As filed with Securities and Exchange Commission on May 31, 2000
Registration No. 33-94858
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7 TO
FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CARILLON LIFE ACCOUNT
(Exact Name of Trust)
THE UNION CENTRAL LIFE INSURANCE COMPANY
(Name of Depositor)
1876 Waycross Road
P.O. Box 40888
Cincinnati, Ohio 45240
(Address of depositor's principal executive offices)
<TABLE>
<C> <C>
THERESA M. BRUNSMAN, ESQ. Copies to:
The Union Central Life Insurance Company KIMBERLY J. SMITH, ESQ.
1876 Waycross Road Sutherland Asbill & Brennan LLP
P.O. Box 40888 1275 Pennsylvania Ave., N.W.
Cincinnati, Ohio 45240 Washington, D.C. 20004-2404
(Name and address of agent for service)
</TABLE>
It is proposed that this filing will become effective (check
appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on August 1, 2000 pursuant to paragraph (a)(1) of rule 485
[ ] this post effective amendment designates a new effective
date for a previously filed post-effective amendment
________________
<PAGE>
CARILLON LIFE ACCOUNT
Registration Statement on Form S-6
Reconciliation and Tie Between Items
In Form N-8B-2 and the Prospectus
Form N-8B-2
Item No. Caption in Prospectus
----------- ---------------------
1 Cover Page
2 Cover Page
3 Inapplicable
4 Sale of the Policies
5 Information about Union Central
6 Carillon Life Account
9 Inapplicable
10(a) Other Policy Benefits and Provisions
10(b) Summary and Diagram of the Policy
10(c),(d),(e) Death Benefit Options; Cash Value; Summary and
Diagram of the Policy; Other Policy Benefits and
Provisions; Surrendering the Policy for Cash
Surrender Value; Partial Cash Surrenders; Loans;
Transfer Privilege; Premiums; Supplemental and/or
Rider Benefits
10(f),(g),(h) Voting Rights; Other Policy Benefits and
Provisions
10(i) Other Policy Benefits and Provisions; Death
Benefit Options; Carillon Life Account;
Supplemental and/or Rider Benefits
11 Carillon Life Account
12 Carillon Life Account; The Portfolios; Sale of
the Policies
13 Charges and Deductions; Sale of the Policies; The
Portfolios
14 Premiums; Charges and Deductions; Sale of the
Policies
15 Premiums
16 Carillon Life Account; The Portfolios
17 Captions referenced under Items 10(c), (d), (e)
and (i) above
18 Carillon Life Account; Cash Value
19 Reports to Policy Owners; Sale of the Policies
20 Captions referenced under Items 6 and 10(g) above
21 Loans
22 Inapplicable
23 Sale of the Policies
24 Other Policy Benefits and Provisions
25 Information about Union Central
26 Sale of the Policies
27 Information about Union Central
28 Union Central Directors and Executive Directors
29 Information about Union Central
30 Inapplicable
31 Inapplicable
32 Inapplicable
33 Inapplicable
34 Sale of the Policies
35 Information about Union Central
36 Inapplicable
37 Inapplicable
38 Sale of the Policies
39 Sale of the Policies
40 Sale of the Policies
41(a) Sale of the Policies
42 Inapplicable
43 Inapplicable
44(a) Carillon Life Account; The Portfolios; Premiums;
Charges and Deductions
44(b) Charges and Deductions
44(c) Premiums; Charges and Deductions
45 Inapplicable
46 The Portfolios; Captions referenced under Items
10(c), (d) and (e) above
47 Inapplicable
48 Inapplicable
49 Inapplicable
50 Inapplicable
51 Cover Page; Summary and Diagram of the Policy;
Death Benefit Options; Loan Repayment; Effect If
Not Repaid; Changes in Specified Amount; Charges
and Deductions; Supplemental and/or Rider
Benefits; Other Policy Benefits and Provisions;
Premiums; Sale of the Policies
52 Other Policy Benefits and Provisions
53 Tax Considerations
54 Inapplicable
55 Inapplicable
59 Financial Statements
<PAGE>
SUPPLEMENT DATED AUGUST 1, 2000
TO THE PROSPECTUS DATED MAY 1, 2000
of
CARILLON LIFE ACCOUNT
Effective August 1, 2000, the prospectus for Carillon Life
Account Excel Choice dated May 1, 2000 (the "Prospectus") is
amended by including the following information:
1. Tax Qualification Test Election
If you buy a policy after August 1, 2000*, you will choose one
of two alternative tests to evaluate whether your policy
qualifies as a life insurance contract under the Internal
Revenue Code. Section 7702 of the Internal Revenue Code provides
that if one of the two tests is met, a policy will be treated as
a life insurance policy for federal income tax purposes. These
tests are referred to as the "cash value accumulation test" and
the "guideline premium test". Once chosen, you cannot change
your choice later. Because you cannot change your choice once
you have made it, you should consult a tax adviser before making
your choice as to the consequences of each test. See page CLA-
40 for a further discussion of tax considerations. .
A. Guideline Premium Test
If you choose the guideline premium test, 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. If cash value growth in later policy years is your primary
objective, the guideline premium test may be the appropriate
choice because it requires a lower death benefit, and therefore
lower cost of insurance charges, once the policy's death benefit
is subject to increases required by 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. A table showing the Guideline
Premium Test Factors is included in Appendix A, page CLA-97.
The guideline premium test provides for a maximum premium in
relation to the death benefit, and a minimum "corridor" of death
benefit in relation to account value.
B. Cash Value Accumulation Test
If you choose the cash value accumulation test, there are no
limits on the amount of premium you can pay in a policy year, so
long as the death benefit is large enough compared to the
account value to meet the test requirements. If you select the
cash value accumulation test, you can generally make a higher
amount of premium payments for any given specified amount and a
higher death benefit may result in the long term. If cash value
growth in early policy years is your primary objective, the cash
value accumulation test may be an appropriate choice because it
allows you to invest more premiums in the policy for each dollar
of death benefit. Under the cash value accumulation test, the
death benefit at all times must be at least equal to an
actuarially determined factor, depending on the insured person's
age, sex, and premium class at any point in time, multiplied by
the account value. A table of the Cash Value Accumulation Test
factors can be found in Appendix C attached to this supplement.
The illustrations presented on pages CLA-29 to CLA-36 reflect
the use of the Guideline Premium Test. Illustrations reflecting
the use of the Cash Value Accumulation Test are attached to this
supplement. For further information concerning the policy
illustrations, see page CLA-28.
2. Enhanced Death Benefit Option
If you buy a policy after August 1, 2000*, you may choose one
of two enhanced death benefit options when you apply for your
policy. The two options establish increased death benefits on
the life of the insured person at certain ages based on the life
expectancy of the insured person. We offer two corridors, a
nine-year corridor and a fifteen-year corridor. The death
benefits on the life of the insured person centered on attained
age 85 could potentially be a greater percentage of the account
value than with the standard corridor for the chosen tax test.
If death benefit protection at policy ages 78 through 92 is an
important factor to you, the enhanced corridor for the tax test
chosen may be the appropriate choice. The death benefit amounts
at those ages will only be affected if the account values have
reached levels that would force the death benefit amounts to be
increased. At ages under 78 and over 92, the enhanced and
CLA Supplement page 1
<PAGE>
standard corridor factors are equal. While this option is
available free of charge, if the enhanced factors result in an
increased death benefit, there will be higher cost of insurance
charges to provide the increased coverage. If the account
values never reach the required levels, the enhanced and
standard options will result in the same death benefit. The
maximum limits on premium payments for any given specified
amount do not change due to your choice of enhanced corridor or
standard corridor factors. If you choose this option, your
death benefit will be calculated using the factors shown in
Appendix D attached to this supplement.
3. Monthly Deduction Option
After August 1, 2000*, current owners have the option of
choosing which subdivisions to use for monthly deductions. The
monthly deduction will continue to be deducted from the
subdivisions and from the guaranteed account pro rata on the
basis of the portion of account value in each, unless you choose
to have the monthly deduction taken only from certain
subdivisions by using the Monthly Deduction Endorsement.
The Monthly Deduction Endorsement provides the owner the option
of designating from which subdivisions the monthly deductions
will be taken. If the subdivisions chosen by the owner do not
have sufficient funds, the monthly deduction is made against the
account value in each subdivision of the variable account and
the guaranteed account in proportion to the total amounts in
those subdivisions. This endorsement can be added at any time,
and the owner can change the designated subdivisions upon
written notice to us.
* These options are subject to state insurance department
approval. Check with your registered representative about
availability in your state of residence.
CLA Supplement page 2
<PAGE>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT CASH VALUE ACCUMULATION TEST
$5,000 ANNUAL PREMIUM USING CURRENT CHARGES
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- --------------------- --------------------
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return of
END INTEREST -------------------- -------------------- --------------------
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,250 400,000 400,000 400,000 3,849 4,105 4,361 749 1,005 1,261
2 10,763 400,000 400,000 400,000 7,592 8,341 9,122 4,422 5,171 5,952
3 16,551 400,000 400,000 400,000 11,231 12,717 14,327 8,061 9,547 11,157
4 22,628 400,000 400,000 400,000 14,759 17,230 20,014 11,589 14,060 16,844
5 29,010 400,000 400,000 400,000 18,181 21,890 26,240 15,011 18,720 23,070
6 35,710 400,000 400,000 400,000 21,500 26,707 33,063 18,647 23,854 30,210
7 42,746 400,000 400,000 400,000 24,722 31,694 40,554 22,186 29,158 38,018
8 50,133 400,000 400,000 400,000 27,851 36,860 48,787 25,632 34,641 46,568
9 57,889 400,000 400,000 400,000 30,885 42,214 57,841 28,983 40,312 55,939
10 66,034 400,000 400,000 400,000 33,821 47,759 67,802 32,236 46,174 66,217
11 74,586 400,000 400,000 400,000 36,847 53,779 79,166 35,579 52,511 77,898
12 83,565 400,000 400,000 400,000 39,778 60,045 91,742 38,827 59,094 90,791
13 92,993 400,000 400,000 400,000 42,604 66,562 105,662 41,970 65,928 105,028
14 102,893 400,000 400,000 400,000 45,320 73,339 121,079 45,003 73,022 120,762
15 113,287 400,000 400,000 400,000 47,914 80,381 138,160 47,914 80,381 138,160
20 173,596 400,000 400,000 512,768 60,237 121,428 256,606 60,237 121,428 256,606
25 250,567 400,000 400,000 783,370 68,219 171,416 448,762 68,219 171,416 448,762
30 348,804 400,000 400,000 1,173,968 70,188 233,337 758,538 70,188 233,337 758,538
</TABLE>
Notes concerning this illustration:
(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
$5.00 per month, 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 -
1.516%, 4.393%, and 10.302% respectively, during the first ten policy
years, and -1.023%, 4.916%, and 10.855% 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 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.
