
provides for the allocation of net amounts received by the Company to such
Account for investment in the shares of one of more specified investment
companies selected among those companies available through the Accounts to act
as underlying investment media; (iv) selection of a particular
investment company
is made by the Contract owner under a particular Contract, who may change such
selection from time to time in accordance with the terms of the applicable
Contract; and (v) the activities of the Company contemplated by this Agreement
comply with all material provisions of federal and state insurance, securities,
and tax laws applicable to such activities.
(b) Investors Research represents and warrants that: (i) this Agreement
has been duly authorized by all necessary corporate action and, when executed
and delivered, shall constitute the legal, valid and binding obligation of
Investors Research and Issuer, enforceable in accordance with its
terms; and (ii) the investments of the Fund will at all times
be adequately diversified within the meaning of Section 817(h)
of the Internal Revenue Service Code of 1986, as
amended (the"Code"), and the regulations thereunder, and that at all times while
this Agreement is in effect, all beneficial interests in the Fund will be owned
by one or more insurance companies or by any other party permitted under Section
1.817-5(f)(3) of the Regulations promulgated under the Code. In the event that
the Fund is not so diversified at the end of any applicable quarter, the Issuer
and Investors Research will make every reasonable effort to (a) adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Treas. Reg. 1.817.5 and (b) notify the Company.
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply in all material respects with all provisions
of federal and state laws and regulations applicable to its respective
activities under this Agreement.
(b) Each party shall promptly notify the other parties in the event that
it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners
in proper form prior to the Close of Trading of the Exchange on that
Business Day.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to Investors Research, shall be sent by or under the authority and
direction of a person designated by the Company as being duly authorized to act
on behalf of the owner of the Accounts. Absent actual knowledge to the
contrary, Investors Research shall be entitled to rely on the existence
of such authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the Company is
"an appropriate person" as used in Sections 8-308 and 8-404 of the
Uniform Commercial Code with respect to the transmission of
instructions regarding Fund shares on behalf of the owner
of such Fund shares. The Company shall maintain the confidentiality of all
passwords and security procedures issued, installed or otherwise put in place
with respect to the use of Remote Computer Terminals and assumes full
responsibility for the security therefor. The Company further agrees to be
solely responsible for the accuracy, propriety and consequences of all data
transmitted to Investors Research by the Company by telephone, telecopy or other
electronic transmission acceptable to Investors Research.
(e) The Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and promotion to
shares of the Fund as is given to other underlying investments of the Accounts.
(f) The Company shall not, without the written consent of Investors
Research, make representations concerning the Issuer or the shares of the Fund
except those contained in the then-current prospectus and statement of
additional information, and in current printed sales literature
approved by Investors Research or the Issuer.
(g) Advertising and sales literature with respect to the Issuer or the
Fund prepared by the Company or its agents, if any, for use in marketing shares
of the Fund as underlying investment media to Contract owners shall be submitted
to Investors Research for review and approval before such material is used.
(h) Investors Research will provide to the Company at least one complete
copy of all prospectuses, statements of additional information, annual and semi-
annual reports, proxy statements and all amendments or supplements to any of the
above that relate to the Fund promptly after such document becomes effective or
eligible for use by the Fund. In addition, Investors Research will provide the
Company with a copy of no-action letters or orders for exemptive relief granted
or issued to the Fund by the SEC that Investors Research reasonably believes
will materially impact the offering of the Contracts.
(i) The Company will provide to Investors Research at least one complete
copy of all registration statements, prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that relate to the Accounts
promptly after the filing of such document with the SEC or other
regulatory authority.
8. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither Investors Research nor the Fund shall use any trademark,
trade name, service mark or logo of the Company, or any variation of any such
trademark, trade name, service mark or logo, without the Company's prior written
consent, the granting of which shall be at the Company's sole option. Except as
otherwise expressly provided for in this Agreement, the Company shall not use
any trademark, trade name, service mark or logo of the Issuer or Investors
Research, or any variation of any such trademarks, trade names, service
marks, or logos, without the prior written consent of either the Issuer or
Investors Research, as appropriate, the granting of which shall be at the
sole option of Investors Research and/or the Issuer.
9. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it calculates voting privileges in a consistent manner consistent
with the separate accounts of the other Participating Companies (as defined in
Section 11(a) below) participating in the Fund.
(b) So long as the Company is required to provide pass-through voting
privileges to Contract owners, the Company will distribute to Contract owners
all proxy material furnished by Investors Research and will vote shares in
accordance with instructions received from such Contract owners.
The Company shall vote Fund shares for which no instructions have been
received in the same proportion as shares for which such instructions
have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for
such Contract owners, except to the extent required by applicable law.
10. INDEMNITY.
(a) Investors Research agrees to indemnify and hold harmless the Company
and its officers, directors, employees, agents, affiliates and each person, if
any, who controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 10(a))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses (i) result from a breach by Investors Research
of a material provision of this Agreement, or (ii) arise out of or are based
upon any untrue statement of any material fact contained in any registration
statement or prospectus of the Company regarding the Contracts, if any, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
misstatement or omission is the result of information provided
by Investors Research regarding the Fund specifically for inclusion in such
registration statement. Investors Research will reimburse any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. Investors Research shall not be
liable for indemnification hereunder to the extent such Losses are attributable
to the negligence or misconduct of the Company in performing its obligations
under this Agreement.
(b) The Company agrees to indemnify and hold harmless Investors Research
and the Issuer and their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls the Issuer or Investors
Research within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 10(b))
against any Losses to which the Indemnified Parties may become subject,
insofar as such Losses (i) result from a breach by the Company of a material
provision of this Agreement, or (ii) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in any registration statement or prospectus of the
Company regarding the Contracts, if any, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) result from the use by any person of a Remote Computer Terminal. The
Company will reimburse any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such
Losses. The Company shall not be liable for indemnification hereunder to the
extent such Losses are attributable to the negligence or misconduct of Investors
Research or the Issuer in performing their obligations under this Agreement.
(c) Investors Research shall indemnify and hold the Company harmless
against any losses, claims, damages, or liabilities that the Company may incur,
suffer, or be required to pay due to Investors Research's incorrect calculation,
or untimely or incorrect reporting, of the Fund's daily net asset value,
dividend rate, or capital gain distribution rate. Any gain to the Company
attributable to Investors Research's incorrect calculation, or untimely or
incorrect reporting, of the Fund's daily net asset value, dividend rate,
or capital gain distribution rate shall be immediately returned to the Fund.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under this
SECTION 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein at its own expense and, to the extent that it may wish to,
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 10 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgement in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
11. POTENTIAL CONFLICTS.
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by Investors Research on December 21, 1987, with the
SEC and the order issued by the SEC in response thereto (the "Shared Funding
Exemptive Order"). The Company has reviewed the conditions to the requested
relief set forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding;
(iv) the manner in which the investments of any portfolio are being managed;
(v) a difference in voting instructions given by variable annuity contract
owners and variable life insurance contract owners;
or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in
carrying out its responsibilities under the Shared Funding Exemptive Order
by providing the Board with all information reasonably necessary for the
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in the Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund
and reinvesting such assets in a different investment medium or submitting the
question of whether such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating the assets of any
appropriate group (i.e.,annuity contract owners, life insurance contract owners,
or variable contract owners of one or more Participating Companies) that votes
in favor of such segregation, or offering to the affected contract owners the
option of making such a change; and/or
(ii) establishing a new registered management investment company
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
(e) For the purpose of this Section 11, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Issuer
be required to establish a new funding medium for any Contract. The Company
shall not be required by this Section 11 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
12. TERMINATION. This agreement shall terminate as to the sale and
issuance of new Contracts:
(a) at the option of either the Company, Investors Research or the
Issuer upon three months' advance written notice to the other;
(b) at the option of the Company if the Fund's shares are not available
for any reason to meet the requirement of Contracts as determined by the
Company. Reasonable advance notice of election to terminate shall be
furnished by Company;
(c) at the option of either the Company, Investors Research or the
Issuer, upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Accounts, the Company, or the Issuer
by the National Association of Securities Dealers, Inc. (the "NASD"), or the
SEC;
(d) upon termination of the Management Agreement between the Issuer and
Investors Research. Notice of such termination shall be promptly furnished to
the Company. This subsection (d) shall not be deemed to apply if
contemporaneously with such termination a new contract of substantially similar
terms is entered into between the Issuer and Investors Research;
(e) upon (i) receipt by the Company of an order or substitution issued
by the Securities and Exchange Commission permitting the substitution of shares
of another investment company for the corresponding Fund shares, or (ii) the
requisite vote of Contract owners having an interest in the Issuer to substitute
for the Issuer's shares the shares of another investment company in accordance
with the terms of Contracts for which the Issuer's shares had been selected to
serve as the underlying investment medium. The Company will give 60 days'
written notice to the Issuer and Investors Research of any proposed vote or
other action to replace a Fund's shares;
(f) upon assignment of this Agreement unless made with the written
consent of all other parties hereto;
(g) if the Issuer's shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Fund shares as an
underlying investment medium of Contracts issued or to be issued by the
Company. Prompt notice shall be given by either party should such situation
occur;
(h) at the option of the Issuer, if the Issuer reasonably determines in
good faith that the Company is not offering shares of the Fund in conformity
with the terms of this Agreement or applicable law;
(i) at the option of any party hereto upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order; or
(j) termination by the Company by written notice to Investors Research
in the event that a Fund fails to meet the Section 817(h) diversification
requirements or Subchapter M qualification specified in this Agreement or if the
Company reasonably believes that a Fund may fail to meet either of those
requirements.
13. CONTINUATION OF AGREEMENT. Termination as the result of any cause
listed in Section 12 shall not affect the Issuer's obligation to furnish its
shares to Contracts then in force for which its shares serve or may serve as the
underlying medium unless such further sale of Fund shares is proscribed by law
or the SEC or other regulatory body.
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that
this Agreement and the arrangement described herein are intended to be non-
exclusive and that each of the parties is free to enter into similar agreements
and arrangements with other entities.
15. SURVIVAL. The provisions of Sections 4, 6, 7(g), 8, 9 and 10 of this
Agreement shall survive termination of this Agreement with respect to Contracts
in existence as of the termination date for which shares of the Fund serve as
underlying investment media. The provisions of Section 5 with respect to the
payment of the Administrative Services fee shall survive termination of this
Agreement with respect to Contracts in existence as of the termination date for
which shares of the Fund serve as underlying investment media and for which the
Company continues to provide the administrative services required under this
Agreement for a period of 12 months following the termination date.
