Excel
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CHOICE (SM)
(the above is printed in very large letters)
(Centered on the cover is a graphic collage: upper right half
shows the top and two sides of a cube. On the top of the cube
there is a sky w/clouds; a house scene is on the left; and city
skyscraper buildings are on right. Under the cube is the upper
third of a globe. Next to the globe are two sides of a pyramid
showing portions of a dollar bill.)
(Union Central logo)
Union Central
1996 Prospectuses
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Carillon Life Account of The Union Central Life Insurance
Company;
Carillon Fund, Inc.;
MFS Variable Insurance Trust;
Scudder Variable Life Investment Fund; and
TCI Portfolios, Inc.
Distributed by: Carillon Investments, Inc.
P.O. Box 40409, Cincinnati, Ohio 45240
<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 15. 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 December 15, 1995.<PAGE>
<PAGE>
PROSPECTUS CONTENTS
Page
DEFINITIONS OF TERMS 4
SUMMARY AND DIAGRAM OF THE POLICY 6
GENERAL INFORMATION ABOUT UNION CENTRAL,
THE SEPARATE ACCOUNT AND THE PORTFOLIOS 9
The Union Central Life Insurance Company 9
Carillon Life Account 9
The Portfolios 9
Addition, Deletion or Substitution of Investments 10
Voting Rights 11
PREMIUM PAYMENTS AND ALLOCATIONS 11
Applying for a Policy 11
Free Look Right to Cancel the Policy 12
Premiums 12
Net Premium Allocations 13
Crediting Net Premiums 13
Transfer Privilege 14
Dollar Cost Averaging Plan 14
Portfolio Rebalancing Plan 15
Earnings Sweep Plan 15
GUARANTEED ACCOUNT 15
Minimum Guaranteed and Current Interest Rates 15
Calculation of Guaranteed Account Value 16
Transfers from Guaranteed Account 16
Payment Deferral 16
CHARGES AND DEDUCTIONS 16
Premium Expense Charge 16
Monthly Deduction 16
Daily Mortality and Expense Risk Charge 17
Transfer Charge 18
Surrender Charge 18
Special Arrangements 19
Fund Expenses 19
Cost of Additional Benefits Provided by Riders 19
Income Tax Charge 19
HOW YOUR ACCOUNT VALUES VARY 20
Determining the Account Value 20
Cash Value 21
Cash Surrender Value 21
DEATH BENEFIT AND CHANGES IN SPECIFIED AMOUNT 21
Amount of Death Benefit Proceeds 21
Death Benefit Options 21
Initial Specified Amount and Death Benefit Option 22
Changes in Death Benefit Option 22
Changes in Specified Amount 22
Selecting and Changing the Beneficiary 22<PAGE>
<PAGE>
PROSPECTUS CONTENTS
- ---------------------------------------------------------------
CASH BENEFITS 22
Loans 22
Surrendering the Policy for Cash Surrender Value 24
Partial Cash Surrenders 24
Maturity Benefit 24
Payment Options 24
ILLUSTRATIONS OF ACCOUNT VALUES, CASH SURRENDER VALUES,
DEATH BENEFITS AND ACCUMULATED PREMIUM PAYMENTS 24
OTHER POLICY BENEFITS AND PROVISIONS 34
Limits on Rights to Contest the Policy 34
Changes in the Policy or Benefits 34
When Proceeds Are Paid 34
Reports to Policy Owners 34
Assignment 34
Reinstatement 35
Supplemental and/or Rider Benefits 35
Participating 36
State Variations 36
TAX CONSIDERATIONS 36
Tax Status of Policy 36
Treatment of Policy Benefits 37
Possible Charge for Union Central's Taxes 38
OTHER INFORMATION ABOUT THE POLICIES AND UNION CENTRAL 38
Sale of the Policies 38
Union Central Directors and Executive Officers 39
State Regulation 40
Additional Information 40
Experts 40
Actuarial Matters 40
Litigation 40
Legal Matters 40
Financial Statements 40
APPENDIX A 64
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 20.
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 21.
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.
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 12.
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 13.
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 22.
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 12. 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 13. If a policy lapses while loans are
outstanding, adverse tax consequences may result. See "Tax
Considerations," page 36.
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 36.
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 12. 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 13.)
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 14.
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 12 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 12.
* If sufficient premiums are paid, a minimum guaranteed period
may keep the policy in force during the first three policy years.
See page 12.
* Under certain circumstances, which include taking excessive
loans, extra premium payments may be required to prevent lapse.
See page 13.
(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 16.
* For state and local premium taxes (2.50% of premium
payments). See page 16.
(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 13 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 9.
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 15
for rules and limits on guaranteed account allocations.
(a down arrow is centered here between blocks)
<PAGE>
(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 17.
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 19.
(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 20.