CLA Supplement page 3
<PAGE>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT CASH VALUE ACCUMULATION TEST
$5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- --------------------- --------------------
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return of
END INTEREST -------------------- --------------------- --------------------
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,250 400,000 400,000 400,000 3,410 3,648 3,887 310 548 787
2 10,763 400,000 400,000 400,000 6,885 7,578 8,300 3,715 4,408 5,130
3 16,551 400,000 400,000 400,000 10,246 11,619 13,107 7,076 8,449 9,937
4 22,628 400,000 400,000 400,000 13,485 15,767 18,339 10,315 12,597 15,169
5 29,010 400,000 400,000 400,000 16,605 20,028 24,044 13,435 16,858 20,874
6 35,710 400,000 400,000 400,000 19,593 24,394 30,258 16,740 21,541 27,405
7 42,746 400,000 400,000 400,000 22,445 28,865 37,032 19,909 26,329 34,496
8 50,133 400,000 400,000 400,000 25,157 33,441 44,423 22,938 31,222 42,204
9 57,889 400,000 400,000 400,000 27,723 38,122 52,493 25,821 36,220 50,591
10 66,034 400,000 400,000 400,000 30,134 42,901 61,306 28,549 41,316 59,721
11 74,586 400,000 400,000 400,000 32,650 48,129 71,415 31,382 46,861 70,147
12 83,565 400,000 400,000 400,000 34,994 53,485 82,528 34,043 52,534 81,577
13 92,993 400,000 400,000 400,000 37,142 58,955 94,746 36,508 58,321 94,112
14 102,893 400,000 400,000 400,000 39,077 64,532 108,193 38,760 64,215 107,876
15 113,287 400,000 400,000 400,000 40,768 70,196 122,998 40,768 70,196 122,998
20 173,596 400,000 400,000 446,927 44,779 99,465 223,657 44,779 99,465 223,657
25 250,567 400,000 400,000 666,408 37,932 128,614 381,759 37,932 128,614 381,759
30 348,804 400,000 400,000 960,162 10,905 152,888 620,391 10,905 152,888 620,391
</TABLE>
Notes concerning this illustration:
(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 -
1.516%, 4.393%, and 10.302% respectively, during the first ten policy
years, and -1.023%, 4.916%, and 10.855% 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 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.
CLA Supplement page 4
<PAGE>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT CASH VALUE ACCUMULATION TEST
$5,000 ANNUAL PREMIUM USING CURRENT CHARGES
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- --------------------
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return of
END INTEREST -------------------- -------------------- --------------------
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,250 403,840 404,095 404,351 3,840 4,095 4,351 740 995 1,251
2 10,763 407,565 408,311 409,089 7,565 8,311 9,089 4,395 5,141 5,919
3 16,551 411,176 412,654 414,255 11,176 12,654 14,255 8,006 9,484 11,085
4 22,628 414,666 417,119 419,883 14,666 17,119 19,883 11,496 13,949 16,713
5 29,010 418,039 421,714 426,023 18,039 21,714 26,023 14,869 18,544 22,853
6 35,710 421,296 426,444 432,276 21,296 26,444 32,276 18,443 23,591 29,423
7 42,746 424,446 431,322 400,000 24,446 31,322 40,058 21,910 28,786 37,522
8 50,133 427,487 436,352 448,083 27,487 36,352 48,083 25,268 34,133 45,864
9 57,889 430,422 441,541 456,870 30,422 41,541 56,870 28,520 39,639 54,968
10 66,034 433,244 446,888 466,491 33,244 46,888 66,491 31,659 45,303 64,906
11 74,586 436,138 452,665 477,420 36,138 52,665 77,420 34,870 51,397 76,152
12 83,565 438,918 458,640 489,447 38,918 58,640 89,447 37,967 57,689 88,496
13 92,993 441,574 464,809 502,678 41,574 64,809 102,678 40,940 64,175 102,044
14 102,893 444,098 471,174 517,235 44,098 71,174 117,235 43,781 70,857 116,918
15 113,287 446,475 477,727 533,246 46,475 77,727 133,246 46,475 77,727 133,246
20 173,596 457,480 400,000 643,063 57,480 115,179 243,063 57,480 115,179 243,063
25 250,567 463,161 557,291 820,635 63,161 157,291 420,635 63,161 157,291 420,635
30 348,804 461,480 602,712 1,108,751 61,480 202,712 708,751 61,480 202,712 708,751
</TABLE>
Notes concerning this illustration:
(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
$5.00 per month, 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 -
1.516%, 4.393%, and 10.302% respectively, during the first ten policy
years, and -1.023%, 4.916%, and 10.855%.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 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.
CLA Supplement page 5
<PAGE>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT CASH VALUE ACCUMULATION TEST
$5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- ---------------------
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return of
END INTEREST -------------------- -------------------- ---------------------
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,250 403,401 403,638 403,876 3,401 3,638 3,876 301 538 776
2 10,763 406,857 407,547 408,267 6,857 7,547 8,267 3,687 4,377 5,097
3 16,551 410,190 411,555 413,034 10,190 11,555 13,034 7,020 8,385 9,864
4 22,628 413,390 415,653 418,204 13,390 15,653 18,204 10,220 12,483 15,034
5 29,010 416,458 419,845 423,819 16,458 19,845 23,819 13,288 16,675 20,649
6 35,710 419,381 424,120 429,907 19,381 24,120 29,907 16,528 21,267 27,054
7 42,746 422,153 428,473 400,000 22,153 28,473 36,510 19,617 25,937 33,974
8 50,133 424,768 432,899 443,671 24,768 32,899 43,671 22,549 30,680 41,452
9 57,889 427,221 437,393 451,440 27,221 37,393 51,440 25,319 35,491 49,538
10 66,034 429,498 441,941 459,863 29,498 41,941 59,863 27,913 40,356 58,278
11 74,586 431,856 446,881 469,460 31,856 46,881 69,460 30,588 45,613 68,192
12 83,565 434,014 451,883 479,913 34,014 51,883 79,913 33,063 50,932 78,962
13 92,993 435,948 456,923 491,287 35,948 56,923 91,287 35,314 56,289 90,653
14 102,893 437,635 461,976 503,654 37,635 61,976 103,654 37,318 61,659 103,337
15 113,287 439,042 467,007 517,087 39,042 67,007 117,087 39,042 67,007 117,087
20 173,596 440,981 400,000 603,549 40,981 90,700 203,549 40,981 90,700 203,549
25 250,567 430,886 507,152 732,726 30,886 107,152 332,726 30,886 107,152 332,726
30 348,804 400,588 504,303 921,908 588 104,303 521,908 588 104,393 521,908
</TABLE>
Notes concerning this illustration:
(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 -
1.516%, 4.393%, and 10.302% respectively, during the first ten policy
years, and -1.023%, 4.916%, and 10.855% 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 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.
CLA Supplement page 6
<PAGE>
<TABLE>
<CAPTION>
APPENDIX C
TABLE OF CASH VALUE ACCUMULATION TEST FACTORS
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
0 10.31 12.33 12.91 14.40 10.94 12.69
1 10.30 12.43 12.84 14.39 10.93 12.78
2 10.00 12.10 12.47 14.00 10.62 12.44
3 9.70 11.76 12.11 13.60 10.30 12.09
4 9.41 11.43 11.74 13.21 9.98 11.74
5 9.12 11.10 11.38 12.82 9.68 11.40
6 8.83 10.76 11.03 12.43 9.37 11.06
7 8.55 10.44 10.68 12.05 9.07 10.72
8 8.27 10.11 10.34 11.68 8.78 10.39
9 7.99 9.79 10.01 11.32 8.49 10.06
10 7.73 9.47 9.68 10.96 8.20 9.73
11 7.46 9.16 9.36 10.61 7.93 9.42
12 7.21 8.86 9.05 10.26 7.66 9.11
13 6.97 8.58 8.76 9.93 7.40 8.82
14 6.74 8.31 8.47 9.62 7.16 8.54
15 6.52 8.06 8.19 9.31 6.93 8.28
16 6.33 7.82 7.93 9.01 6.72 8.03
17 6.15 7.59 7.67 8.73 6.52 7.79
18 5.97 7.37 7.43 8.45 6.33 7.56
19 5.80 7.16 7.19 8.18 6.15 7.34
20 5.64 6.95 6.96 7.92 5.97 7.13
21 5.48 6.75 6.74 7.67 5.80 6.92
22 5.32 6.55 6.53 7.42 5.63 6.71
23 5.17 6.36 6.32 7.18 5.47 6.51
24 5.02 6.17 6.11 6.95 5.30 6.31
25 4.87 5.98 5.91 6.73 5.14 6.11
26 4.72 5.79 5.72 6.51 4.98 5.92
27 4.57 5.60 5.54 6.30 4.83 5.73
28 4.43 5.42 5.36 6.09 4.67 5.55
29 4.29 5.25 5.18 5.89 4.53 5.37
30 4.15 5.08 5.01 5.70 4.38 5.19
31 4.01 4.91 4.85 5.51 4.24 5.02
32 3.88 4.75 4.69 5.33 4.10 4.85
33 3.76 4.59 4.54 5.15 3.97 4.69
34 3.64 4.44 4.39 4.98 3.84 4.54
35 3.52 4.29 4.25 4.81 3.72 4.39
36 3.41 4.15 4.11 4.65 3.60 4.24
37 3.30 4.01 3.98 4.50 3.48 4.10
38 3.19 3.88 3.85 4.35 3.37 3.96
39 3.09 3.75 3.73 4.21 3.26 3.83
40 2.99 3.63 3.61 4.07 3.16 3.71
41 2.90 3.51 3.50 3.94 3.06 3.59
42 2.81 3.39 3.39 3.81 2.97 3.47
43 2.73 3.28 3.29 3.69 2.88 3.36
44 2.65 3.18 3.19 3.57 2.79 3.25
45 2.57 3.07 3.10 3.46 2.71 3.14
46 2.49 2.98 3.00 3.35 2.63 3.04
47 2.42 2.88 2.92 3.25 2.56 2.95
48 2.35 2.79 2.83 3.15 2.48 2.86
</TABLE>
CLA Supplement page 7
<TABLE>
<CAPTION>
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
49 2.29 2.70 2.75 3.05 2.41 2.77
50 2.22 2.62 2.67 2.95 2.35 2.68
51 2.16 2.54 2.60 2.86 2.28 2.60
52 2.10 2.46 2.53 2.78 2.22 2.52
53 2.05 2.39 2.46 2.69 2.16 2.44
54 1.99 2.31 2.39 2.61 2.10 2.37
55 1.94 2.24 2.33 2.53 2.05 2.30
56 1.89 2.18 2.26 2.46 2.00 2.23
57 1.85 2.12 2.20 2.39 1.95 2.17
58 1.80 2.06 2.15 2.32 1.90 2.10
59 1.76 2.00 2.09 2.25 1.86 2.04
60 1.72 1.94 2.04 2.18 1.82 1.99
61 1.68 1.89 1.98 2.12 1.77 1.93
62 1.65 1.84 1.93 2.06 1.73 1.88
63 1.61 1.79 1.88 2.00 1.70 1.83
64 1.58 1.75 1.83 1.94 1.66 1.78
65 1.55 1.70 1.79 1.89 1.63 1.74
66 1.52 1.66 1.74 1.84 1.59 1.69
67 1.49 1.62 1.70 1.79 1.56 1.65
68 1.46 1.58 1.66 1.74 1.53 1.61
69 1.43 1.55 1.63 1.70 1.50 1.58
70 1.41 1.51 1.59 1.65 1.48 1.54
71 1.39 1.48 1.55 1.61 1.45 1.51
72 1.36 1.45 1.52 1.57 1.43 1.48
73 1.34 1.42 1.48 1.53 1.40 1.45
74 1.32 1.39 1.45 1.50 1.38 1.42
75 1.30 1.37 1.42 1.46 1.36 1.39
76 1.29 1.34 1.39 1.43 1.34 1.36