16. AMENDMENT. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
THE UNION CENTRAL LIFE INSURANCE COMPANY
1876 Waycross Road
Cincinnati, Ohio 45240
Attention: Law and Corporate Relations Dept.
(513) 595-2470 (telephone number)
(513) 595-2918 (telecopy number)
To the Issuer or Investors Research:
TWENTIETH CENTURY MUTUAL FUNDS
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (telephone number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without
the written consent of all parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts,
all of which taken together shall constitute one agreement, and any party hereto
may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. APPLICABLE LAW. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Missouri. In addition to and notwithstanding the foregoing, this Agreement
shall be subject to the provisions of the 1933, 1934 and 1940 Acts,
and the rules and regulations and rulings thereunder, including such
exemptions from those statues, rules and regulations as the
Securities and Exchange Commission may grant (including,
but not limited to, the Shared Funding Exemptive Order) and the terms
hereof shall be interpreted and construed in accordance therewith.
22. ENTIRE AGREEMENT. This Agreement, including the Attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
INVESTORS RESEARCH CORPORATION
By: /s/ William M. Lyons
William M. Lyons
Executive Vice President
THE UNION CENTRAL LIFE INSURANCE COMPANY
By: /s/ Elizabeth G. Monsell
Name: Elizabeth G. Monsell
Title: Second Vice President
TCI PORTFOLIOS, INC.
By: /s/ William M. Lyons
William M. Lyons
Executive Vice President
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
THE UNION CENTRAL LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 27th day of October 1995, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust
(the "Trust"), THE UNION CENTRAL LIFE INSURANCE COMPANY, an Ohio corporation
(the "Company") on its own behalf and on behalf of each of the segregated
asset accounts of the Company set forth in Schedule A hereto, as may be
amended from time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL
SERVICES COMPANY, a Delaware corporation("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the " 1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the
aforesaid variable annuity and/or
variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts invest, is specified
in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as
a broker-dealer with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934, as amended
(hereinafter the " 1934 Act"), and is a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, Carillon Investments, Inc., the underwriter for the individual
variable annuity and the variable life policies, is registered as a broker-
dealer with the SEC under the 1934 Act and is a member in good
standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders on that Business Day, as defined
below) and which are available for purchase by such Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the order for the Shares. For purposes of this
Section 1.1, the Company shall be the designee of the Trust for receipt of
such orders from Policy owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such orders by 9: 30 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange, Inc.
(the "NYSE") is open for trading and
on which the Trust calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Trust agrees to make the Shares available indefinitely for purchase at
the applicable net asset value per share by the Company and the Accounts on
those days on which the Trust calculates its net asset value pursuant to
rules of the SEC and the Trust shall calculate such net asset value on
each day which the NYSE is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Trust (the "Board") may refuse to sell any
Shares to the Company and the
Accounts, or suspend or terminate the offering of the Shares if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary in the best
interest of the Shareholders of such Portfolio.
1. 3 . The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust and
MFS (the "Participating Insurance Companies") and their separate accounts,
qualified pension and retirement plans and MFS or its affiliates.
The Trust and MFS will
not sell Trust shares to any insurance company or separate account unless an
agreement containing provisions substantially the same as Articles III and VII
of this Agreement is in effect to govern such sales. The Company will not resell
the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy holders
on that Business Day), executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the request
for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Trust for receipt of
requests for redemption from Policy owners and receipt by such
designee shall constitute receipt by the Trust; provided that the
Trust receives notice of such request for redemption by 9: 30 a.m. New York time
on the next following Business Day.
1. 5 . Each purchase, redemption and exchange order placed by the Company shall
be placed separately for each Portfolio and shall not be netted with respect to
any Portfolio. However, with respect to payment of the purchase price by the
Company and of redemption proceeds by the Trust, the Company and the Trust shall
net purchase and redemption orders with respect to each Portfolio and shall
transmit one net payment for all of the Portfolios in accordance with
Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall pay for the Shares by 2:00
p.m. New York time on the next Business Day after an order to purchase the
Shares is made in accordance with the provisions of Section 1.1. hereof.
In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:00 p.m. New York time on the next Business Day after an
order to redeem the shares is made in accordance with the provisions of
Section 1.4. hereof. All such payments shall be in federal funds
transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive all
such dividends and distributions as are payable on a Portfolio's Shares in
additional Shares of that Portfolio. The Trust shall notify the Company of the
number of Shares so issued as payment of such dividends and distributions.
1.9. The Trust or its custodian shall make the net asset value per share for
each Portfolio available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. New York time.
In the event that the Trust is unable to meet the 6: 30 p.m. time
stated herein, it shall provide additional time for the Company to place orders
for the purchase and redemption of Shares. Such additional time shall be equal
to the additional time which the Trust takes to make the net asset value
available to the Company. If the Trust provides materially incorrect share net
asset value information, the Trust shall make an adjustment to the number of
shares purchased or redeemed for the Accounts to reflect the correct net asset
value per share. Any material error in the calculation or reporting of net asset
value per share, dividend or capital gains information shall be reported
promptly upon discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to registration
thereunder, and that the Policies will be issued, sold, and distributed in
compliance in all material respects with all applicable state and federal laws,
including without limitation the 1933 Act, the Securities Exchange Act of 1934,
as amended (the " 1934 Act"), and the 1940 Act. The Company further represents
and warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the Account
as a segregated asset account under applicable law and has registered or, prior
to any issuance or sale of the Policies, will register the Accounts as unit
investment trusts in accordance with the provisions of the 1940 Act (unless
exempt therefrom) to serve as segregated investment accounts for the Policies,
and that it will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements under the 1933
Act for the Policies and the registration statements under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Policies or as may otherwise be required by applicable law.
The Company shall register and qualify the Policies for sales accordance with
the securities laws of the various states only if and to the extent
deemed necessary by the Company.
2.2. Subject to Article VI hereto, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contract under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), that it will maintain
such treatment and that it will notify the Trust or MFS immediately upon having
a reasonable basis for believing that the Policies have ceased to be so treated
or that they might not be so treated in the future.
2.3. The Company represents and warrants that Carillon Investments, Inc., the
underwriter for the individual variable annuity and the variable life policies,
is a member in good standing of the NASD and is a registered broker-dealer with
the SEC. The Company represents and warrants that the Company and Carillon
Investments, Inc. will sell and distribute such policies in accordance in all
material respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.4. The Trust and MFS represent and warrant that the Shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that the
Trust is and shall remain registered under the 1940 Act. The Trust shall amend
the registration statement for its Shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
Shares. The Trust shall register and qualify the Shares for sale in accordance
with the laws of the various states only if and to the extent deemed necessary
by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell
and distribute the Shares in accordance in all material respects
with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly existing
under the laws of The Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act and any applicable regulations
thereunder.
2.7. MFS represents and warrants that it is and shall remain duly registered
under all applicable federal securities laws and that it shall perform its
obligations for the Trust in compliance in all material respects with any
applicable federal securities laws and with the securities laws of The
Commonwealth of Massachusetts. MFS represents and warrants that it is not
subject to state securities laws other than the securities laws of
The Commonwealth of Massachusetts and that it is exempt from registration as
an investment adviser under the securities laws of The Commonwealth of
Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the Board
such reports, material or data as the Board may reasonably request so that it
may carry out fully the obligations imposed upon it by the conditions
contained in the exemptive application pursuant to which the SEC has
granted exemptive relief to permit mixed and shared funding
(the "Mixed and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the
Shares as the Company may reasonably request for distribution to
existing Policy owners whose Policies are funded by such Shares. The Trust or
its designee shall provide the Company, at
the Company's expense, with as many copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof, the Trust
or its designee shall provide such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company, as
a diskette in the form sent to the financial printer) and other assistance
as is reasonably necessary in order for the parties hereto once each year
(or more frequently if the prospectus for the Shares is supplemented or
amended) to have the prospectus for the Policies and the prospectus
for the Shares printed together in one document; the expenses of such
printing to be apportioned between (a) the Company and
(b) the Trust or its designee in proportion to the number of
pages of the Policy and Shares' prospectuses, taking account of other relevant
factors affecting the expense of printing, such as covers, columns, graphs and
charts; the Trust or its designee to bear the cost of printing the Shares'
prospectus portion of such document for distribution to owners of existing
Policies funded by the Shares and the Company to bear the expenses of printing
the portion of such document relating to the Accounts; provided, however, that
the Company shall bear all printing expenses of such combined documents where
used for distribution to prospective purchasers or to owners of existing
Policies not funded by the Shares. In the event that the Company requests
that the Trust or its designee provides the Trust's prospectus in a "camera
ready" or diskette format, the Trust shall be responsible for providing the
prospectus in the format in which it or MFS is accustomed to formatting
prospectuses and shall bear the
expense of providing the prospectus in such format (e.g., typesetting expenses),
and the Company shall bear the expense of adjusting or changing the format to
conform with any of its prospectuses.
3 . 2 . The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall print and provide
such statement of additional information to the Company
(or a master of such statement
suitable for duplication by the Company) for distribution to any owner of a
Policy funded by the Shares. The Trust or its designee, at the Company's
expense, shall print and provide such statement to the Company (or a master of
such statement suitable for duplication by the Company) for distribution to a
prospective purchaser who requests such statement or to an owner of a Policy not
funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Trust's proxy materials,
reports to Shareholders and other communications to Shareholders in such
quantity as the Company shall reasonably require for distribution to
Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or of
Article V below, the Company shall pay the expense of printing or providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not limited
to, the printing of the Shares' prospectus or prospectuses for distribution to
prospective purchasers or to owners of existing Policies not funded by such
Shares.
3 . 5 . The Trust hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from Policy owners;
and
(c) vote the Shares for which no instructions have been received in the same
proportion as the Shares of such Portfolio for which instructions have been
received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contract owners. The Company
will in no way recommend action in connection with or oppose or interfere with
the solicitation of proxies for the Shares held for such Policy owners. The
Company reserves the right to vote shares held in any segregated asset account
in its own right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate accounts
holding Shares calculates voting privileges in the manner required by the Mixed
and Shared Funding Exemptive Order. The Trust and MFS will notify the Company of
any changes of interpretations or amendments to the Mixed and Shared Funding
Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material in
which the Trust, MFS, any other investment adviser to the Trust, or any
affiliate of MFS are named, at least three (3) Business Days prior to its
use. No such material shall be used if the Trust, MFS, or their respective
designees reasonably objects to such use within three (3) Business
Days after receipt of such material .