* 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 20.
* 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 20 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 22 for rules and limits.
* Partial cash surrenders generally can be made provided there
is sufficient remaining cash surrender value. See page 24
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 24.
* Payment options are available. See page 24.
* Loans, partial cash surrenders, and surrenders in full may
have adverse tax consequences. See page 36.
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 21.
* Flexibility to change the death benefit option and specified
amount. See page 22 for rules and limits.
* Supplemental and/or rider benefits may be available. See
page 35.
(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 36.
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 13.) 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 36.
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
13.
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 35.
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," page 22. 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 16) 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 21. 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 35.
A grace period also may begin if policy debt becomes excessive.
See "Loan Repayment; Effect if not Repaid," page 23.
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 20.
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
16, 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 17, and "Cost of Insurance Charge," page 16.
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 21) 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
35. 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 35.
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 17, and "Cost of Insurance Charge," page 16.
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 sales charge component of the premium expense charge;
the monthly administrative charge; and/or the 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. In addition, in the future, Union
Central may reduce or waive the sales charge component of the
premium expense charge; and/or the 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. Reductions or waivers of the sales charge component of
the premium expense charge, the monthly administrative charge,
and the surrender charge reflect the reduced sales and
administrative effort associated with policies sold to the owners
specified. The home office can provide advice regarding the
availability of reduced or waived charges to such owners.
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 sales charge component of the premium
expense charge; the surrender charge; the monthly charge for the
cost of insurance; rider charges; monthly administrative charges;
daily mortality and expense risk charges; and/or the 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
as described below and 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 insurance cost and
mortality expense risk per policy may 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 (including underwriting-related
factors that are determined by Union Central to result in lower
anticipated expenses of providing insurance coverage, and/or
lower mortality expense risk, under policies sold to members of
the group or through the sponsored arrangement). The amount of
any reduction and the criteria for qualification will reflect the
reduced sales and administrative effort resulting from sales to
qualifying group or sponsored arrangements, and/or the reduced
anticipated cost of insurance or mortality expense risk under
such policies. 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 24) 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 12, and "Grace
Period," page 13.
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 24). It is also the
amount that is available upon full surrender of the policy (see
page 24).
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 34) or, if elected, under a
payment option (see "Payment Options," page 24). The death
benefit will be paid to the beneficiary. See "Selecting and
Changing the Beneficiary," page 22.
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 34.
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 24.
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 13. 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 18).
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 34, and "Payments from the Guaranteed
Account," page 16.
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 36, 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 18. 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 34, and
"Transfers from the Guaranteed Account," page 16. 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 24. 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 36.
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 34, and
"Payment Deferral from the Guaranteed Account," page 16.
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 36.
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 "Payment Deferral from the Guaranteed Account," page 16.
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 16). 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 stock 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>
Financial Statements
Statutory Basis of Accounting
The Union Central Life Insurance Company
Years ended December 31, 1994 and 1993
with report of Independent Auditors
<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 47
Balance Sheets - Statutory Basis of Accounting 48
Statements of Income and Changes in Surplus
- - Statutory Basis of Accounting 49
Statements of Cash Flows - Statutory Basis of Accounting 50
Notes to Financial Statements
- - Statutory Basis of Accounting 51
<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
toabove 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
- ----------------------------------------------------------------
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>
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
<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>
The accompanying notes are an integral part
of the financial statements.<PAGE>
<PAGE> The Union Central Life Insurance Company
- -----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
STATUTORY BASIS OF ACCOUNTING
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 theresults 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 economicenvironment. 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 ofgood will, 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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) dispositioncosts. 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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.
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.
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
<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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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 Atlantic 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%
======== ======
<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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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
======== ========
</TABLE>
* Includes amounts for the occupancy of company-owned property
of $3,425,000 and $3,420,000 in 1994 and 1993, respectively.
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.
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
========== ========== ========== ==========
<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>
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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.
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>
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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%
=========== ======
</TABLE>
* 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).
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>
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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>
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
-------- ----- -------- -----
(000's Omitted)
<S> <C> <C> <C> <C>
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 reverse stock split which were written
off totalled $487,000 in 1994 and $872,000 in 1993.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS OF ACCOUNTING --
(Continued)
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>
<CAPTION>
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>
(Union Central logo)
Union Central
Insurance and Investments
At Union Central, being Reliable for Generations is more than a
slogan. It's our mission.
*Securities products offered through registered
representatives of Carillon Investments, Inc., a
subsidiary of The Union Central Life Insurance
Company, P.O. Box 40409, Cincinnati, Ohio
45240-0409, (800) 999-1840.
(Recycling logo) Printed on recycled paper
UC 2304 1/96
Copyright 1996 -- The Union Central Life Insurance Company
1876 Waycross Road, Cincinnati, Ohio 45240