77 1.27 1.32 1.37 1.40 1.32 1.34
78 1.25 1.30 1.34 1.37 1.31 1.32
79 1.24 1.28 1.32 1.35 1.29 1.30
80 1.23 1.26 1.30 1.32 1.27 1.28
81 1.21 1.24 1.28 1.30 1.26 1.26
82 1.20 1.23 1.26 1.27 1.24 1.24
83 1.19 1.21 1.24 1.25 1.23 1.22
84 1.18 1.20 1.22 1.23 1.22 1.21
85 1.17 1.18 1.20 1.21 1.20 1.19
86 1.16 1.17 1.19 1.20 1.19 1.18
87 1.15 1.16 1.18 1.18 1.18 1.17
88 1.14 1.15 1.16 1.17 1.17 1.15
89 1.13 1.14 1.15 1.15 1.16 1.14
90 1.12 1.13 1.14 1.14 1.15 1.13
91 1.12 1.12 1.13 1.13 1.14 1.12
92 1.11 1.11 1.11 1.11 1.13 1.11
93 1.10 1.10 1.10 1.10 1.12 1.10
94 1.09 1.09 1.09 1.09 1.11 1.09
95 1.07 1.07 1.08 1.08 1.10 1.08
96 1.06 1.06 1.06 1.06 1.08 1.06
97 1.05 1.05 1.05 1.05 1.07 1.05
98 1.03 1.03 1.03 1.03 1.05 1.03
99 1.02 1.02 1.02 1.02 1.04 1.02
</TABLE>
CLA Supplement page 8
<TABLE>
<CAPTION>
APPENDIX D
ENHANCED DEATH BENEFIT OPTION TABLES
Nine Year Corridor-Guideline Premium Test
ATTAINED ATTAINED
AGE PERCENTAGE AGE PERCENTAGE
<S> <C> <S> <C>
41 243.00% 71 113.00%
42 236.00 72 111.00
43 229.00 73 109.00
44 222.00 74 107.00
45 215.00 75 105.00
46 209.00 76 105.00
47 203.00 77 105.00
48 197.00 78 105.00
49 191.00 79 105.00
50 185.00 80 105.00
51 178.00 81 109.20
52 171.00 82 113.40
53 164.00 83 117.60
54 157.00 84 121.80
55 150.00 85 126.00
56 146.00 86 121.80
57 142.00 87 117.60
58 138.00 88 113.40
59 134.00 89 109.20
60 130.00 90 105.00
61 128.00 91 104.00
62 126.00 92 103.00
63 124.00 93 102.00
64 122.00 94 101.00
65 120.00 95 and over 100.00
66 119.00
67 118.00
68 117.00
69 116.00
70 115.00
</TABLE>
CLA Supplement page 9
<TABLE>
<CAPTION>
Fifteen year corridor-Guideline Premium Test
ATTAINED ATTAINED
AGE PERCENTAGE AGE PERCENTAGE
<S> <C> <C> <C>
41 243.00% 71 113.00%
42 236.00 72 111.00
43 229.00 73 109.00
44 222.00 74 107.00
45 215.00 75 105.00
46 209.00 76 105.00
47 203.00 77 105.00
48 197.00 78 107.63
49 191.00 79 110.25
50 185.00 80 112.88
51 178.00 81 115.50
52 171.00 82 118.13
53 164.00 83 120.75
54 157.00 84 123.38
55 150.00 85 126.00
56 146.00 86 123.38
57 142.00 87 120.75
58 138.00 88 118.13
59 134.00 89 115.50
60 130.00 90 112.88
61 128.00 91 109.20
62 126.00 92 105.58
63 124.00 93 102.00
64 122.00 94 101.00
65 120.00 95 and over 100.00
66 119.00
67 118.00
68 117.00
69 116.00
70 115.00
</TABLE>
CLA Supplement page 10
<PAGE>
<TABLE>
<CAPTION>
Nine Year Corridor-Cash Value Accumulation Test
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
0 10.31 12.33 12.91 14.40 10.94 12.69
1 10.30 12.43 12.84 14.39 10.93 12.78
2 10.00 12.10 12.47 14.00 10.62 12.44
3 9.70 11.76 12.11 13.60 10.30 12.09
4 9.41 11.43 11.74 13.21 9.98 11.74
5 9.12 11.10 11.38 12.82 9.68 11.40
6 8.83 10.76 11.03 12.43 9.37 11.06
7 8.55 10.44 10.68 12.05 9.07 10.72
8 8.27 10.11 10.34 11.68 8.78 10.39
9 7.99 9.79 10.01 11.32 8.49 10.06
10 7.73 9.47 9.68 10.96 8.20 9.73
11 7.46 9.16 9.36 10.61 7.93 9.42
12 7.21 8.86 9.05 10.26 7.66 9.11
13 6.97 8.58 8.76 9.93 7.40 8.82
14 6.74 8.31 8.47 9.62 7.16 8.54
15 6.52 8.06 8.19 9.31 6.93 8.28
16 6.33 7.82 7.93 9.01 6.72 8.03
17 6.15 7.59 7.67 8.73 6.52 7.79
18 5.97 7.37 7.43 8.45 6.33 7.56
19 5.80 7.16 7.19 8.18 6.15 7.34
20 5.64 6.95 6.96 7.92 5.97 7.13
21 5.48 6.75 6.74 7.67 5.80 6.92
22 5.32 6.55 6.53 7.42 5.63 6.71
23 5.17 6.36 6.32 7.18 5.47 6.51
24 5.02 6.17 6.11 6.95 5.30 6.31
25 4.87 5.98 5.91 6.73 5.14 6.11
26 4.72 5.79 5.72 6.51 4.98 5.92
27 4.57 5.60 5.54 6.30 4.83 5.73
28 4.43 5.42 5.36 6.09 4.67 5.55
29 4.29 5.25 5.18 5.89 4.53 5.37
30 4.15 5.08 5.01 5.70 4.38 5.19
31 4.01 4.91 4.85 5.51 4.24 5.02
32 3.88 4.75 4.69 5.33 4.10 4.85
33 3.76 4.59 4.54 5.15 3.97 4.69
34 3.64 4.44 4.39 4.98 3.84 4.54
35 3.52 4.29 4.25 4.81 3.72 4.39
36 3.41 4.15 4.11 4.65 3.60 4.24
37 3.30 4.01 3.98 4.50 3.48 4.10
38 3.19 3.88 3.85 4.35 3.37 3.96
39 3.09 3.75 3.73 4.21 3.26 3.83
40 2.99 3.63 3.61 4.07 3.16 3.71
41 2.90 3.51 3.50 3.94 3.06 3.59
42 2.81 3.39 3.39 3.81 2.97 3.47
43 2.73 3.28 3.29 3.69 2.88 3.36
44 2.65 3.18 3.19 3.57 2.79 3.25
45 2.57 3.07 3.10 3.46 2.71 3.14
46 2.49 2.98 3.00 3.35 2.63 3.04
47 2.42 2.88 2.92 3.25 2.56 2.95
48 2.35 2.79 2.83 3.15 2.48 2.86
49 2.29 2.70 2.75 3.05 2.41 2.77
</TABLE>
CLA Supplement page 11
<PAGE>
<TABLE>
<CAPTION>
Nine Year Corridor-Cash Value Accumulation Test
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
50 2.22 2.62 2.67 2.95 2.35 2.68
51 2.16 2.54 2.60 2.86 2.28 2.60
52 2.10 2.46 2.53 2.78 2.22 2.52
53 2.05 2.39 2.46 2.69 2.16 2.44
54 1.99 2.31 2.39 2.61 2.10 2.37
55 1.94 2.24 2.33 2.53 2.05 2.30
56 1.89 2.18 2.26 2.46 2.00 2.23
57 1.85 2.12 2.20 2.39 1.95 2.17
58 1.80 2.06 2.15 2.32 1.90 2.10
59 1.76 2.00 2.09 2.25 1.86 2.04
60 1.72 1.94 2.04 2.18 1.82 1.99
61 1.68 1.89 1.98 2.12 1.77 1.93
62 1.65 1.84 1.93 2.06 1.73 1.88
63 1.61 1.79 1.88 2.00 1.70 1.83
64 1.58 1.75 1.83 1.94 1.66 1.78
65 1.55 1.70 1.79 1.89 1.63 1.74
66 1.52 1.66 1.74 1.84 1.59 1.69
67 1.49 1.62 1.70 1.79 1.56 1.65
68 1.46 1.58 1.66 1.74 1.53 1.61
69 1.43 1.55 1.63 1.70 1.50 1.58
70 1.41 1.51 1.59 1.65 1.48 1.54
71 1.39 1.48 1.55 1.61 1.45 1.51
72 1.36 1.45 1.52 1.57 1.43 1.48
73 1.34 1.42 1.48 1.53 1.40 1.45
74 1.32 1.39 1.45 1.50 1.38 1.42
75 1.30 1.37 1.42 1.46 1.36 1.39
76 1.29 1.34 1.39 1.43 1.34 1.36
77 1.27 1.32 1.37 1.40 1.32 1.34
78 1.25 1.30 1.34 1.37 1.31 1.32
79 1.24 1.28 1.32 1.35 1.29 1.30
80 1.23 1.26 1.30 1.32 1.27 1.28
81 1.26 1.29 1.33 1.35 1.31 1.31
82 1.30 1.33 1.36 1.38 1.34 1.34
83 1.33 1.36 1.39 1.40 1.38 1.37
84 1.37 1.39 1.42 1.43 1.41 1.40
85 1.40 1.42 1.45 1.46 1.45 1.43
86 1.34 1.36 1.38 1.39 1.38 1.37
87 1.29 1.30 1.32 1.32 1.32 1.31
88 1.23 1.24 1.26 1.26 1.27 1.25
89 1.18 1.18 1.20 1.20 1.21 1.19
90 1.12 1.13 1.14 1.14 1.15 1.13
91 1.12 1.12 1.13 1.13 1.14 1.12
92 1.11 1.11 1.11 1.11 1.13 1.11
93 1.10 1.10 1.10 1.10 1.12 1.10
94 1.09 1.09 1.09 1.09 1.11 1.09
95 1.07 1.07 1.08 1.08 1.10 1.08
96 1.06 1.06 1.06 1.06 1.08 1.06
97 1.05 1.05 1.05 1.05 1.07 1.05
98 1.03 1.03 1.03 1.03 1.05 1.03
99 1.02 1.02 1.02 1.02 1.04 1.02
</TABLE>
CLA Supplement page 12
<PAGE>
<TABLE>
<CAPTION>
Fifteen Year Corridor-Cash Value Accumulation Test
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
0 10.31 12.33 12.91 14.40 10.94 12.69
1 10.30 12.43 12.84 14.39 10.93 12.78
2 10.00 12.10 12.47 14.00 10.62 12.44
3 9.70 11.76 12.11 13.60 10.30 12.09
4 9.41 11.43 11.74 13.21 9.98 11.74
5 9.12 11.10 11.38 12.82 9.68 11.40
6 8.83 10.76 11.03 12.43 9.37 11.06
7 8.55 10.44 10.68 12.05 9.07 10.72
8 8.27 10.11 10.34 11.68 8.78 10.39
9 7.99 9.79 10.01 11.32 8.49 10.06
10 7.73 9.47 9.68 10.96 8.20 9.73
11 7.46 9.16 9.36 10.61 7.93 9.42
12 7.21 8.86 9.05 10.26 7.66 9.11
13 6.97 8.58 8.76 9.93 7.40 8.82
14 6.74 8.31 8.47 9.62 7.16 8.54
15 6.52 8.06 8.19 9.31 6.93 8.28
16 6.33 7.82 7.93 9.01 6.72 8.03
17 6.15 7.59 7.67 8.73 6.52 7.79
18 5.97 7.37 7.43 8.45 6.33 7.56
19 5.80 7.16 7.19 8.18 6.15 7.34
20 5.64 6.95 6.96 7.92 5.97 7.13
21 5.48 6.75 6.74 7.67 5.80 6.92
22 5.32 6.55 6.53 7.42 5.63 6.71
23 5.17 6.36 6.32 7.18 5.47 6.51
24 5.02 6.17 6.11 6.95 5.30 6.31
25 4.87 5.98 5.91 6.73 5.14 6.11
26 4.72 5.79 5.72 6.51 4.98 5.92
27 4.57 5.60 5.54 6.30 4.83 5.73
28 4.43 5.42 5.36 6.09 4.67 5.55
29 4.29 5.25 5.18 5.89 4.53 5.37
30 4.15 5.08 5.01 5.70 4.38 5.19
31 4.01 4.91 4.85 5.51 4.24 5.02
32 3.88 4.75 4.69 5.33 4.10 4.85
33 3.76 4.59 4.54 5.15 3.97 4.69
34 3.64 4.44 4.39 4.98 3.84 4.54
35 3.52 4.29 4.25 4.81 3.72 4.39
36 3.41 4.15 4.11 4.65 3.60 4.24
37 3.30 4.01 3.98 4.50 3.48 4.10
38 3.19 3.88 3.85 4.35 3.37 3.96
39 3.09 3.75 3.73 4.21 3.26 3.83
40 2.99 3.63 3.61 4.07 3.16 3.71
41 2.90 3.51 3.50 3.94 3.06 3.59
42 2.81 3.39 3.39 3.81 2.97 3.47
43 2.73 3.28 3.29 3.69 2.88 3.36
44 2.65 3.18 3.19 3.57 2.79 3.25
45 2.57 3.07 3.10 3.46 2.71 3.14
46 2.49 2.98 3.00 3.35 2.63 3.04
47 2.42 2.88 2.92 3.25 2.56 2.95
48 2.35 2.79 2.83 3.15 2.48 2.86
49 2.29 2.70 2.75 3.05 2.41 2.77
</TABLE>
CLA Supplement page 13
<PAGE>
<TABLE>
<CAPTION>
Fifteen Year Corridor-Cash Value Accumulation Test
Attained Male Male Female Female Unisex Unisex
Age Smoker Nonsmoker Smoker Nonsmoker Smoker Nonsmoker
<S> <C> <C> <C> <C> <C> <C>
50 2.22 2.62 2.67 2.95 2.35 2.68
51 2.16 2.54 2.60 2.86 2.28 2.60
52 2.10 2.46 2.53 2.78 2.22 2.52
53 2.05 2.39 2.46 2.69 2.16 2.44
54 1.99 2.31 2.39 2.61 2.10 2.37
55 1.94 2.24 2.33 2.53 2.05 2.30
56 1.89 2.18 2.26 2.46 2.00 2.23
57 1.85 2.12 2.20 2.39 1.95 2.17
58 1.80 2.06 2.15 2.32 1.90 2.10
59 1.76 2.00 2.09 2.25 1.86 2.04
60 1.72 1.94 2.04 2.18 1.82 1.99
61 1.68 1.89 1.98 2.12 1.77 1.93
62 1.65 1.84 1.93 2.06 1.73 1.88
63 1.61 1.79 1.88 2.00 1.70 1.83
64 1.58 1.75 1.83 1.94 1.66 1.78
65 1.55 1.70 1.79 1.89 1.63 1.74
66 1.52 1.66 1.74 1.84 1.59 1.69
67 1.49 1.62 1.70 1.79 1.56 1.65
68 1.46 1.58 1.66 1.74 1.53 1.61
69 1.43 1.55 1.63 1.70 1.50 1.58
70 1.41 1.51 1.59 1.65 1.48 1.54
71 1.39 1.48 1.55 1.61 1.45 1.51
72 1.36 1.45 1.52 1.57 1.43 1.48
73 1.34 1.42 1.48 1.53 1.40 1.45
74 1.32 1.39 1.45 1.50 1.38 1.42
75 1.30 1.37 1.42 1.46 1.36 1.39
76 1.29 1.34 1.39 1.43 1.34 1.36
77 1.27 1.32 1.37 1.40 1.32 1.34
78 1.29 1.33 1.38 1.41 1.34 1.35
79 1.30 1.35 1.39 1.41 1.35 1.36
80 1.32 1.36 1.40 1.42 1.37 1.37
81 1.33 1.37 1.40 1.43 1.38 1.38
82 1.35 1.38 1.41 1.43 1.40 1.39
83 1.37 1.39 1.42 1.44 1.41 1.41
84 1.38 1.41 1.43 1.45 1.43 1.42
85 1.40 1.42 1.45 1.46 1.45 1.43