4. 2 . The Company shall not give any information or make any representations or
statement on behalf of the Trust, MFS, any other investment adviser to the
Trust, or any affiliate of MFS or concerning the Trust or any other such
entity in connection with the sale of the Policies other than the information or
representations contained in the registration statement, prospectus or statement
of additional information for the Shares, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports or proxy statements for the
Trust, or in sales literature or other promotional material approved by the
Trust, MFS or their respective designees, except with the permission of the
Trust, MFS or their respective designees. The Trust, MFS or their respective
designees each agrees to respond to any request for approval on a prompt and
timely basis. The Company shall adopt and implement procedures reasonably
designed to ensure that
information concerning the Trust, MFS or any of their affiliates which is
intended for use only by brokers or agents selling the Policies (i.e.,
information that is not intended for distribution to Policy holders or
prospective Policy holders) is so used, and neither the Trust, MFS nor any of
their affiliates shall be liable for any losses, damages or expenses relating to
the improper use of such broker only materials. The parties hereto agree that
this Section 4.2 is neither intended to designate nor otherwise imply that the
Company is an underwriter or distributor of the Trust's shares.
4.3. The Trust or its designee shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material in which the Company and/or the Accounts is named, at least three (3)
Business Days prior to its use. No such material shall be used if the Company or
its designee reasonably objects to such use within three (3) Business Days after
receipt of such material.
4. 4. The Trust and MFS shall not give, and agree that the Underwriter shall not
give, any information or make any representations on behalf of the Company or
concerning the Company, the Accounts, or the Policies in connection with the
sale of the Policies other than the information or representations contained in
a registration statement, prospectus, or statement of additional information for
the Policies, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or in
reports for the Accounts, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company. The Company or its designee agrees to respond to any request for
approval on a prompt and timely basis. The parties hereto agree that this
Section 4.4. is neither intended to designate nor otherwise imply that MFS is an
underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or the
Trust, as appropriate) will each provide to the other at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Policies, or to the Trust or
its Shares, prior to or contemporaneously with the filing of such document with
the SEC or other regulatory authorities. The Company and the Trust shall also
each promptly inform the other or the results of any examination by the SEC (or
other regulatory authorities) that relates to the Policies, the Trust or its
Shares, and the party that was the subject of the examination shall provide the
other party with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4. 6 . The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of any
material change in the Trust's registration statement, particularly any change
resulting in change to the registration statement or prospectus or statement of
additional information for any Account. The Trust and MFS will cooperate with
the Company so as to enable the Company to solicit proxies from Policy owners
or to make changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and MFS will make
reasonable efforts to attempt to have changes affecting Policy prospectuses
become effective simultaneously with the annual updates for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
and sales literature (such as brochures, circulars, reprints or excerpts or any
other advertisement, sales literature, or published articles), distributed or
made generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Trust,
except that if the Trust or any Portfolio adopts and implements a plan pursuant
to Rule 1 2b- 1 under the 1940 Act to finance distribution and Shareholder
servicing expenses, then, subject to obtaining any required exemptive orders or
regulatory approvals, the Trust may make payments to the Company or to the
underwriter for the Policies if and in amounts agreed to by the Trust in
writing. Each party, however, shall, in accordance with the allocation of
expenses specified in Articles III and V hereof, reimburse other parties for
expense initially paid by one party but allocated to another party.
In addition, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and
arranging for appropriate compensation for, other services relating to the Trust
and/or to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of the Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of the Trust's proxy materials and reports to Shareholders; setting in
type and printing its prospectus and statement of additional information (to the
extent provided by and as determined in accordance with Article III above);
setting in type and printing the proxy materials and reports to Shareholders (to
the extent provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by any
federal or state law with respect to its Shares; all taxes on the issuance or
transfer of the Shares; and the costs of distributing the Trust's prospectuses
and proxy materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any, under
Rule 1 2b- 1 under the 1940 Act. The Trust shall not bear any expenses of
marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares' prospectus
or prospectuses in connection with new sales of the Policies and of distributing
the Trust's Shareholder reports and proxy materials to Policy owners. The
Company shall bear all expenses associated with the registration,
qualification, and filing of the Policies under applicable federal
securities and state insurance laws; the cost of preparing,
printing and distributing the Policy prospectus and
statement of additional information; and the cost of preparing, printing and
distributing annual individual account statements for Policy owners as required
by state insurance laws.
5.4. MFS will quarterly reimburse the Company certain of the administrative
costs and expenses incurred by the Company as a result of operations
necessitated by the beneficial ownership by Policy owners of shares of the
Portfolios in the Trust, equal to 0.10% of the aggregate net assets of the
Trust attributable to such Policy owners. In no event shall such fee be
paid by the Trust, its shareholders or by the Policy holders.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of the Trust
will meet the diversification requirements of Section 81 7(h)( 1 ) of the Code
and Treas. Reg. 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, as they may be amended
from time to time (and any revenue rulings, revenue procedures, notices, and
other published announcements of the Internal Revenue Service interpreting these
sections). In the event that any Portfolio is not so diversified at the end of
any applicable quarter, the Trust and MFS will make every effort to (a)
adequately diversify the Portfolio so as to achieve compliance within the grace
period afforded by Treas. Reg. 1.817.5 and (b) notify the Company.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable annuity contract owners and the variable life insurance policy owners
of the Company and/or affiliated companies ("contract owners") investing in the
Trust. The Board shall have the sole authority to determine if a material
irreconcilable conflict exists, and such determination shall be binding
on the Company only if approved in the form of a resolution by a
majority of the Board, or a majority of the disinterested trustees
of the Board. The Board will give prompt notice of any such
determination to the Company.
7.2. The Company agrees that it will be responsible for assisting
the Board in carrying out its responsibilities under the conditions
set forth in the Trust's exemptive application pursuant to which
the SEC has granted the Mixed and Shared Funding Exemptive Order by
providing the Board, as it may reasonably request, with all
information necessary for the Board to consider any issues raised
and agrees that it will be responsible for promptly reporting any
potential or existing conflicts of which it is aware to the Board
including, but not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are
disregard. The Company also agrees that, if a material
irreconcilable conflict arises, it will at is own cost remedy such
conflict up to and including (a) withdrawing the assets allocable
to some or all of the Accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium, including
(but not limited to) another Portfolio of the Trust, or submitting
to a vote of all affected contract owners whether to withdraw
assets from the Trust or any Portfolio and reinvesting such assets
in a different investment medium and, as appropriate, segregating
the assets attributable to any appropriate group of contract owners
that votes in favor of such segregation, or offering to any of the
affected contract owners the option of segregating the assets
attributable to their contracts or policies, and (b) establishing
a new registered management investment company and segregating the
assets underlying the Policies, unless a majority of Policy owners
materially adversely affected by the conflict have voted to decline
the offer to establish a new registered management investment
company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately
remedies any material irreconcilable conflict. In the event that
the Board determines that any proposed action does not adequately
remedy any material irreconcilable conflict, the Company will
withdraw from investment in the Trust each of the Accounts
designated by the disinterested trustees and terminate this
Agreement within six (6) months after the Board informs the Company
in writing of the foregoing determination; provided, however, that
such withdrawal and termination shall be limited to the extent
required to remedy any such material irreconcilable conflict as
determined by a majority of the disinterested trustees of the
Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shares funding (as defined in the Mixed
and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed Shared
Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rule 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5
of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust,
MFS, any affiliates of MFS, and each of their respective
directors/trustees, officers and each person, if any, who controls
the Trust or MFS within the meaning of Section 15 of the 1933 Act,
and any agents or employees of the foregoing (each an "Indemnified
Party," or collectively, the "Indemnified Parties" for purposes of
this Section 8.1 ) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or expenses (including reasonable counsel
fees) to which an Indemnified Party may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information for
the Policies or contained in the Policies or sales literature or
other promotional material for the Policies (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the commission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was
made in reasonable reliance upon and in conformity with information
furnished to the Company or its designee by or on behalf of the
Trust or MFS for use in the registration statement, prospectus or
statement of additional information for the Policies or in the
Policies or sales literature or other promotional material (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust not supplied by the Company or this designee, or persons
under its control and on which the Company has reasonably relied)
or wrongful conduct of the Company or persons under its control,
with respect to the sale or distribution of the Policies or Shares;
or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Trust, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein
not misleading, if such statement or omission was made in reliance
upon information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; as limited by and in accordance with the provisions of
this Article VIII .
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company,
Carillon Investments, Inc., any affiliates of the Company, and each
of their respective directors and officers and each person, if any,
who controls the Company or Carillon Investments, Inc. within the
meaning of Section 15 of the 1933 Act, and any agents or employees
of the foregoing (each an "Indemnified Party," or collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust) or
expenses (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or
the Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus, statement of additional information or sales
literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statement therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reasonable reliance upon and in conformity with
information furnished to the Trust, MFS, the Underwriter or their
respective designees by or on behalf of the Company for use in the
registration statement, prospectus or statement of additional
information for the Trust or in sales literature or other
promotional material for the Trust (or any amendment or supplement)
or otherwise for use in connection with the sale of the Policies or
Shares; or
(b) arise out of or as a result of statements or representations
(other than statement or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material for
the Policies not supplied by the Trust, MFS, the Underwriter or any
of their respective designees or persons under their respective
control and on which any such entity has reasonably relied) or
wrongful conduct of the Trust or persons under its control, with
respect to the sale or distribution of the Policies or Shares; or
(c) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement) or arise out of or
result from any other material breach of this Agreement by the
Trust; or
(d) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate; or
(e) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement; or
(f) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature covering the Policies,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf
of the Trust; as limited by and in accordance with the provisions
of this Article VIII .
8.3. In no event shall the Trust be liable under the
indemnification provisions contained in this Agreement to any
individual or entity, including without limitation, the Company, or
any Participating Insurance Company or any Policy holder, with
respect to any losses, claims, damages, liabilities or expenses
that arise out of or result from (i) a breach of any
representation, warranty, and/or covenant made by the Company
hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by the Company or any
Participating Insurance Company to maintain its segregated asset
account (which invests in any Portfolio) as a legally and validly
established segregated asset account under applicable state law and
as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) subject to the
Trust's compliance with the diversification requirements specified
in Article VI, the failure by the Company or any Participating
Insurance Company to maintain its variable annuity and/or variable
life insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the
Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect
to any losses, claims, damages, liabilities or expenses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, willful misconduct, or
gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard
of obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this
Section 8.5. of commencement of action, such Indemnified Party
will, if a claim in respect thereof is to be made against the
indemnifying party under this section, notify the indemnifying
party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which
it may have to any Indemnified Party otherwise than under this
section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses
of any additional counsel obtained by it, and the indemnifying
party shall not be liable to such Indemnified Party under this
section for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other
parties of the commencement of any litigation or proceeding against
it or any of its respective officers, directors, trustees,
employees or 1933 Act control persons in connection with the
Agreement, the issuance or sale of the Policies, the operation of
the Accounts, or the sale or acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this
Article VIII shall survive any termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules
and regulations as the SEC may grant and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Notice of Formal Proceedings
The Trust, MFS, and the Company agree that each such party
shall promptly notify the other parties to this Agreement, in
writing, of the institution of any formal proceedings brought
against such party or its designees by the NASD, the SEC, or any
insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the
Policies, the operation of the Accounts, or the purchase of the
Shares.
ARTICLE XI. Termination
11.1. This Agreement shall terminate with respect to the Accounts,
or one, some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance written
notice to the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements of
the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without limiting
the generality of the foregoing, the Shares of a Portfolio would
not be "appropriate funding vehicles" if, for example, such Shares
did not meet the diversification or other requirements referred to
in Article VI hereof; or if the Company would be permitted to
disregard Policy owner voting instructions pursuant to Rule 6e-2 or
6e-3(T) under the 1940 Act. Prompt notice of the election to
terminate for such cause and an explanation of such cause shall be
furnished to the Trust by the Company; or
(c) at the option of the Trust or MFS upon institution of formal
proceedings against the Company by the NASD, the SEC, or any
insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Policies, the operation of the Accounts, or the purchase of the
Shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body
regarding the Trust's or MFS' duties under this Agreement or
related to the sale of the Shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of
any necessary regulatory approvals and/or the vote of the Policy
owners having an interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company for the
corresponding Portfolio Shares in accordance with the terms of the
Policies for which those Portfolio Shares had been selected to
serve as the underlying investment media. The Company will give
thirty (30) days' prior written notice to the Trust of the Date of
any proposed vote or other action taken to replace the Shares; or
(f) termination by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively,
shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Trust and
MFS, if the Company shall determine, in its sole judgment exercised
in good faith, that the Trust or MFS has suffered a material
adverse change in this business, operations, financial condition or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(h) at the option of any party to this Agreement, upon another
party's failure to cure any material breach of any provision of
this Agreement within 30 days after written notice thereof; or
(i) upon assignment of this Agreement, unless made with the written
consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios,
Policies and, if applicable, the Accounts as to which the Agreement
is to be terminated.
11.3. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 11.1 (a) may
be exercised for cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated
transactions, or as required by state insurance laws or
regulations, the Company shall not redeem the Shares attributable
to the Policies (as opposed to the Shares attributable to the
Company's assets held in the Accounts), and the Company shall not
prevent Policy owners from allocating payments to a Portfolio that
was otherwise available under the Policies, until thirty (30) days
after the Company shall have notified the Trust of its intention to
do so.
11.5. Notwithstanding any termination of this Agreement, the Trust
and MFS shall, at the option of the Company, continue to make
available additional shares of the Portfolios pursuant to the terms
and conditions of this Agreement, for all Policies in effect on the
effective date of termination of this Agreement (the "Existing
Policies"), except as otherwise provided under Article VII of this
Agreement. Specifically, without limitation, the owners of the
Existing Policies shall be permitted to transfer or reallocate
investment under the Policies, redeem investments in any Portfolio
and/or invest in the Trust upon the making of additional purchase
payments under the Existing Policies.
ARTICLE XII. Notices
Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address of
such party set forth below or at such other address as such party
may from time to time specify in writing to the other party.
If to the Trust:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, Secretary
If to the Company:
The Union Central Life Insurance Company
1876 Waycross Road
Cincinnati, Ohio 45240
Attn: John F. Labmeier, Associate General Counsel
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. Miscellaneous
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Policies and all information
reasonably identified as confidential in writing by any other party
hereto and, except as permitted by this Agreement or as otherwise
required by applicable law or regulation, shall not disclose,
disseminate or utilize such names and addresses and other
confidential information without the express written consent of the
affected party until such time as it may come into the public
domain.
13.2. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time,
is incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state
insurance regulators) relating to this Agreement or the
transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with
the Secretary of State of The Commonwealth of Massachusetts. The
Company acknowledges that the obligations of or arising out of this
instrument are not binding upon any of the Trust's trustees,
officers, employees, agents or shareholders individually, but are
binding solely upon the assets and property of the Trust in
accordance with its proportionate interest hereunder. The Company
further acknowledges that the assets and liabilities of each
Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets
or property of the Portfolio on whose behalf the Trust has executed
this instrument. The Company also agrees that the obligations of
each Portfolio hereunder shall be several and not joint, in
accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Portfolio for the
obligations of another Portfolio.
13.9 Except as otherwise expressly provided in this Agreement,
neither the Trust nor MFS nor any affiliate thereof shall use any
trademark, trade name, service mark or logo of the Company, or any
variation of any such trademark, trade name, service mark or logo,
without the Company's prior written consent, the granting of which
shall be at the Company's sole option. Except as otherwise
expressly provided in this Agreement, neither the Company, Carillon
Investments, Inc. nor any affiliate thereof shall use any
trademark, trade name, service mark or logo or the Trust or of MFS,
or any variation of any such trademark, trade name, service mark or
logo, without the prior written consent of either the Trust or of
MFS, as appropriate, the granting of which shall be at the sole
option of the Trust or of MFS, as applicable.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name and on its behalf by its
duly authorized representative and its seal to be hereunder affixed
hereto as of the date specified above.
THE UNION CENTRAL LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/ Elizabeth G. Monsell
Elizabeth G. Monse..
Title: Second Vice President
MFS VARIABLE INSURANCE TRUST, on behalf of the Portfolios
By its authorized officer and not individually,
By: /s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
Arnold D. Scott
Senior Executive Vice President
<PAGE>
<PAGE>
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
- --------------------------------- --------------------------- -----------------------
<S> <C> <C>
Carillon Life Account Variable Universal Life MFS High Income Series
(Est. 1995) MFS Growth With Income Series
Carillon Account Variable Annuity MFS High Income Series
(Est. 1984) MFS Growth With Income Series
Mutual Fund Separate Account VI Group Annuity MFS High Income Series
Mutual Fund Separate Account VII (funding 401(k) Plans) MFS Growth With Income Series
Mutual Fund Separate Account VII MFS Emerging Growth Series
(Est. 1995)
</TABLE>
INDEMNIFICATION AGREEMENT
BETWEEN
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AND
THE UNION CENTRAL LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement") is made and entered into this 27th day of
October, 1995 by and between MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS"), and THE UNION CENTRAL LIFE INSURANCE
COMPANY, an Ohio corporation (the "Company"), on its own behalf
and on behalf of the each of the
segregated asset accounts (the "Accounts") of the Company referenced in the
Participation Agreement (as defined below).
WHEREAS, MFS and the Company, on its own behalf and on behalf of the
Accounts, have entered into a Participation Agreement with MFS Variable
Insurance Trust, a Massachusetts business trust (the "Trust"),
dated as of the date hereof (the "Participation Agreement");
NOW, THEREFORE, in consideration of their mutual promises as set forth in
the Participation Agreement, MFS and the Company agree as follows:
ARTICLE I. DEFINITIONS
All capitalized terms not defined herein shall have the meanings as set
forth in the Participation Agreement.
ARTICLE II. APPLICABILITY
The indemnification provided by MFS under this Agreement shall relate
solely to certain losses, claims, damages, liabilities and expenses that may
arise in connection with the performance by the Trust or MFS of its obligations
and duties under the Participation Agreement.
ARTICLE III. INDEMNIFICATION
3.1. MFS agrees to indemnify and hold harmless the Company and each of its
directors, officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act and any agents or employees of the
foregoing (each an "Indemnified Party" or, collectively, the "Indemnified
Parties") against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of MFS) or expenses
(including reasonable counsel fees) to which an Indemnified Party may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Shares or
the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus or statement of additional information ("SAI") of the Trust or sales
literature for the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished to the
Trust, MFS or the Underwriter by or on behalf of the Company for use in the
registration statement, prospectus, or SAI of the Trust or in sales literature
or other promotional material for the Trust (or any amendment or supplement) or
otherwise for use in connection with the sales of the Policies or Shares; or
(b) arise out of or as a result of material statements or representations (other
than statements or representations contained in the registration statement,
prospectus, SAI or sales literature or other promotional literature for the
Policies not supplied by the Trust, MFS, the Underwriter or their respective
designees or persons under their control and on which the Trust has reasonably
relied) or wrongful conduct of the Trust, MFS, the Underwriter or persons under
their control, with respect to the sale or distribution of the Policies or
Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus, SAI or sales literature
or other promotional literature covering the Policies, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of the Trust;
or
(d) arise as a result of any material failure by the Trust or MFS to provide the
services and furnish the materials under the terms of the Participation
Agreement (including a failure, whether unintentional or in good faith
or otherwise, of the Trust to comply with the diversification requirements
specified in Article VI of the Participation Agreement); or
(e) arise out of or result from any material breach of any representation and/or
warranty made by MFS in the Participation Agreement or any other material breach
of the Participation Agreement by MFS; or
(f) arise out of or result from the materially incorrect or untimely calculation
or reporting by MFS of the daily net asset value per share or dividend or
capital gain distribution rate;
as limited by and in accordance with the provisions of this Article III.
3.2. In no event shall MFS be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including, without
limitation, the Company, any Participating Insurance Company or any Policy
holder, with respect to any losses, claims, damages, liabilities or expenses
that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by the Company under the Participation
Agreement or by any Participating Insurance Company under an agreement
containing substantially similar representations, warranties and covenants;
(ii) the failure by the
Company or any Participating Insurance Company to maintain its segregated asset
account (which invests in any Portfolio) as a legally and validly established
segregated asset account under applicable state law and as a duly registered
unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom);
or (iii) the failure by the Company or any Participating Insurance Company to
maintain its variable annuity and/or variable life insurance contracts (with
respect to which any Portfolio serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable provisions of the
Code.