86 1.36 1.38 1.40 1.41 1.40 1.38
87 1.32 1.33 1.35 1.36 1.36 1.34
88 1.28 1.29 1.31 1.31 1.32 1.30
89 1.25 1.25 1.26 1.27 1.28 1.26
90 1.21 1.21 1.22 1.23 1.24 1.22
91 1.17 1.17 1.18 1.18 1.20 1.18
92 1.13 1.14 1.14 1.14 1.16 1.14
93 1.10 1.10 1.10 1.10 1.12 1.10
94 1.09 1.09 1.09 1.09 1.11 1.09
95 1.07 1.07 1.08 1.08 1.10 1.08
96 1.06 1.06 1.06 1.06 1.08 1.06
97 1.05 1.05 1.05 1.05 1.07 1.05
98 1.03 1.03 1.03 1.03 1.05 1.03
99 1.02 1.02 1.02 1.02 1.04 1.02
</TABLE>
CLA Supplement page 14
<PAGE> PROSPECTUS
Individual Flexible Premium Variable Universal Life Insurance
Policies
---------------------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
CARILLON LIFE ACCOUNT
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 offered by The Union
Central Life Insurance Company. Under this policy, we insure
the life of the person you specify, and give you flexibility in
the death benefit, and amount and timing of your premium
payments. With this flexibility, you can provide for your
changing insurance needs under a single policy.
You can allocate net premiums to one or more subdivisions of the
variable account, to the guaranteed account, or to both. If you
allocate net premiums to the variable account, we will deposit
them in subaccounts of the Carillon Life Account in proportions
that you specify. We invest the assets of each subaccount in a
corresponding portfolio of Summit Mutual Funds, Inc., Scudder
Variable Life Investment Fund, AIM Variable Insurance Funds,
Inc., MFS Variable Insurance Trust, Franklin Templeton Variable
Insurance Products Trust, American Century Variable Portfolios,
Inc, Oppenheimer Variable Account Funds, and Neuberger Berman
Advisers Management Trust. To learn more about the portfolios,
see their accompanying prospectuses.
<TABLE>
<C> <C>
Summit Pinnacle Balanced Index Portfolio MFS Total Return SeriesHigh Income Series
Summit Pinnacle Zenith Portfolio MFS Growth With Income Series
Summit Pinnacle Bond Portfolio MFS High Income Series
Summit Pinnacle S&P 500 Index Portfolio MFS Emerging Growth Series
Summit Pinnacle S&P MidCap 400 Index Portfolio MFS New Discovery Series
Summit Pinnacle Nasdaq-100 Index Portfolio Neuberger Berman AMT Guardian Portfolio
Summit PinnacleRussell 2000 Small Cap Index Portfolio Oppenheimer Global Securities Portfolio
AIM V.I. Capital Appreciation Fund Oppenheimer Main Street Growth & Income Portfolio
AIM V.I. Growth Fund Scudder Capital Growth Portfoli Class A
American Century Income & Growth Portfolio Scudder International Portfolio Class A
American Century VP Value Portfolio Scudder Money Market Portfolio
Templeton International Securities Fund Class 2
(Previously Templeton International Fund)
</TABLE>
Each of these portfolios is available through a subaccount.
This prospectus generally describes the variable account. For a
brief summary of the guaranteed account, see "The Guaranteed
Account," page 18. THERE ARE LIMITS ON TRANSFERS FROM THE
GUARANTEED ACCOUNT.
You can select from two death benefit options available under
the policy: a level death benefit ("Option A"), or a death
benefit that includes the account value ("Option B"). We
guarantee to keep the policy in force as long as you meet the
minimum monthly premium requirement and other conditions. We
also allow policy loans and partial cash surrenders, within
limits.
The policy provides for a cash surrender value that we will pay
to you if you surrender your policy. If you allocate net
premiums to the variable account, the cash surrender value will
depend on the investment performance of the portfolios. We do
not guarantee a minimum cash surrender value.
If you already have life insurance, it might not be to your
advantage to replace it with this policy. Within certain
limits, you may return the policy, or convert it to a policy
that provides benefits that do not depend on investment results.
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 risk that you could lose
your premium payments.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities, or passed upon the accuracy or adequacy of this
prospectus. It is a criminal offense to state otherwise.
The Date of this Prospectus is May 1, 2000
<PAGE>
<PAGE>
PROSPECTUS CONTENTS
---------------------------------------------------------------
Page
SPECIAL TERMS.................................................4
SUMMARY AND DIAGRAM OF THE POLICY.............................4
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
PREMIUM PAYMENTS AND ALLOCATIONS.............................13
Applying for a Policy...................................13
Purchase of the Policy for Specialized Purposes.........13
Free Look Right to Cancel the Policy....................14
Premiums................................................14
Net Premium Allocations.................................15
Crediting Net Premiums..................................15
Transfer Privilege......................................16
Dollar Cost Averaging Plan..............................17
Portfolio Rebalancing Plan..............................17
Earnings Sweep Plan ....................................17
GUARANTEED ACCOUNT...........................................18
Minimum Guaranteed and Current Interest Rates ..........18
Calculation of Guaranteed Account Value.................18
Transfers from the Guaranteed Account...................18
Payment Deferral from the Guaranteed Account............18
CHARGES AND DEDUCTIONS.......................................18
Premium Expense Charge..................................19
Monthly Deduction.......................................19
Daily Mortality and Expense Risk Charge.................20
Transfer Charge.........................................21
Surrender Charge........................................21
Fund Expenses...........................................22
Cost of Additional Benefits Provided by Riders..........22
Income Tax Charge.......................................22
Special Arrangements....................................22
HOW YOUR ACCOUNT VALUES VARY.................................23
Determining the Account Value...........................23
Cash Value..............................................24
Cash Surrender Value ...................................24
DEATH BENEFIT AND CHANGES IN SPECIFIED AMOUNT................24
Amount of Death Benefit Proceeds........................24
Death Benefit Options...................................25
Initial Specified Amount and Death Benefit Option.......25
Changes in Death Benefit Option.........................25
Changes in Specified Amount.............................25
Selecting and Changing the Beneficiary..................26
CASH BENEFITS................................................26
Loans...................................................26
Surrendering the Policy for Cash Surrender Value........27
Partial Cash Surrenders.................................27
Maturity Benefit........................................28
Payment Options.........................................28
ILLUSTRATIONS OF ACCOUNT VALUES, CASH SURRENDER VALUES,
DEATH BENEFITS AND ACCUMULATED PREMIUM PAYMENTS........28
OTHER POLICY BENEFITS AND PROVISIONS.........................37
Limits on Rights to Contest the Policy..................37
Changes in the Policy or Benefit........................37
When Proceeds Are Paid..................................37
Reports to Policy Owners................................37
Assignment..............................................37
Reinstatement ..........................................38
Supplemental and/or Rider Benefits......................38
Addition, Deletion or Substitution of Investments.......39
Voting Rights ..........................................39
Participating...........................................40
State Variations........................................40
TAX CONSIDERATIONS...........................................40
Tax Status of Policy....................................40
Treatment of Policy Benefits............................41
Possible Charge for Union Central's Taxes ..............42
OTHER INFORMATION ABOUT THE POLICIES AND UNION CENTRAL.......42
Sale of the Policies ...................................42
Union Central Directors and Executive Officers..........42
State Regulation .......................................42
Additional Information..................................42
Experts.................................................42
Actuarial Matters.......................................43
Litigation..............................................43
Legal Matters ..........................................43
Financial Statements....................................43
APPENDIX A...................................................97
APPENDIX B...................................................98
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY PLACE
WHERE IT WOULD BE ILLEGAL TO MAKE IT. WE HAVE NOT AUTHORIZED ANY
PERSON TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE
OFFERING OTHER THAN THOSE IN THIS PROSPECTUS, THE PROSPECTUSES
FOR THE PORTFOLIOS, OR THEIR STATEMENTS OF ADDITIONAL
INFORMATION.