3.3. MFS shall not be liable under this Agreement with respect to any losses,
claims, damages, liabilities or expenses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
willful misconduct, or gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or the Participation Agreement.
3.4. Promptly after receipt by an Indemnified Party under this Section 3.4 of
commencement of an action, such Indemnified Party will, if a claim in respect
thereof is to be made against MFS under this section, notify MFS of the
commencement thereof; but the omission so to notify MFS will not relieve it from
any liability that it may have to any Indemnified Party otherwise than under
this section. In case any such action is brought against any Indemnified
Party, and it notified MFS of the commencement thereof, MFS will be
entitled to participate therein and, to the extent that it may wish,
assume the defense thereof, with counsel satisfactory to such
Indemnified Party. After notice from MFS of its intention to assume the
defense of an action, the Indemnified Party shall bear
the expenses of any additional counsel obtained by it, and MFS shall not be
liable to such Indemnified Party under this section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
3.5. Each party hereto shall promptly notify the other parties to the
Participation Agreement of the commencement of any litigation or proceeding
against it or any of its respective officers, directors, trustees, employees or
1933 Act control persons in connection with this Agreement and the Participation
Agreement, the issuance or sale of the Policies, the operation of the Accounts,
or the sale or acquisition of Shares.
3.6. A successor by law of the parties to this Agreement and the Participation
Agreement shall be entitled to the benefits of the indemnification contained
herein. The indemnification provisions contained herein shall survive any
termination of this Agreement and the Participation Agreement.
ARTICLE IV. DURATION AND TERMINATION
This Agreement shall be effective upon execution and shall terminate with
respect to the Accounts, or one, some or all Portfolios, two years after the
date of termination of the Participation Agreement with respect to the
Accounts, or one, some or all Portfolios, in accordance with the
provisions of Article XI thereof.
ARTICLE V. CONFIDENTIALITY
Except as required by applicable law or pursuant to the written consent of
MFS, the Company shall treat as confidential the indemnification provided
pursuant to this Agreement, all information reasonably related to this
Agreement, and the existence of this Agreement.
This Article V shall survive the termination of this Agreement.
ARTICLE VI. MISCELLANEOUS
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which taken together shall constitute one and the same instrument. The captions
in this Agreement are included for convenience of reference only. Any notice
required by this Agreement shall be sent to the persons so specified to receive
notice in the Participation Agreement.
IN WITNESS WHEREOF, both of the parties hereto have caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
/s/ Arnold D. Scott
By: Arnold D. Scott
Senior Executive Vice President
THE UNION CENTRAL LIFE
INSURANCE COMPANY
By its authorized officer,
/s/ Elizabeth G. Monsell
By: Elizabeth G. Monsell
Title: Second Vice President
(Union Central Letterhead)
The Union Central Life
Insurance Company
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
November 27, 1995
The Union Central Life Insurance Company
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
Ladies and Gentlemen:
With reference to the Registration Statement on Form S-6 (File No. 33-94858)
filed by The Union Central Life Insurance Company and Carillon Life Account
with the Securities and Exchange Commission covering individual flexible
premium variable universal life insurance policies, I have examined such
documents and such law as I considered necessary and appropriate, and on the
basis of such examination, it is my opinion that:
1. The Union Central Life Insurance Company is duly organized and validly
existing under the laws of the State of Ohio and has been duly authorized to
issue individual flexible premium variable universal life insurance policies
by the Department of Insurance of the State of Ohio.
2. Carillon Life Account is a duly authorized and existing separate account
established pursuant to the provisions of Section 3907.15 of the Ohio Revised
Code.
3. The individual flexible premium variable universal life insurance
policies, when issued as contemplated by said Form S-6 Registration Statement,
will constitute legal, validly issued and binding obligations of The Union
Central Life Insurance Company.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ John F. Labmeier
John F. Labmeier
Second Vice President,
Associate General Counsel
and Assistant Secretary
Actuarial Opinion and Consent
This opinion is furnished in connection with the registration of the individual
flexible premium variable universal life policy of the Carillon Life Account of
The Union Central Life Insurance Company, file number 94858.
I am familiar with the terms of the Registration Statement and the accompanying
exhibits. The prospectus included in the Registration Statement describes the
policy issued by Union Central. In my professional opinion:
1. The sales load of the policy, as defined in Rule 6e-3(T), does not
exceed 9% of the sum of the guideline annual premiums that would be paid during
the period equal to the lesser of 20 years or the life expectancy based on the
1980 CSO mortality table used as the guaranteed mortality basis of the policy.
During the first two policy years, the sales load does not exceed the sum of:
a) 30% of premium payments up to one guideline annual premium, plus b) 10% of
each payment made in excess of one guideline annual premium but less than or
equal to two guideline annual premiums plus c) 9% of each payment made in excess
of two guideline annual premiums. The proportionate amount of the sales load
deducted from any payment does not exceed the proportionate amount deducted from
any prior payment.
2. The illustrations of accumulated premium, death benefits, account
values, and cash surrender values that appear in the prospectus are consistent
with the provisions of the policy, and are based on the assumptions stated in
the accompanying text.
3. The illustrations show values on both a current basis and a guaranteed
basis. The current basis uses the charges that are currently assessed by the
company. The guaranteed basis uses the maximum charges that could be assessed
at any future date during the lifetime of a policy.
4. The specific ages, sex, rate class, and the premium amounts used in
these illustrations have not been selected so as to make the relationship
between premiums and benefits look more favorable in these specific
instances than it would for prospective male or female purchasers at other
ages or paying other premium amounts. Generally, the rates are lower
for the preferred rate class than the standard non-tobacco rate class,
and the rates are lower for the standard non-tobacco rate class
than the standard tobacco rate class.
I hereby consent to the use of this opinion as an Exhibit to the registration,
and to the reference to my name as an "Expert" in the prospectus.
/s/ Kristal E. Hambrick
Kristal E. Hambrick, MAAA, FSA, 2nd
Vice President and Associate Actuary,
Union Central Life Insurance Company,
November 22, 1995
[Sutherland, Asbill & Brennan Letterhead]
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
TEL: (202) 383-0100
FAX: (202) 637-3593
CONSENT OF SUTHERLAND, ASBILL & BRENNAN
We consent to the reference to our firm under the heading "Legal
Matters" in the prospectus included in Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 for certain individual flexible premium
variable universal life insurance policies issued through Carillon Life
Account of The Union Central Life Insurance Company (File No. 33-94858). In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
/s/ Sutherland, Asbill & Brennan
SUTHERLAND, ASBILL & BRENNAN
Washington, D.C.
November 28, 1995
POWER OF ATTORNEY
WITH RESPECT TO
THE UNION CENTRAL LIFE INSURANCE COMPANY
Know all men by these presents that Philip G. Barach, whose signature
appears below, hereby constitutes and appoints David F. Westerbeck, John F.
Labmeier and John M. Lucas, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign any
registration statements and amendments thereto for The Union Central Life
Insurance Company as Depositor for Carillon Life Account and any other separate
accounts of the Company, 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 attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Date: July 21, 1995 /s/ Philip G. Barach
Philip G. Barach
Director
The Union Central Life Insurance Company
(Union Central Letterhead)
The Union Central Life Insurance Company
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
Date of This Notice:
Name of Insured:
Policy Number:
NOTICE OF RIGHT OF WITHDRAWAL
This notice is legally required by the Securities and Exchange Commission
(SEC). Please read it carefully and retain it with your important records.
We are pleased that you have recently purchased a Variable Universal Life
Insurance policy from Union Central Life Insurance Company. Benefits under
this policy depend on the investment experience of Carillon Life Account. You
have, in accordance with the requirements of the SEC, the right to examine and
return your policy for cancellation at any time within 20 days from delivery
of the policy, or 45 days from the date of Part 1 of the application, or 10
days from delivery of this notice, whichever is later. Upon such cancellation,
you will receive a refund equal to the greater of any premiums paid, less any
partial cash surrenders, or the account value.
In determining whether or not to cancel your policy, you should consider,
among other things, the projected cost of your policy and your ability to make
any additional premium payments required to keep the policy in force in the
event the cash value of the policy (less indebtedness) is insufficient to pay
the monthly deductions as they come due. The policy describes the
circumstances under which the policy will terminate.
You also received a Prospectus describing the deductions from premiums before
amounts are allocated to Carillon Life Account and/or the General Account of
Union Central, the monthly deductions from the policy's cash value, and the
charges against the Carillon Life Account. Total premium expense charges of
6.50% are deducted from all premium payments during years 1-10. These charges
consist of a sales charge of 4% and a state and local premium tax charge of
2.50%.
The sales charge reduces to 2% in year 11 and later for a total premium
expense charge of 4.50%.
In addition, the policy's cash value will be reduced by a monthly deduction
equal to the sum of:
- - a monthly cost of insurance charge;
- - a cost of any optional insurance benefits added by a rider;
- - during the first year, a monthly administrative charge equal to $25 per
month, and $5 per month thereafter.
If the policy is cash surrendered within the first fifteen policy years a
surrender charge will be deducted. The surrender charge will be based on a
charge per thousand of the specified face amount and age of the insured at
issue or at the time of an increase in the specified face amount. The
surrender charge declines over the fifteen policy years to zero after the
fifteenth year.
Should you decide to exercise this right of cancellation, complete the
enclosed form and return your policy as outlined in the instructions on the
form, postmarked on or before the latest date permitted for cancellation as
described above.
<PAGE>
<PAGE>
ELECTION TO EXERCISE RIGHT OF WITHDRAWAL
INSTRUCTIONS
PLEASE READ CAREFULLY
If, after reading the enclosed notice, you decide to exercise your right
of withdrawal, you must return your policy and complete the information below
as follows:
1. Verify Policy Number and name of insured.
Policy Number:____________________________
Name of Insured:___________________________
2. Date and sign the bottom portion of this form.
3. Mail this notice, together with your policy to:
The Union Central Life Insurance Company
PO Box 40888
Cincinnati OH 45240
Make certain that the postmark on the envelope is on or before the
last date permitted for cancellation as described in the attached notice.