<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 23.
age - The insured's age on his or her nearest birthday.
initial specified amount - The specified amount on the policy
date.
loan account - A part of the guaranteed account. When you take
out a policy loan, we transfer some of your account value to
this account to hold as collateral for the loans.
net premium - A premium payment minus the applicable premium
expense charge. See page 15.
owner, you - The person(s) who owns a policy.
policy debt - The sum of all outstanding policy loans plus
accrued interest.
portfolio - An investment company or its series, in which we
invest premiums allocated to a subaccount of the separate
account.
risk amount - On each 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).
See page 13 for a definition of monthly date.
specified amount - A dollar amount used to determine the death
benefit under a policy. See page 24.
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 the New York Stock Exchange
is 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.
SUMMARY AND DIAGRAM OF THE POLICY
--------------------------------------------------------------
Please read this summary and the diagram that follows together
with the detailed information below. Unless we indicate
otherwise, in describing the policy in this Prospectus, we
assume that the policy is in force and that there is no
outstanding policy debt.
The policy is similar in many ways to fixed-benefit life
insurance. As with fixed-benefit life insurance, you pay
premiums for insurance coverage on a person's life. Also like
fixed-benefit life insurance, the policy provides for
accumulation of net premiums and a cash surrender value that we
will pay if you surrender your policy before the insured person
dies. As with fixed-benefit life insurance, the cash surrender
value during the early policy years is likely to be
substantially lower than the premiums you pay.
However, the policy is different from fixed-benefit life
insurance in several important ways. 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 where you invest your net premiums. Also, we
do not guarantee any minimum cash surrender value. However, we
do guarantee to keep the policy in force during the first three
policy years as long as you meet the minimum monthly premium
requirement. See "Minimum Guaranteed Period," page 14
Otherwise, if the cash surrender value is not enough to pay
charges due, the policy will lapse without value after a grace
period. See "Premium Payments to Prevent Lapse," page 15. If a
policy lapses while loans are outstanding, adverse tax
consequences may result. See "Tax Considerations," page 30.
Purpose of the Policy. We designed the policy to be a long-term
investment that provides insurance benefits. You should
evaluate the policy based on your need for insurance, and the
policy's long-term investment potential. It might not be to
your advantage to replace your existing insurance coverage with
the policy. You should be particularly careful about replacing
your insurance if you base your decision to replace existing
coverage primarily on a comparison of policy illustrations (see
below).
Illustrations. Illustrations that we use in this prospectus or
that are used in connection with the purchase of a policy are
based on hypothetical rates of return. We do not guarantee
these rates. They are illustrative only and you should not
consider them as representing past or future performance.
Actual rates of return may be higher or lower than those
reflected in any illustrations, and therefore, your actual
values will be different from those illustrated.
Tax Considerations. We intend 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
considered a modified endowment contract under the Internal
Revenue Code. For further discussion of the tax status of the
policy and the tax consequences of being treated as a life
insurance contract or a modified endowment contract, see page
40.
Free Look Right to Cancel and Conversion Right. For a limited
time after we issue a policy, you have the right to cancel your
policy and receive a refund. See "Free Look Right to Cancel the
Policy," page 14. Until this "free look" period ends, we 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 15.)
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 paying any transfer fee. This
transfer effectively "converts" the policy into a contract that
provides fixed (non-variable) benefits. See "Conversion Right,"
page 16.
Owner Inquiries. If you have any questions, you may write or
call our 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
you do not have to pay them according to the plan. You can
change the amount and frequency of premiums, and can you
skip planned periodic premiums. See page 14 for rules and
limits.
- There is no minimum initial payment or planned periodic
premium.
- You may make unplanned premium payments, within limits. See
page 14.
- If you pay minimum required premiums, we guarantee to keep
the policy in force for a minimum guaranteed period, the
first three policy years. See page 14.
- Under certain circumstances, which include excessive policy
debt, you may have to pay extra premiums to prevent lapse.
See page 15.
(a down arrow is centered here between blocks)
DEDUCTIONS FROM PREMIUM PAYMENTS
- We deduct sales charges equal to 2% of premium payments.
See page 18.
- We deduct 2.0% of all premiums for state and local premium
taxes. See page 18.
(a down arrow is centered here between blocks)
NET PREMIUMS
- You direct the allocation of net premiums among twenty -three
subdivisions of the variable account and the guaranteed
account. See page 15 for rules and limits on net
allocations.
- The subdivisions are invested in corresponding portfolios of
Summit Mutual Funds, Inc., Scudder Variable Life Investment
Fund, AIM Variable Insurance Funds, Inc., American Century
Variable Portfolios, Inc., MFS Variable Insurance Trust,
Neuberger Berman Advisers Management Trust, Oppenheimer Variable
Account Fund and Templeton Variable Insurance Products Trust.
See page 9. Portfolios available are:
<TABLE>
<C> <C>
Summit Pinnacle Balanced Index Portfolio MFS Total Return SeriesHigh Income Series
Summit Pinnacle Zenith Portfolio MFS Growth With Income Series
Summit Pinnacle Bond Portfolio MFS High Income Series
Summit Pinnacle S&P 500 Index Portfolio MFS Emerging Growth Series
Summit Pinnacle S&P MidCap 400 Index Portfolio MFS New Discovery Series
Summit Pinnacle Nasdaq-100 Index Portfolio Neuberger Berman AMT Guardian Portfolio
Summit PinnacleRussell 2000 Small Cap Index Portfolio Oppenheimer Global Securities Portfolio
AIM V.I. Capital Appreciation Fund Oppenheimer Main Street Growth & Income Portfolio
AIM V.I. Growth Fund Scudder Capital Growth Portfoli Class A
American Century Income & Growth Portfolio Scudder International Portfolio Class A
American Century VP Value Portfolio Scudder Money Market Portfolio
Templeton International Securities Fund Class 2
</TABLE>
- We credit interest on amounts allocated to the guaranteed
account at a guaranteed minimum interest rate of 4%. See page
18 for rules and limits on guaranteed account allocations.
(a down arrow is centered here between blocks)
DEDUCTIONS FROM YOUR ACCOUNT VALUE
- Monthly deduction for cost of insurance, administrative
charge, and charges for any supplemental and/or rider benefits.
The administrative charge is currently $5.00 per month. See
page 19.
DEDUCTIONS FROM VARIABLE SUBDIVISIONS
- We deduct a 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 20.
- The portfolios deduct the following investment advisory fees
and operating expenses from their assets.
<TABLE>
<CAPTION>
Management Other Total
Fees Expenses
Expenses
<S> <C> <C> <C>
Summit Mutual Funds, Inc.
Zenith Portfolio<F1><F7> 0.60% 0.09%
0.69%
Bond Portfolio<F1><F7> 0.47% 0.13%
0.60%
S&P 500 Index Portfolio<F1><F7> 0.30% 0.09%
0.39%
S&P MidCap 400 Index Portfolio<F5> 0.30% 0.30%
0.60%
Balanced Index Portfolio<F5> 0.30% 0.17%
0.47%
Russell 2000 Small Cap Index Portfolio<6> 0.35% 0.40%
0.75%
Nasdaq-100 Index Portfolio<F6> 0.35% 0.30%
0.65%
Scudder Variable Life Investment Fund<F1>
Capital Growth Portfolio Class A 0.46% 0.03%
0.49%
International Portfolio Class A 0.85% 0.18%
1.03%
Money Market Portfolio 0.37% 0.06%
0.43%
MFS Variable Insurance Trust <F1><F2>
Growth With Income Series 0.75% 0.13%
0.88%
High Income Series<F8> 0.75% 0.26%
1.01%
Emerging Growth Series 0.75% 0.09%
0.84%
Total Return Series 0.75% 0.15%
0.90%
New Discovery Series<F9> 0.90% 0.27%
1.17%
American Century Variable Portfolios, Inc.<F1>
VP Value 1.00% <F3>
1.00%
VP Income & Growth 0.70% <F3>
0.70%
AIM Variable Insurance Funds, Inc.<F1>
AIM V.I. Capital Appreciation Fund 0.61% 0.12%
0.73%
AIM V.I. Growth Fund 0.63% 0.10%
0.73%
<CAPTION>
12b-1 Management Other
Total
Fees Fees Expenses
Expenses
<S> <C> <C> <C> <C>
Templeton Variable Insurance Products
Trust<F4><F10>
Templeton International Securities Fund
Class 2 0.25% 0.69% 0.19%
1.13%
<CAPTION>
Management Other Total
Fees Expenses
Expenses
<S> <C> <C> <C>
Neuberger Berman Advisers Management Trust<F1>
AMT Guardian Portfolio 0.85% 0.15%
1.00%
Oppenheimer Variable Account Fund<F1>
Global Securities Fund 0.67% 0.02%
0.69%
Main Street Growth & Income Fund 0.73% 0.05%
0.78%
<FN>
<F1> Figures are based on the actual expenses incurred by the Portfolio for
the year ended December 31, 1999 Actual Portfolio expenses may vary.
<F2> Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expense). Any such fee reductions are not
reflected under "Other Expenses."
<F3> All expenses except brokerage, taxes, interest and fees and expenses of
non-interested person directors are paid by the investment adviser.
<F4> Class 2 of the Fund has a distribution plan or "Rule 12b-1 plan" which
is described in the Fund's prospectus.
<F5> This Portfolio commenced operations on May 3, 1999. Actual expenses
would be higher for the period shown above if the Adviser had not reimbursed
expenses.
<F6> This Portfolio commenced operations on December 27, 1999; therefore, the
expense figures for this Portfolio are estimated.
<F7> The adviser has reduced its management fee from those shown above for a
period of one year beginning April 1, 2000, as follows: .03% (S&P 500); .08%
(Zenith); .20% (Bond).
<F8> Subject to reimbursement, the adviser is paying, under a temporary
expense reimbursement agreement, all operating expenses, exclusive of
management fees. In consideration, the Portfolio pays the adviser a fee not
greater than 0.25% of average daily net assets. To the extent actual
expenses deviated from this limitation, the expense ratio would have been
0.97%.
<F9> Subject to reimbursement, the adviser is paying all operating expenses,
exclusive of management fees. In consideration, the Portfolio pays the
adviser a fee not greater than 0.25% of average daily net assets. To the
extent actual expenses deviated from this limitation, the expense ratio
would have been 2.49%.