Pursuant to the terms of the Notice of Right of Withdrawal, I hereby
return the policy numbered above for cancellation and request a refund. I
hereby release The Union Central Life Insurance Company from any claims in
connection with the sale or issuance of this policy and acknowledge that Union
Central's sole liability with respect to the policy is the refund requested
herein.
- --------------------- ----------------------------------------
Date Signature of Policyowner
THE UNION CENTRAL LIFE INSURANCE COMPANY
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report pertaining to The Union Central Life Insurance Company dated
February 10, 1995 in Pre-Effective Amendment No. 1 to Registration Statement
(Form S-6 No. 33-94858) and related Prospectus of Carillon Life Account.
ERNST & YOUNG LLP
Cincinnati, Ohio
November 27, 1995
Description of
Issuance, Transfer, and Redemption Procedures
for Policies Pursuant to
Rule 6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be followed by
The Union Central Life Insurance Company ("Union Central") in
connection with the issuance of certain of its individual
flexible premium variable universal life insurance policies (the "policies")
issued through Carillon Life Account (the "Separate Account"),
the transfer of assets held
under the policies, and the redemption of interests in policies.
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF THE POLICIES
A. Offering of the Policy
----------------------
The policy is offered only to individuals ("owners") who satisfy certain
suitability standards. The policy may be purchased to acquire
insurance on the life of a person (an "insured") in whom the
owner has an insurable interest. Union Central requires satisfactory
evidence of the insured's insurability, which may include a
medical examination of the insured. The available issue
ages are 0 through 75. Age is determined on the insured's age
as of the birthday nearest the policy date.
The minimum specified amount is $50,000. The specified amount
is a dollar amount used to determine the death benefit under a policy.
Acceptance of an application depends on Union Central's underwriting
rules, and Union Central reserves the right to reject an application for
any reason.
If a policy has more than one owner (joint owners), then
any transaction under the policy except for telephone transfers
of account value will require the authorization of all owners.
B. Cost of Insurance Charges Structure, Payments and Underwriting Standards
------------------------------------------------------------------------
Union Central places the insured in a rate class when the policy is issued,
based on Union Central's underwriting of the application.
This original rate class applies to the initial specified amount.
The current cost of insurance charge rate for a policy is based
on the age at issue, sex, and rate class of the insured, and on
the policy year, and therefore varies from time to time. Different
current cost of insurance rates apply to policies with a specified amount
under $250,000 than to policies with a specified amount of $250,000 or
more. Union Central currently places insureds in the following
rate classes, based on underwriting:
Standard Tobacco (ages 0-75); Standard Nontobacco (ages 20-75), or Preferred
(ages 20-70). The preferred class is available only under policies
with specified amounts of $100,000 or more. Insureds may also
be placed in a substandard rate class, which involves a higher
mortality risk that the standard tobacco or standard nontobacco classes.
Union Central guarantees that the cost of insurance rates used
to calculate the monthly cost of insurance charge will not exceed
the maximum cost of insurance rates set forth in the policies.
The guaranteed rates for standard classes are based on the 1980 Commissioners'
Standard Ordinary Mortality Tables, Male or Female, Smoker or Nonsmoker
Mortality Rates ("1980 CSO Tables"). The guaranteed rates for
substandard classes are based on multiples of or additives to the
1980 CSO Tables.
Union Central's current cost of insurance rates may be less
than the guaranteed rates that are set forth in the policy.
Current cost of insurance rates will be determined based on
Union Central's expectations as to future mortality, investment
earnings, expenses, taxes, and persistency experience.
These rates may change from time to time.
Cost of insurance rates (whether guaranteed or current)
for an insured in a standard nontobacco class are equal to or
lower than guaranteed rates for an insured of the same age
and sex in a standard tobacco class. Cost of insurance rates
(whether guaranteed or current) for an insured in a standard
nontobacco or tobacco class are generally lower than guaranteed
rates for an insured of the same age and sex and tobacco status
in a substandard class.
The cost of insurance rates for the policy will
not be the same for all owners. Insurance is based on
the principle of pooling and distribution of mortality risks which
assumes that each owner is charged a cost of insurance
commensurate with the insured's mortality risk as actually
determined, reflecting factors such as age, sex, health, and
underwriting method. A uniform cost of insurance charge
for all insureds would discriminate unfairly in favor of
those insureds representing higher risks. Although there
will be no uniform cost of insurance charges for all insureds,
for a given specified amount there will be a uniform cost of
insurance charge for all insureds of the same issue age, sex,
policy duration and underwriting classification.
If the insured's age or sex has been misstated in the
application for the policy or in any application for supplemental
and/or rider benefits, and if the misstatement becomes
known during the lifetime of the insured, then policy
values will be adjusted to those based
on the correct monthly deductions (reflecting the
correct age or sex) since the policy date. If
the policy's values are insufficient to cover the
monthly deduction on the prior monthly date,
the grace period will be deemed to have begun on
such date, and notification will be sent to
the owner at least 61 days prior to the end of
the grace period. See "Policy Termination and
Grace Period," below.
The policy provides coverage on an insured named
under the policy and a Death Benefit payable upon the
death of the insured. The policy will remain in force as long as the
policy's cash surrender value is sufficient to cover the charges due.
Union Central guarantees that a policy will remain in
force during the minimum guaranteed period, regardless of
the sufficiency of the cash surrender value, if the sum of
the premiums paid to date, less any partial cash surrenders
and policy debt equals or exceeds the minimum monthly
premium (shown in the policy) multiplied by the number
of complete policy months since the policy date, including
the current policy month. The minimum guaranteed period is three
years following the policy date. An extended minimum
guaranteed period may be available under a Guaranteed Death Benefit Rider.
The minimum monthly premium is calculated for each policy
based on the age, sex and rate class of the insured, the requested
specified amount and any supplemental and/or rider
benefits. The minimum monthly premium may change due to
changes made during a minimum guaranteed period to the
specified amount, the death benefit option, ratings, and
supplemental and/or rider benefits. Union Central will
notify the owner of any increase in the minimum monthly premium.
On or after one year from the policy date, the owner may
request a change in the specified amount, by notice to Union
Central, subject to the following rules. If a change in
the specified amount would result in total premiums paid
exceeding the premium limitations prescribed under current
tax law to qualify the policy as a life insurance contract, Union
Central will refund promptly to the owner the amount of
such excess above the premium limitations.
The minimum amount of any decrease in specified amount
is $5,000, and any decrease in specified amount will become
effective on the monthly date next following the
date that notice requesting the decrease is received and
approved by Union Central. Union
Central reserves the right to decline a requested
decrease in the specified amount if compliance with
the guideline premium limitations under current tax law resulting from this
decrease would result in immediate termination of
the policy, or if to effect the requested
decrease, payments to the owner would have to be
made from the accumulated value for
compliance with the guideline premium limitations,
and the amount of such payments would
exceed the cash surrender value under the policy.
Any increase in the specified amount must
be at least $5,000 (unless the increase is
effected pursuant to a rider providing for
automatic increases in specified amount), and an
application must be submitted. Any increase
that is not guaranteed by rider will require
satisfactory evidence of insurability and must
meet Union Central's underwriting rules. The
increase in specified amount will become
effective on the monthly date next following the
date the request for the increase is received
and approved, and the account value will be
adjusted to the extent necessary to reflect
a monthly deduction as of the effective date based
on the increase in specified amount.
Union Central will determine a cost of
insurance rate for increases in coverage based
on the age of the insured at the time of the
increase. The following rules will apply for
purposes of determining the risk amount for each rate.
When an increase in specified amount
is requested, Company conducts underwriting
before approving the increase (except as noted
below) to determine whether a different rate
class will apply to the increase. If the rate
class for the increase has lower cost of insurance
rates than the original rate class, then the rate
class for the increase will also be applied to
the initial specified amount. If the rate class
for the increase has higher cost of insurance
rates than the original rate class, the rate
class for the increase will apply only to the increase
in specified amount, and the original rate
class will continue to apply to the initial specified
amount.
Union Central does not conduct underwriting
for an increase in specified amount if
the increase is requested by exercising an
option to increase the specified amount
automatically, without underwriting. In such
case, the insured's rate class for an increase
will be the class in effect when the guaranteed
option rider was issued.
For purposes of determining the risk
amount associated with a specified amount,
Union Central will attribute the account
value solely to the initial specified amount unless the
account value exceeds the initial specified amount.
If the account value exceeds the initial
specified amount, the excess will be considered
attributable to the increases in specified
amount in the order of the increases. If
there is a decrease in specified amount after an
increase, a decrease is applied first to decrease
any prior increases in specified amount,
starting with the most recent increase and
then each prior increase.
The policy will be offered and sold
pursuant to an established mortality structure and
underwriting standards in accordance with state
insurance laws. Where state insurance laws
prohibit the use of actuarial tables that
distinguish between men and women in determining
premiums and policy benefits for their insured
residents, Union Central will comply.
C. Application and Payment Processing
----------------------------------
To purchase a policy, an application must be
completed and submitted through an
authorized Union Central agent. There is no
minimum initial premium payment. An
owner's policy coverage will become effective
on the policy date. If an initial premium
payment is submitted with the application,
then the policy date is generally the date of
approval of the owner's application. If the
application is not accompanied by an initial
premium payment, then the policy date will
generally be the valuation date on which the
initial premium payment is received by Union
Central and the initial net premium is credited
to the policy. A valuation date is each day
on which both the New York Stock Exchange
and Union Central are open for business.
As provided for under state insurance law,
the owner, to preserve insurance age, may
be permitted to backdate the policy. In no
case may the policy date be more than six months
prior to the date the application was completed.
Charges for the monthly deduction for the
backdated period are deducted on the issue date.
Temporary life insurance coverage may be
provided prior to the policy date under the terms of
a temporary insurance agreement. In
accordance with Union Central's underwriting
rules, temporary life insurance coverage may
not exceed $500,000 and will not remain in
effect for more than sixty (60) days.
The initial net premium will be credited
to the policy on the policy date. For
backdated policies, the initial net premium
will be credited on the issue date. Planned
periodic premiums and unscheduled premiums that
are not underwritten will be credited to
the policy and the net premiums will be invested
as requested on the valuation date they are
received by the home office. If an additional
premium payment is rejected, Union Central
will return the premium payment promptly,
without any adjustment for investment
experience.
The policy date is the date from which
policy months, years, and anniversaries are
measured. A policy month is each one-month
period beginning with a monthly date and
ending with the day immediately preceding
the next following monthly date. The monthly
date is the same day as the policy date for
each succeeding month. The monthly deduction is
deducted on each monthly date.
A policy year is each period of twelve
months commencing with the policy date and
ending immediately preceding the first annual date,
or any following year commencing with
an annual date and ending immediately preceding
the next annual date. The annual date is
the same day in each policy year as the policy date.
The issue date is the date from which
the suicide and contestable periods start. It is
shown in the policy, and is the date that the policy is issued.
D. Allocation of Net Premiums
--------------------------
On the policy date, the account value is equal
to the initial net premium credited
(initial premium payment less the premium
expense charge), less the monthly deduction made
as of the policy date. On each valuation date
thereafter, the account value is the sum of the
variable account, the guaranteed account, and
the loan account. The account value will
vary to reflect the performance of the
subdivisions to which amounts have been allocated,
interest credited on amounts allocated to the
guaranteed account, interest credited on
amounts in the loan account, charges,
transfers, partial cash surrenders, loans and loan
repayments. The cash surrender value is
cash value minus any outstanding policy debt.
Cash value is account value minus any
applicable surrender charge.
When applying for a policy, the owner
selects a plan for paying level premium
payments at specified intervals, e.g., quarterly,
semi-annually or annually, until the maturity
date. If the owner elects, Union Central will
also arrange for payment of planned period
premiums on a monthly basis under a pre-authorized
payment arrangement. The owner is not
required to pay premium payments in accordance
with these plans; rather, the owner can pay
more or less than planned or skip a planned
periodic premium entirely. Currently, there is
no minimum amount for each premium. Union Central
may establish a minimum amount 90
days after Union Central sends the owner
a written notice of such increase. Subject to
certain limits (described below), the owner
can change the amount and frequency of planned
periodic premiums whenever the owner wishes
by sending notice to the home office.
However, Union Central reserves the right to
limit the amount of a premium payment or the
total premium payments paid.
In the application, the owner specifies
the percentage of a net premium to be allocated
to each subdivision and to the guaranteed account.
Net premiums will generally be allocated
to the subdivisions and to the guaranteed account
on the valuation date that Union Central
receives them in accordance with the allocations
specified in the application or subsequent
notice.
Union Central will allocate all net
premiums received before the end of the "free
look" period (including the initial net premium)
to the subdivision corresponding to the
Scudder Money Market Portfolio. After the
end of the "free look" period, the account value
will be allocated to the subdivisions and to
the guaranteed account based on the premium
payment allocation percentages in the application.
For this purpose, the end of the "free
look" period is deemed to be 25 days after
the date the policy is issued and mailed to the
owner's Union Central agent for delivery.
The net premium allocation percentages
specified in the application will apply to
subsequent premium payments until the owner
changes the percentages. The minimum
allocation percentage that an owner may specify
for a subdivision or the guaranteed account
is 5%, and allocation percentages must be whole numbers.
The sum of allocations must equal 100%.
Union Central reserves the right to limit
the number of subdivisions to which
account value may be allocated. An owner
can change the allocation percentages at any
time, subject to the rules below, by sending
notice to the home office. The change will apply
to all premium payments received with or after
receipt of the owner's notice.
Any premium payment that is underwritten
will be allocated to the subdivision
corresponding to the Scudder Money Market
Portfolio until underwriting has been completed
and the premium payment has been accepted.
When accepted, the account value allocated to
the subdivision corresponding to the Scudder
Money Market Portfolio and attributable to the
resulting net premium will be credited to the
policy and allocated in accordance with the
owner's instructions.
E. Additional Payments
-------------------
Additional unscheduled premium payments
can be made at any time while the policy
is in force. Premium payments after the
initial premium payment must be made to the home
office.
Union Central has the right to limit
the number and amount of such premium
payments. Total premium payments paid in a
policy year may not exceed guideline premium
payment limitations for life insurance set forth
in the Internal Revenue Code. Union Central
will promptly refund any portion of any premium
payment that is determined to be in excess
of the premium payment limit established by law
to qualify a policy as a contract for life
insurance.
Union Central reserves the right to reject
any requested increase in planned periodic
premiums, or any unscheduled premium. Union Central
also reserves the right to require
satisfactory evidence of insurability prior to
accepting any premium which increases the risk
amount of the policy. No premium payment will be
accepted after the maturity date.
The owner may specify that a specific
unscheduled premium payment is to be applied
as a repayment of policy debt, if any.
The payment of premiums may cause a policy
to be a modified endowment contract
under the Internal Revenue Code. If acceptance
of a premium paid would, in Union
Central's view, cause the policy to become
a Modified Endowment Contract, then to the
extent feasible Union Central will not accept
that portion of the premium that would cause
the policy to become a Modified Endowment
Contract unless the owner confirms in writing
the owner's intent to convert the policy
to a Modified Endowment Contract. Union Central
may return that portion of the payment pending
receipt of instructions from the owner.
F. Policy Termination and Grace Period
-----------------------------------
The policy terminates at the earliest of the
end of the grace period, the surrender of
the policy by the owner, the maturity date of
the policy, or the fulfillment of Union Central's
obligations under the policy (i.e., payment of
the death benefit proceeds).
If the cash surrender value on a monthly
date is less than the amount of the monthly
deduction to be deducted on that date and the
minimum guaranteed period is not in effect, the
policy will be in default. In addition, if on a
monthly date the cash value less any policy
debt (the cash surrender value) exceeds the
amount of the monthly deduction due for the
following policy month, the policy will be in
default. An owner, and any assignee of record,
will be sent notice of the default.
If a policy goes into default, the owner
will be allowed a 61-day grace period to pay a
premium payment sufficient to cover the monthly
deductions due during the grace period or a
sufficient amount to avoid termination of the
policy due to excessive loans. Union Central
will send notice of the amount required to be
paid during the grace period ("grace period
premium payment") to the owner's last known
address and the address of any assignee of
record. The grace period will begin when
the notice is sent. An owner's policy will remain
in effect during the grace period. If the insured
should die during the grace period and
before the grace period premium payment is paid,
the death benefit proceeds will still be
payable to the beneficiary, although the
amount paid will reflect a reduction for the monthly
deductions due on or before the date of the
insured's death (and for any policy debt). If the
grace period premium payment has not been
paid before the grace period ends, the policy
will lapse. It will have no value and no
benefits will be payable.
The maturity date is the date when insurance
coverage under the policy terminates and
the maturity benefit is paid. It is generally
the insured's 100th birthday, and is shown in the
policy. The maturity benefit is equal to the
cash surrender value on the maturity date.
G. Reinstatement of a Policy Terminated for Insufficient Values
------------------------------------------------------------
The policy may be reinstated within five years
after lapse and before the maturity date, subject to
compliance with certain conditions, including the payment of a necessary
premium payment and submission of satisfactory evidence of insurability.
H. Repayment of Loan
-----------------
An owner may repay all or part of policy debt
at any time while the insured is living and the policy
is in force. Loan repayments must be sent to the home
office and will be credited as of the date received.
The owner may give Union Central notice that a specific
unscheduled premium made while a loan is
outstanding is to be applied as a loan repayment.
When a loan repayment is made, account
value in the loan account in an amount equivalent
to the repayment is transferred from the loan
account to the subdivisions and the guaranteed
account. Amounts will be transferred to the
subdivisions and the guaranteed account in
accordance with the owner's current net
premium allocation instructions.
I. Policy Riders
-------------
Supplemental and/or rider benefits may be
available and, if so, may be added to the
policy. Monthly charges for these benefits
and/or riders, if any, will be deducted from the
account value as part of the monthly deduction.
The supplemental and/or rider benefits
available with the policies provide fixed
benefits that do not vary with the investment
experience of the separate account. The
following supplemental and/or rider benefits may
be available: Term Insurance Rider for Other
Insured Persons; Scheduled Increase Option
Rider for the Insured; Guaranteed Death Benefit
Rider; Cost of Living Rider for the Insured;
Guaranteed Insurability Option Rider;
Accidental Death Benefit Rider; Total Disability
Benefit Rider - Waiver of Monthly Deduction;
Total Disability Benefit Rider - Policy
Continuation to Maturity Date Not Guaranteed;
Children's Insurance Rider; and Insurance
Exchange Rider. An Accelerated Benefit
Rider may become available in the future.
The Insurance Exchange Rider provides
the right to exchange the policy for a new
policy on the life of a substitute insured.
Exercise of the right is subject to satisfactory
evidence of insurability of the substitute insured,
and may result in a cost or credit to the
owner. The new policy can be any adjustable
life insurance policy issued by Union Central
at the time the exchange privilege is exercised.
The policy date for the new policy will
generally be the same as the policy date of the
exchanged policy; the issue date for the new
policy will be the date of exchange. The
initial cash value under the new policy will be the
same as the cash value of the policy on the
date of the exchange. There is no cost for this
rider, and there are no charges or other fees
imposed under the policy or the new policy at
the time of the exchange. For purposes of
calculating any surrender charges subsequently
imposed on the policy acquired by exchange,
Union Central takes into account the number of
policy years that the policy, and the policy
acquired by exchange, have been in force.
Additional rules and limits apply to
these supplemental and/or rider benefits, and are
set forth in the applicable endorsement or rider.
II. TRANSFERS AMONG INVESTMENT DIVISIONS
Several subdivisions of the Separate Account
are available for allocation of Net
Premiums paid under the policy, subject to
certain limitations set forth in the policy. Each
subdivision of the Separate Account invests
its assets in shares or units of an underlying
portfolio. Available subdivisions of the
Separate Account invest in portfolios of Carillon
Fund, Inc., Scudder Variable Life Investment Fund,
TCI Portfolios, Inc., and MFS Variable
Insurance Trust (together, the "Funds").
All Funds are registered under the Investment
Company Act of 1940 as an open-end management
investment company.
After the free-look period and prior
to the maturity date, the owner may transfer all
or part of the account value (except the loan
account) from subdivisions investing in one
portfolio to other subdivision(s) or to the
guaranteed account, or transfer a part of an amount
in the guaranteed account to the subdivision(s),
subject to the following restrictions. The
minimum transfer amount is the lesser of $100
or the entire amount in that subdivision or the
guaranteed account. A transfer request that
would reduce the amount in a subdivision or the
guaranteed account below $25 will be treated as
a transfer request for the entire amount in
that subdivision or the guaranteed account.