<F10> On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton International Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees, which
apply to the combined fund effective 5/1/00. The table shows restated total
expenses based on the new fees and the assets of the fund as of 12/31/99, and
not the combined assets. The fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.65%, 12b-1 fees 0.25%, Other Expenses 0.20%, and Total
Expenses 1.10%.
</FN>
</TABLE>
(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 23.
- 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 24.
- 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 16 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 blocked item has two down arrows under it,
each pointing to one of the next two blocked items
which are positioned 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 26 for rules and limits.
- Partial cash surrenders generally can be made provided
there is sufficient remaining cash surrender value. See
page 27 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 21.
- Payment options are available. See page 27.
- Loans, partial cash surrenders, and surrenders in full may
have adverse tax consequences. See page 40.
DEATH BENEFITS
- Are income tax free to beneficiary.
- Are available as lump sum or under a variety of payment
options.
- For all policies, the minimum initial specified amount is
$50,000.
- There are 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 25.
- You have the flexibility to change the death benefit option
and specified amount. See page 25 for rules and limits.
- Supplemental and/or rider benefits may be available.
See page 38.
GENERAL INFORMATION ABOUT UNION CENTRAL,
THE SEPARATE ACCOUNT AND THE PORTFOLIOS
---------------------------------------------------------------
The Union Central Life Insurance Company
Union Central, a mutual life insurance company organized under
the laws of the State of Ohio in 1867, issues the Policies.
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.
We are 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 we do business. We
submit annual statements on our operations and finances to
insurance officials in such states and jurisdictions.
Carillon Life Account
We established Carillon Life Account (the "separate account") as
a separate investment account under Ohio law on July 10, 1995.
It supports 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.
We own the assets in the separate account. 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 twenty-
three designated portfolios of eight series-type mutual funds,
as shown in the chart below, which identifies the mutual fund
families, the investment advisers to each fund family, and the
portfolios in which the separate account invests.
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 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 chart.
<TABLE>
<CAPTION>
CARILLON LIFE ACCOUNT PORTFOLIOS
FUND FAMILY AND PORTFOLIOS INVESTMENT ADVISER
<S> <C>
Summit Mutual Funds, Inc. Pinnacle Series
("Summit Fund") Summit Investment Partners, Inc.
- Balanced Index Portfolio
- Bond Portfolio
- Nasdaq-100 Index Portfolio
- Russell 2000 Small Cap Index Portfolio
- S&P MidCap 400 Index Portfolio
- S&P 500 Index Portfolio
- Zenith Portfolio
(formerly Equity Portfolio)
AIM Variable Insurance Funds, Inc.
("AIM Fund") AIM Advisors, Inc.
- Capital Appreciation Fund
- Growth Fund
American Century Variable Portfolios, Inc.
("American Fund") American Century Investment
- Income & Growth Management, Inc.
- Value
MFS Variable Insurance Trust
("MFS Fund") Massachusetts Financial Services
- Emerging Growth Series Company
- Growth with Income Series
- High Income Series
- New Discovery Series
- Total Return Series
Neuberger Berman Advisers Management Trust
("Neuberger Berman Fund") Neuberger Berman Management, Inc.
- Guardian Portfolio
Oppenheimer Variable Account Funds
("Oppenheimer Fund") OppenheimerFunds, Inc.
- Global Securities Fund
- Main Street Growth & Income Fund
Scudder Variable Life Investment Fund
("Scudder Fund") Scudder Kemper Investments, Inc.
- Capital Growth Portfolio Class A
- International Portfolio Class A
- Money Market Portfolio
Franklin Templeton Variable Insurance
Products Trust ("Templeton Fund") Templeton Investment Counsel,
Inc.
- Templeton International Securities Fund,
Class 2
</TABLE>
The Summit Pinnacle Zenith Portfolio (formerly Carillon Equity
Portfolio) seeks primarily long-term appreciation of capital by
investing primarily in common stocks and other equity
securities.
The Summit Pinnacle 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 Summit Pinnacle Balanced Index Portfolio seeks investment
results, with respect to 60% of its assets, that correspond to
the total return performance of U.S. common stocks, as
represented by the S&P 500 Index and, with respect to 40% of its
assets, that correspond to the total return performance of
investment grade bonds, as represented by the Lehman Brothers
Aggregate Bond Index.
The Summit Pinnacle 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"*). The S&P 500 is a
well-known stock market index that includes common stocks of
companies representing approximately 70% 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.
-----
*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(R)", "S&P 500(R)", "Standard &
Poor's 500(R)", and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Summit Fund.
The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or
warranty, express or implied, to the beneficial owners of the
Portfolio or any member of the public regarding the advisability
of investing in securities generally or in the Portfolio
particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to
Summit Fund is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to Summit Fund or
the Portfolio. S&P has no obligation to take the needs of Summit
Fund or the beneficial owners of the Portfolio into
consideration in determining, composing or calculating the S&P
500 Index. S&P is not responsible for and has not participated
in the determination of the prices and amount of the Portfolio
or the timing of the issuance or sale of the Portfolio or in the
determination or calculation of the equation by which the
Portfolio is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of the Portfolio.
S&P does not guarantee the accuracy and/or the completeness of
the S&P 500 Index or any data included therein and S&P shall
have no liability for any errors, omissions, or interruptions
therein. S&P makes no warranty, express or implied, as to
results to be obtained by Summit Fund, beneficial owners of the
Portfolio, or any other person or entity from the use of the S&P
500 Index or any data included therein. S&P makes no express or
implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein.
Without limiting any of the foregoing, in no event shall S&P
have any liability for any special, punitive, indirect, or
consequential damages (including lost profits), even if notified
of the possibility of such damages.
------
The Summit Pinnacle S&P MidCap 400 Index Portfolio seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented by the S&P
MidCap 400 Index.
The Summit Pinnacle Russell 2000* Small Cap Index Portfolio
seeks investment results that correspond to the investment
performance of U.S. common stocks, as represented by the Russell
2000 Index. The Portfolio invests primarily in stocks of
companies listed in the Russell 2000 Index, as well as futures
contracts and options relating to those stocks.
-------
The Russell 2000 Index is a trademark/service mark of the Frank
Russell Company. Russell is a trademark of the Frank Russell
Company. Summit Mutual Funds and the Russell 2000 Small Cap
Index Portfolio are not promoted, sponsored or endorsed by, nor
in any way affiliated with Frank Russell Company. Frank Russell
is not responsible for and has not reviewed the Prospectus, and
Frank Russell makes no representation or warranty, express or
implied, as to its accuracy, or completeness, or otherwise.
Frank Russell Company reserves the right, at any time and
without notice, to alter, amend, terminate or in any way change
its Index. Frank Russell has no obligation to take the needs of
any particular fund or its participants or any other product or
person into consideration in determining, composing or
calculating the Index.
Frank Russell Company's publication of the Index in no way
suggests or implies an opinion by Frank Russell Company as to
the attractiveness or appropriateness of the investment in any
or all securities upon which the Index is based. FRANK RUSSELL
COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO
THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE
INDEX OR DATA INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY
MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE
RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR
ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX.
FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED
WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF ANY KIND,
INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION
THEREOF) INCLUDED THEREIN.
--------
The Summit Pinnacle Nasdaq-100* Index Portfolio seeks
investment results that correspond to the investment performance
of U.S. common stocks, as represented by the Nasdaq-100 Index.
The Portfolio invests primarily in stocks of companies listed in
the Nasdaq-100 Index, as well as futures contracts and options
relating to those stocks.
--------
*"Nasdaq" and related marks are trademarks or service marks of
The Nasdaq Stock Market, Inc. "Nasdaq" and have been licensed
for use for certain purposes by Summit Mutual Funds, Inc. and
the Nasdaq-100 Index Portfolio. The Nasdaq-100 Index is
composed and calculated by Nasdaq without regard to Summit
Mutual Funds. Nasdaq makes no warranty, express or implied, and
bears no liability with respect to the Nasdaq-100 Index Fund.
Nasdaq makes no warranty, express or implied, and bears no
liability with respect to Summit Mutual Funds, its use, or any
data included therein.
--------
The Scudder Capital Growth Portfolio Class A 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 Class A 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 MFS Total Return Series seeks primarily to provide above-
average income (compared to a portfolio invested entirely in
equity securities) consistent with the prudent employment of
capital, and secondarily to provide a reasonable opportunity for
growth of capital and income.
The MFS Growth With Income Series seeks to provide reasonable
current income and long-term growth of capital and income.
The MFS New Discovery Series seeks capital appreciation by,
under normal market conditions, investing at least 65% of its
total assets in equity securities of emerging growth companies.
Its focus is on small emerging growth companies.
The MFS High Income Series seeks high current income by
investing primarily in a professionally managed diversified
portfolio of fixed income securities, some of which may involve
equity features. The MFS High Income Portfolio may invest up to
100% 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.
The MFS Emerging Growth Series seeks to provide long-term
growth of capital.
The Templeton International Securities Fund Class 2 seeks long-
term capital growth. The fund invests in equity securities of
companies located outside the United States, including emerging
markets.
The AIM V.I. Capital Appreciation Fund seeks growth of capital
through investment in common stocks, with emphasis on medium and
small-sized growth companies.
The AIM V.I. Growth Fund seeks growth of capital primarily by
investing in established and large companies considered to have
strong earnings momentum.
The American Century VP Income & Growth Fund seeks dividend
growth, current income and capital appreciation by investing in
common stocks. The Portfolio selects its investments primarily
from the largest 1,500 publicly traded U.S. companies.
The American Century VP Value Fund seeks long-term capital
growth, with income being a secondary objective. The Portfolio
invests primarily in stocks of medium to large companies that
the portfolio managers believe are undervalued at the time of
purchase.
The Neuberger Berman AMT Guardian Portfolio seeks long-term
growth of capital; current income is a secondary goal. The
Portfolio invests mainly in common stocks of large companies.
The Oppenheimer Global Securities Fund/VA seeks long-term
capital appreciation by investing a substantial portion of
assets in securities of foreign issuers, "growth-type"
companies, cyclical industries and special situations that are
considered to have appreciation possibilities.
The Oppenheimer Main Street Growth & Income Fund/VA seeks high
total return (which includes growth in the value of its shares
as well as current income) from equity and debt securities. It
invests mainly in common stocks of U.S. companies, with an
emphasis on large-capitalization companies.
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.
The investment objectives and policies of certain portfolios are
similar to the investment objectives and policies of other funds
with similar names that may be managed by the same investment
adviser. The investment results of the portfolios, however, may
be higher or lower than the results of such other funds. There
can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable
to the investment results of any other fund, even if the other
fund has the same investment adviser.
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.)
Scudder Kemper Investments, Inc., the investment adviser to the
Scudder Fund; AIM Advisors, Inc., the investment adviser to the
AIM Fund; Massachusetts Financial Services Company, the
investment adviser to the MFS Fund; OppenheimerFunds, Inc., the
investment adviser to The Oppenheimer Fund; Neuberger Berman
Management, Inc., the investment adviser to the Neuberger Berman
Fund; and American Century Investment Management, Inc., the
investment adviser to the American Fund, have agreed to
compensate Union Central for the performance of certain
administrative and other services. This compensation , which
may be significant, is based on the assets of the Scudder Fund,
the AIM Fund, the MFS Fund, the Oppenheimer Fund, the Neuberger
Berman Fund and the American Fund, respectively, that are
attributable to the policies. Union Central's affiliated broker-
dealer, Carillon Investments, Inc., the principal underwriter
for the policies, will receive 12b-1 fees assessed against
shares of the Templeton International Securities Fund Class 2
attributable to the policies as compensation for providing
certain services.