With the exception of the Conversion Right
(described below), Union Central reserves
the right to limit the number or frequency of
transfers permitted in the future.
Union Central will make the transfer
as of the end of the valuation period during
which Union Central receives notice requesting
such transfer. Currently, there is no limit on
the number of transfers that can be made between
subdivisions or to the guaranteed account.
However, transfers from the guaranteed account
during any policy year are limited to an
amount equal to 20% of the account value in
the guaranteed account on the annual date at
the beginning of such policy year. Currently,
Union Central assesses a transfer charge equal
to $10 for each transfer during a policy year
in excess of the first twelve transfers. (Union
Central reserves the right to decrease or
eliminate the number of free transfers; in addition,
the transfer charge may be increased, but is
guaranteed not to exceed $15 per transfer.) The
transfer charge will be deducted from the
subdivisions or the guaranteed account from which
the requested transfer is being made, on a pro-rata basis.
Telephone transfers will be based
upon instructions given by telephone, provided the
appropriate election has been made at the time of
application or proper authorization has
been provided to Union Central. Union Central
reserves the right to suspend telephone
transfer privileges at any time, for any reason,
if Union Central deems such suspension to be
in the best interests of owners.
During the first twenty-four policy
months following the issue date, and within sixty
days of the later of notification of a change in
the investment policy of the separate account
or the effective date of such change, the owner
may exercise a one-time Conversion Right by
requesting that all or a portion of the
variable account be transferred to the guaranteed
account. Exercise of the Conversion Right is
not subject to the transfer charge. Following
the exercise of the Conversion Right, net
premiums may not be allocated to the subdivisions
of the variable account, and transfers of
account value to the subdivisions will not be
permitted. The other terms and conditions of
the policy will continue to apply.
Transfers may also be effected pursuant
to any Dollar Cost Averaging Plan, Portfolio
Rebalancing Plan, or Earnings Sweep Plan as
elected by the owner from time to time and as
described in the current prospectus for the policies.
III. REDEMPTION PROCEDURES, SURRENDER AND RELATED TRANSACTIONS
A. Surrender for Cash Surrender Value
----------------------------------
An owner may surrender the policy at any
time for its cash surrender value by submitting
notice to the home office. Union Central may
require return of the policy. A
surrender charge may apply. A surrender
request will be processed as of the date the
surrender notice and all required documents
are received. Payment will generally be made
within seven calendar days. The cash surrender
value may be taken in one lump sum or it
may be applied to a payment option acceptable
to the owner and to Union Central. An
owner's policy will terminate and cease
to be in force if it is surrendered. It cannot later be
reinstated.
Union Central will make the payment of
the cash surrender value out of its general
account and, at the same time, transfer assets
from the Separate Account to its general
account in an amount equal to the sum of
account value (applicable to the policy) held in
each subdivision of the Variable Account.
B. Death Claims
------------
The death benefit proceeds are equal
to the sum of the death benefit under the death
benefit option selected, calculated on the date
of the insured's death, plus any supplemental
and/or rider benefits, minus any policy debt
on that date. If the date of death occurs during
a grace period, the death benefit proceeds are
the death benefit immediately prior to the start
of the grace period, minus policy debt and minus
any past due monthly deductions. If the
insured's age or sex has been misstated in
the application for the policy or in any application
for supplemental and/or rider benefits, and if
the misstatement becomes known after the
death of the insured, then the death benefit
under the policy or such supplemental and/or
rider benefits will be adjusted to the correct
amount (reflecting the correct age or sex) for the
monthly deduction made for the month in which death occurred.
If part or all of the death benefit is
paid in one sum, Union Central will pay interest
on this sum as required by applicable state
law from the date of receipt of due proof of the
insured's death to the date of payment.
Union Central will usually pay the death
benefit proceeds to the beneficiary within
seven days after receipt at its Home Office
of due proof of death of the insured and all other
requirements necessary to make payment.
The death benefit payable will be calculated as of
the date of death of the insured.
The Death Benefit payable depends on
the death benefit option in effect on the date of
death. Subject to certain conditions, owners
may change the death benefit option. Under
Option A, the death benefit is the greater of
the specified amount, which includes the account
value, or the Applicable Percentage of account
value on the date of the insured's death.
Under Option B, the death benefit is the greater
of the specified amount plus the account
value on the date of death, or the Applicable
Percentage of the account value on the date of
the insured's death.
The "Applicable Percentage," which is
based on Internal Revenue Code requirements,
is 250% when the insured has attained age 40
or less, and decreases each year thereafter to
100% when the insured has attained age 95.
A table showing the Applicable Percentages for
Attained Ages 0 to 95 is set forth in the policy.
On or after one year from the policy
date, the owner may change the death benefit
option on the policy, by notice to Union Central,
subject to the following rules. After any
change, the specified amount must be at least
$50,000. The effective date of the change will
be the monthly date next following the day
that Union Central receives and accepts notice of
the request for change. Union Central may
require satisfactory evidence of insurability.
When a change from Option A to Option B is
made, the specified amount after the
change is effected will be equal to the
specified amount before the change less the account
value on the effective date of the change.
When a change from Option B to Option A is
made, unless requested by notice to Union Central,
the specified amount after the change will
be equal to the specified amount before the
change is effected and the death benefit will be
reduced by the account value on the effective
date of the change.
Union Central will make payment of
the death benefit proceeds out of its general
account and, at the same time, will transfer
the account value applicable to the policy out of
the Separate Account to the general account.
C. Policy Loan
-----------
After the first policy year and while
the insured is living, provided the policy is not in
the grace period, the owner may borrow against
the policy at any time by submitting notice
to the home office. The minimum amount of
any loan request is $500. The maximum loan
amount is equal to the sum of 90% of the
variable account, plus 100% of the guaranteed
account, less any surrender charges that would
be applicable on the effective date of the
loan, less loan interest to the annual date.
Outstanding loans reduce the amount available for
new loans. Loans will be processed as of the
date the loan notice is received and approved.
Loan proceeds generally will be sent to the
owner within seven calendar days.
Each year Union Central will set the
annual loan interest rate. The rate will never be
more than the maximum permitted by law, and
will not be changed more frequently than
once per year. The rate for a policy year
may not exceed the greater of (i) the Published
Monthly Average for the calendar month ending
two months before the annual date at the
beginning of the policy year; or (ii) the
guaranteed minimum interest rate applicable to the
guaranteed account, plus 1.0%. The Published
Monthly Average means Moody's Corporate
Bond Yield Average - Monthly Average Corporates,
as published by Moody's Investor
Service, Inc., or any successor to that
service; or if the average is no longer published, a
substantially similar average, established
by regulation issued by the insurance supervisory
official of the state in which the policy is delivered.
If the maximum annual loan interest
rate for a policy year is at least 0.5% higher than
the rate set for the previous policy year,
Union Central may increase the rate to no more than
that limit. If the maximum limit for a policy
year is at least 0.5.% lower than the rate set
for the previous policy year, Union Central
will reduce the rate to at least that limit.
Union Central will notify owners of the
initial rate of interest when a loan is made.
Union Central will notify the owner at least
thirty days in advance of any increase in the
annual loan interest rate applicable to any outstanding loan.
Interest is due and payable at the end
of each policy year while a loan is outstanding.
If interest is not paid when due, the amount
of the interest is added to the loan and becomes
part of the outstanding loan.
Outstanding loans (including unpaid
interest added to the loan) plus accrued interest
not yet due equals the policy debt.
When a policy loan is made, an amount
sufficient to secure the loan is transferred out
of the variable account and the guaranteed
account and into the policy's loan account.
Thus, a loan will have no immediate effect
on the account value, but other policy values,
such as the cash surrender value and the
death benefit proceeds, will be reduced immediately
by the amount transferred to the loan account.
This transfer is made against the account
value in each subdivision and the guaranteed
account in proportion to the account value in
each on the effective date of the loan,
unless the owner specifies that transfers be made from
specific subdivisions. An amount of account
value equal to any due and unpaid loan interest
which exceeds interest credited to the loan
account will also be transferred to the loan
account on each annual date. Such interest
will be transferred from each subdivision and the
guaranteed account in the same proportion
that account value in each subdivision and the
guaranteed account bears to the total unloaned account value.
The loan account will be credited with
interest at an effective annual rate of not less
than the annual loan interest rate, less 1.25%
during the first ten policy years, and 0.50%
thereafter. Thus, the maximum net cost of a
loan per year is 1.25% during the first ten
policy years, and 0.50% thereafter (the net
cost of a loan is the difference between the rate
of interest charged on policy loans and the
amount credited on the equivalent amount held in
the loan account). Union Central will determine
the rate of interest to be credited to the
loan account in its sole discretion, and the
rate may change from time to time.
D. Partial Withdrawals
-------------------
An owner may make partial cash
surrenders under the policy at any time subject to
the conditions below. An owner must submit
notice to the home office. Each partial cash
surrender must be at least $500. The partial
surrender amount may not exceed the cash
surrender value. There is no fee or charge
imposed on a partial cash surrender. As of the
date Union Central receives notice of
a partial cash surrender request, the cash value will be
reduced by the partial cash surrender amount.
Unless the owner requests that a partial
cash surrender be deducted from specified
subdivisions, the partial cash surrender
amount will be deducted from account value in the
subdivisions and in the guaranteed account
pro-rata in proportion to the account value in
each.
If death benefit Option A is in effect,
Union Central will reduce the specified amount
by the partial cash surrender amount. Union
Central may reject a partial cash surrender
request if the partial cash surrender would
reduce the specified amount below $50,000, or if
the partial cash surrender would cause the
policy to fail to qualify as a life insurance contract
under applicable tax laws, as interpreted by Union Central.
Partial cash surrender requests will be
processed as of the date notice is received by
Union Central, and generally will be paid within seven calendar days.
E. Monthly Charges
---------------
On each monthly date, Union Central
will deduct from the account value the monthly
deductions due, commencing as of the policy date.
An owner's policy date is the date used
to determine the applicable monthly date.
The monthly deduction consists of (1) cost of
insurance charges ("cost of insurance charge"),
(2) the monthly administrative charge (the
"administrative charge"), and (3) any charges
for supplemental and/or rider benefits
("supplemental and/or rider benefit charges").
The monthly deduction is deducted from the
subdivisions of the Variable Account and from
the guaranteed account pro rata on the basis
of the portion of account value in each.