PREMIUM PAYMENTS AND ALLOCATIONS
--------------------------------------------------------------
In the sections that follow, we use the following special terms:
policy date - the date from which policy months, years and
anniversaries are measured
issue date - the date from which the suicide and contestable
periods start.
annual date - the same day in each policy year as the policy
date.
monthly date - the same day as the policy date for each
succeeding month.
policy month - Each one-month period beginning with a monthly
date and ending the day before the next monthly date.
policy year - Each period of twelve months starting on the
policy date and ending the day before the first annual date, or
any following year starting on an annual date and ending the day
before the next annual date.
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. We deduct charges for
the monthly deduction for the backdated period 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.
We require 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
we reserve 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
transactions 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. You may change the owner before the insured's
death by notice satisfactory to us. A change in owner may have
tax consequences. See "Tax Considerations," page 40.
Purchase of the Policy for Specialized Purposes
The policy provides a death benefit and an accumulation of
account value. It can be used for various individual and
business planning purposes. Purchasing the policy for such
purposes entails certain risks. For example, if the investment
performance of the subaccounts to which account value is
allocated is poorer than anticipated, or if sufficient premiums
are not paid or account value maintained, the policy may lapse
or may not accumulate sufficient account value to fund the
purpose for which the policy was purchased. Loans and partial
cash surrenders may significantly affect current and future
account value, cash surrender value, and death benefit proceeds.
Depending upon subaccount investment performance and the amount
of loans and partial cash surrenders, the policy may lapse.
Because the policy is designed to provide benefits on a long-
term basis, before purchasing a policy for a specialized
purpose, you should consider whether the long-term nature of the
policy and the impact of loans and partial cash surrenders is
consistent with the purpose for which it is being considered.
Using a policy for a specialized purpose may have tax
consequences. (See "Tax Considerations.")
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 unless otherwise required by state law.
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, for the
duration of the policy. 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 15.) 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 a timely basis if your policy is
in jeopardy of becoming a modified endowment contract as a
result of premium payments. See "Tax Considerations," page 40.
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 15.
No premium payment will be accepted after the insured's 100th
birthday (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 38.
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 25. 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 19) 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
Proceeds," page 24. 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 38.
A grace period also may begin if policy debt becomes excessive.
See "Loan Repayment; Effect if Not Repaid," page 26.
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 23. 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
providing notice to the home office, in a form acceptable to
Union Central. 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 18 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. Owners are eligible to effect transfers
pursuant to telephone instructions unless they elect out of the
option by writing 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.
Excessive Trading. Your policy is a long-term investment and is
not designed for professional market timing organizations or
other entities using programmed or frequent transfers. When
thinking about a transfer of contract value, you should consider
the risk involved that transfers based on short-term
expectations may be made at an inopportune time. Because
excessive trading can disrupt investment portfolio management
strategies and increase portfolio expenses, we limit excessive
trading practices.
To minimize harm to the portfolios and other policyowners, in
addition to any restrictions or rights reserved in the current
portfolio prospectuses that accompany this prospectus, we
reserve the right to:
- limit the number, frequency, method or amount of transfers;
- reject any transfer from any owner we believe has a history of abusive
trading or whose trading, in our judgment, has been or may be disruptive
to a portfolio;
- delay any transfer request for up to seven days; or
- limit the portfolios into which transfers may be made.
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 from the Guaranteed Account
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
--------------------------------------------------------------
Union Central deducts the charges described below to cover costs
and expenses, services provided, and risks assumed under the
policies. The amount of a charge may not necessarily correspond
to the costs associated with providing the services or benefits
indicated by the designation of the charge or associated with
the particular policy. For example, the sales charge and sales
surrender charge may not fully cover all of the sales and
distribution expenses actually incurred by Union Central, and
proceeds from other charges, including the cost of insurance
charge and the mortality and expense risk charge, may be used in
part to cover such expenses. Union Central may profit from
certain charges.
Premium Expense Charge
A sales charge is deducted from each premium payment. This
charge is equal to 2% of premiums paid. We reserve the right to
increase the sales charge up to an amount equal to 4% of
premiums paid during the first ten policy years; the charge is
guaranteed to be no more than 2% thereafter. The sales charge is
intended to partially reimburse Union Central for some of the
expenses incurred in the distribution of the policies. See
"Daily Mortality and Expense Risk Charge," page 19, and "Cost of
Insurance Charge," shown below.
A 2% charge for state and local premium taxes and expenses is
also deducted from each premium payment. We reserve the right
to increase the premium tax charge to 2.50% per year. 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.
If you make premium payments, either planned or unscheduled,
equal to or greater than one million dollars during the first
policy year, your policy may qualify for reduced premium expense
charges. If during the first policy year, you actually make
less than one million dollars in premium payments, or you make
withdrawals or surrenders from the policy to the extent that
less than one million dollars of premium remains in the policy
on its first policy anniversary, we reserve the right to
increase the first year's premium expense charges to the
standard premium expense charge on all premium received during
the first policy year, as though those standard charges were
made at the time the premium payments were made. This
chargeback will not occur if the reduction below one million
dollars at the first policy anniversary is due to unfavorable
investment performance. Before you deposit premium payments
into your policy in order to qualify for the reduced premium
expense charges, please read "Tax Considerations", page 40,
concerning the treatment of heavily-funded life insurance
policies.
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 24) 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),
Preferred (ages 20-70), or Preferred Plus (ages 20-70). The
Preferred and Preferred Plus rate classes are 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
38. 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 $5 per
month. We reserve the right to increase the administrative
charge during the first policy year up to $25 per month, and
after the first policy year up to $10 per month. The
administrative charge is guaranteed not to exceed $25 per month
during the first policy year and $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.
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 38.
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 following
table.
<TABLE>
<CAPTION>
END OF SALES SURRENDER
POLICY YEAR 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. See "Daily Mortality and Expense Risk Charge," page
20, and "Cost of Insurance Charge," page 19.
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.
Fund Expenses
The value of the net assets of each subaccount reflects the
management fees and other expenses incurred by the corresponding
portfolio in which the subaccount invests. The investment
advisers earn management fees for the services they provide in
managing the portfolios. See the prospectuses for the
portfolios. The fee table appears on page 7.
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. See "Supplemental and/or Rider Benefits," page 38.
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, current or
retired employees ("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. We may also reduce the minimum specified amount
per policy. 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 19) 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 14, and "Grace
Period," page 15.
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, other than AIM V.I. Capital Appreciation Portfolio
and Summit S&P MidCap 400 Index Portfolio, was arbitrarily set
at $10 when the subaccount began operations. The initial unit
values for the AIM V.I. Capital Appreciation Portfolio and the
Summit S&P MidCap 400 Index Portfolio were set based on closing
values of the American Century V.P. Capital Appreciation
Portfolio and the Summit Capital Portfolio, respectively, on the
date on which the AIM V.I. Capital Appreciation Portfolio and
the Summit S&P MidCap 400 Index Portfolio replace the other two
portfolios, which date was October 21, 1999. 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
value 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 26). It is also the
amount that is available upon full surrender of the policy (see
page 27).
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 37 or, if elected, under a
payment option (see "Payment Options," page 28). The death
benefit will be paid to the beneficiary. See "Selecting and
Changing the Beneficiary," page 26.
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 37.
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
You 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 28.
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
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. A change in the death benefit option
may have adverse tax consequences.
When a change from Option A to Option B is made, unless
requested by notice to us, 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
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.
Decreasing the specified amount of the policy may have adverse
tax consequences.
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 15. 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 21).
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 37, and "Transfers from the Guaranteed
Account," page 18.
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
1.5% during the first ten policy years, and 0.25% thereafter.
Thus, the maximum net cost of a loan per year is 1.5% during the
first ten policy years, and 0.25% 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) is less than 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. Please consult your tax
adviser concerning 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 Charge," page 21. 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 37, and
"Transfers from the Guaranteed Account," page 18. 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," shown below. 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 40.
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 37, and
"Transfers from the Guaranteed Account," page 18.
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 40.
Maturity Benefit
The maturity date is 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. The maturity date can be
extended. See "Maturity Extension Endorsement," page 39.
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
--------------------------------------------------------------
We prepared the following tables 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 planned periodic
premiums were paid annually and the return on the assets in 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 0.768% of the average
daily net assets of the portfolios available under the policies.
This average annual expense ratio is based on a simple
arithmetic average of the actual expense ratios of each of the
portfolios for the last fiscal year. 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 -
1.507%, 4.403%, and 10.313%, respectively, during the first ten
policy years, and -1.013%, 4.926%, and 10.866%, 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
$5,000 ANNUAL PREMIUM USING CURRENT CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR 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 3849 4105 4361 749 1005
1261
2 10762 400000 400000 400000 7592 8341 9122 4492 5241
6022
3 16551 400000 400000 400000 11231 12717 14327 8131 9617
11227
4 22628 400000 400000 400000 14759 17230 20014 11659 14130
16914
5 29010 400000 400000 400000 18181 21890 26240 15081 18790
23140
6 35710 400000 400000 400000 21500 26707 33063 18710 23917
30273
7 42746 400000 400000 400000 24722 31694 40554 22243 29214
38074
8 50133 400000 400000 400000 27851 36860 48787 25681 34690
46617
9 57889 400000 400000 400000 30885 42214 57841 29025 40354
55981
10 66034 400000 400000 400000 33821 47759 67802 32271 46209
66252
11 74586 400000 400000 400000 36847 53779 79166 35607 52539
77926
12 83565 400000 400000 400000 39778 60045 91742 38848 59116
90813
13 92993 400000 400000 400000 42604 66562 105662 41984 65942
105043
14 102893 400000 400000 400000 45320 73339 121079 45010 73029
120769
15 113287 400000 400000 400000 47914 80381 138160 47914 80381
138160
20 173596 400000 400000 400000 60237 121428 257483 60237 121428
257483
25 250567 400000 400000 560185 68219 171416 459168 68219 171416
459168
30 348804 400000 400000 921164 70188 233337 794107 70188 233337
794107
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
$5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR 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 3410 3648 3887 310 548
787
2 10762 400000 400000 400000 6885 7578 8300 3785 4478
5200
3 16551 400000 400000 400000 10246 11619 13107 7146 8519
10007
4 22628 400000 400000 400000 13485 15767 18339 10385 12667
15239
5 29010 400000 400000 400000 16605 20028 24044 13505 16928
20944
6 35710 400000 400000 400000 19593 24394 30258 16803 21604
27468
7 42746 400000 400000 400000 22445 28865 37032 19965 26385
34552
8 50133 400000 400000 400000 25157 33441 44423 22987 31271
42253
9 57889 400000 400000 400000 27723 38122 52493 25863 36262
50633
10 66034 400000 400000 400000 30134 42901 61306 28584 41351
59756
11 74586 400000 400000 400000 32650 48129 71415 31410 46889
70175
12 83565 400000 400000 400000 34994 53485 82528 34064 52555
81598
13 92993 400000 400000 400000 37142 58955 94746 36522 58336
94126
14 102893 400000 400000 400000 39077 64532 108193 38767 64222
107883
15 113287 400000 400000 400000 40768 70196 122998 40767 70196
122998
20 173596 400000 400000 400000 44779 99465 223976 44779 99465
223976
25 250567 400000 400000 483201 37932 128614 396067 37932 128614
396067
30 348804 400000 400000 788694 10905 152888 679909 10905 152888
679909
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
$5,000 ANNUAL PREMIUM USING CURRENT CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 403840 404095 404351 3840 4095 4351 740 995
1251
2 10762 407565 408311 409089 7565 8311 9089 4465 5211
5989
3 16551 411176 412654 414255 11176 12654 14255 8076 9554
11155
4 22628 414666 417119 419883 14666 17119 19883 11566 14019
16783
5 29010 418039 421714 426023 18039 21714 26023 14939 18614
22923
6 35710 421296 426444 432726 21296 26444 32726 18506 23654
29936
7 42746 424446 431322 440058 24446 31322 40058 21966 28842
37578
8 50133 427487 436352 448083 27487 36352 48083 25317 34182
45913
9 57889 430422 441541 456870 30422 41541 56870 28562 39681
55010
10 66034 433244 446888 466491 33244 46888 66491 31694 45338
64941
11 74586 436138 452665 477420 36138 52665 77420 34898 51425
76180
12 83565 438918 458640 489447 38918 58640 89447 37989 57710
88517
13 92993 441574 464809 502678 41574 64809 102678 40954 64189
102058
14 102893 444098 471174 517235 44098 71174 117235 43788 70864
116926
15 113287 446475 477727 533246 46475 77727 133246 46475 77727
133246
20 173596 457480 515179 643063 57480 115179 243063 57480 115179
243063
25 250567 463161 557291 820635 63161 157291 420635 63161 157291
420635
30 348804 461480 602712 1108751 61480 202712 708751 61480 202712
708751
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 40 EXCEL CHOICE $400,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
$5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5250 403401 403638 403876 3401 3638 3876 301 538
776
2 10762 406857 407547 408267 6857 7547 8267 3757 4447
5167
3 16551 410190 411555 413034 10190 11555 13034 7090 8455
9934
4 22628 413390 415653 418204 13390 15653 18204 10290 12553
15104
5 29010 416458 419845 423819 16458 19845 23819 13358 16745
20719
6 35710 419381 424120 429907 19381 24120 29907 16591 21330
27117
7 42746 422153 428473 436510 22153 28473 36510 19673 25993
34030
8 50133 424768 432899 443671 24768 32899 43671 22598 30729
41501
9 57889 427221 437393 451440 27221 37393 51440 25361 35533
49580
10 66034 429498 441941 459863 29498 41941 59863 27948 40391
58313
11 74586 431856 446881 469460 31856 46881 69460 30616 45641
68220
12 83565 434014 451883 479913 34014 51883 79913 33085 50954
78983
13 92993 435948 456923 491287 35948 56923 91287 35328 56303
90667
14 102893 437635 461976 503654 37635 61976 103654 37325 61666
103345
15 113287 439042 467007 517087 39042 67007 117087 39042 67007
117087
20 173596 440981 490700 603549 40981 90700 203549 40981 90700
203549
25 250567 430886 507152 732726 30886 107152 332726 30886 107152
332726
30 348804 400588 504303 921908 588 104303 521908 588 104303
521908
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 50 EXCEL CHOICE $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
$5,300 ANNUAL PREMIUM USING CURRENT CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR 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 3990 4258 4527 1237 1505
1774
2 11408 250000 250000 250000 7869 8653 9471 5116 5900
6718
3 17544 250000 250000 250000 11628 13182 14866 8875 10429
12113
4 23986 250000 250000 250000 15268 17850 20761 12515 15097
18008
5 30750 250000 250000 250000 18783 22658 27206 16030 19905
24453
6 37853 250000 250000 250000 22172 27612 34261 19695 25135
31783
7 45310 250000 250000 250000 25444 32729 42002 23242 30526
39800
8 53141 250000 250000 250000 28614 38031 50524 26687 36104
48597
9 61363 250000 250000 250000 31693 43540 59925 30041 41888
58273
10 69996 250000 250000 250000 34686 49274 70312 33310 47897
68936
11 79061 250000 250000 250000 37791 55528 82216 36690 54427
81115
12 88579 250000 250000 250000 40830 62085 95463 40004 61259
94637
13 98573 250000 250000 250000 43796 68958 110212 43246 68408
109661
14 109066 250000 250000 250000 46686 76164 126645 46410 75889
126369
15 120085 250000 250000 250000 49499 83727 144971 49499 83727
144971
20 184012 250000 250000 316992 61133 126771 273269 61133 126771
273269
25 265601 250000 250000 522487 67948 181767 488306 67948 181767
488306
30 369732 250000 267632 888850 62008 254888 846524 62008 254888
846524
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 50 EXCEL CHOICE $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION A
VARIABLE INVESTMENT
$5,300 ANNUAL PREMIUM USING GUARANTEED CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR 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 3388 3633 3879 635 880
1126
2 11408 250000 250000 250000 6813 7520 8258 4060 4767
5505
3 17544 250000 250000 250000 10085 11476 12986 7332 8723
10233
4 23986 250000 250000 250000 13191 15492 18092 10438 12739
15339
5 30750 250000 250000 250000 16118 19557 23603 13365 16804
20850
6 37853 250000 250000 250000 18853 23661 29554 16375 21183
27076
7 45310 250000 250000 250000 21384 27793 35985 19182 25591
33782
8 53141 250000 250000 250000 23706 31953 42950 21779 30026
41023
9 61363 250000 250000 250000 25807 36131 50509 24155 34480
48857
10 69996 250000 250000 250000 27665 40312 58718 26289 38936
57342
11 79061 250000 250000 250000 29521 44823 68115 28419 43722
67014
12 88579 250000 250000 250000 31096 49345 78422 30270 48519
77596
13 98573 250000 250000 250000 32354 53854 89750 31804 53304
89200
14 109066 250000 250000 250000 33253 58322 102229 32978 58047
101954
15 120085 250000 250000 250000 33743 62717 116019 33743 62717
116019
20 184012 250000 250000 250000 28421 82770 213535 28421 82770
213535
25 265601 250000 250000 410090 1323 95179 383262 1323 95179
383262
30 369732 0 250000 697774 0 85569 664547 0 85569
664547
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 50 EXCEL CHOICE $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
$5,300 ANNUAL PREMIUM USING CURRENT CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 253972 254239 254507 3972 4239 4507 1219 1486
1754
2 11408 257815 258594 259406 7815 8594 9406 5062 5841
6653
3 17544 261520 263057 264724 11520 13057 14724 8767 10304
11971
4 23986 265083 267629 270499 15083 17629 20499 12330 14876
17746
5 30750 268498 272304 276770 18498 22304 26770 15745 19551
24017
6 37853 271762 277082 283580 21762 27082 33580 19284 24604
31103
7 45310 274880 281971 290992 24880 31971 40992 22678 29769
38790
8 53141 277871 286992 299081 27871 36992 49081 25944 35065
47154
9 61363 280743 292159 307927 30743 42159 57927 29091 40507
56276
10 69996 283503 297482 317613 33503 47482 67613 32127 46106
66237
11 79061 286340 303240 328623 36340 53240 78623 35239 52139
77521
12 88579 289080 309211 340755 39080 59211 90755 38254 58385
89930
13 98573 291714 315396 354124 41714 65396 104124 41163 64846
103574
14 109066 294234 321796 368854 44234 71796 118854 43959 71521
118579
15 120085 296641 328422 385091 46641 78422 135091 46641 78422
135091
20 184012 305255 363362 493104 55255 113362 243104 55255 113362
243104
25 265601 306920 400332 665496 56920 150332 415496 56920 150332
415496
30 369732 291288 427678 931900 41288 177678 681900 41288 177678
681900
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
<TABLE>
<CAPTION>
THE UNION CENTRAL LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
MALE ISSUE AGE: 50 EXCEL CHOICE $250,000 SPECIFIED AMOUNT
PREFERRED DEATH BENEFIT OPTION B
VARIABLE INVESTMENT
$5,300 ANNUAL PREMIUM USING GUARANTEED CHARGES
CASH
DEATH BENEFIT ACCOUNT VALUE SURRENDER VALUE
-------------------- -------------------- -------------------
-
PREMIUMS Assuming Hypothetical Assuming Hypothetical Assuming
Hypothetical
ACCUM. Gross Annual Gross Annual Gross Annual
AT 5% Investment Return of Investment Return of Investment Return
of
END INTEREST -------------------- -------------------- -------------------
-
OF PER 0% 6% 12% 0% 6% 12% 0% 6% 12%
YEAR YEAR Gross Gross Gross Gross Gross Gross Gross Gross Gross
---- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5565 253367 253611 253856 3367 3611 3856 614 858
1103
2 11408 256753 257453 258184 6753 7453 8184 4000 4700
5431
3 17544 259961 261334 262824 9961 11334 12824 7208 8581
10071
4 23986 262979 265239 267791 12979 15239 17791 10226 12486
15038
5 30750 265788 269147 273096 15788 19147 23096 13035 16394
20343
6 37853 268373 273039 278756 18373 23039 28756 15895 20562
26278
7 45310 270717 276895 284784 20717 26895 34784 18515 24693
32582
8 53141 272812 280700 291207 22812 30700 41207 20885 28773
39280
9 61363 274643 284433 298046 24643 34433 48046 22991 32781
46394
10 69996 276185 288060 305311 26185 38060 55311 24809 36683
53935
11 79061 277661 291872 313457 27661 41872 63457 26560 40771
62355
12 88579 278797 295536 322141 28797 45536 72141 27971 44711
71315
13 98573 279549 298997 331374 29549 48997 81374 28998 48447
80824
14 109066 279868 302191 341159 29868 52191 91159 29593 51916
90884
15 120085 279704 305045 351497 29704 55045 101497 29704 55045
101497
20 184012 270114 311790 411825 20114 61790 161825 20114 61790
161825
25 265601 0 295519 484496 0 45519 234496 0 45519
234496
30 369732 0 0 557723 0 0 307723 0 0
307723
</TABLE>
(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 -1.507%, 4.403%, and 10.313% respectively, during the first
ten policy years, and -1.013%, 4.926%, and 10.866% 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>
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 18.
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 19). 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 (No-Lapse Rider in Maryland).
Provides that the policy will remain in force and will not
lapse before the expiration date of the rider shown on the
schedule page of your contract, provided that the sum of
premium payments to date, less any partial cash surrenders
and any policy debt, equals or exceeds the minimum monthly
premium for the rider times the number of policy months
since the policy date. The rider extends the minimum
guaranteed period under your policy from three years to
thirty years or until you are 65 years old, whichever occurs
earlier. 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 minimum monthly premium
for the rider multiplied by the number of policy months since
the policy date. Once terminated, this rider will not be
reinstated. This rider is not available for all ages and rate
classes, in all states, 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. Provides for an accelerated
payment of up to 50% of the policy's death benefit (up to
a maximum benefit of $500,000). This advance payment of
the death benefit will be available if you are diagnosed
as terminally ill, as defined in the rider. Certain charges
will apply. Payment will be subject to evidence
satisfactory to Union Central. You should consult your tax
adviser before you request accelerated payment.
Maturity Extension Endorsement. Provides the right, within
two years of the maturity date defined in your policy, to
extend the maturity date to either the date of the insured's
death or the date you request full surrender of the policy,
whichever occurs first. If you exercise this extension
option, the following will occur: all other riders attached
to your policy will terminate on the original maturity date;
after the maturity date has been extended, the account value
will continue to vary based on investment experience and we
will continue to charge interest on policy loans, but we
will no longer accept new premium payments or deduct charges
for cost of insurance or monthly expenses. There is no cost
for this endorsement. The tax consequences associated with
continuing the policy beyond age 100 are unclear. A tax
adviser should be consulted.
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.
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 without owner consent. The
substituted portfolio may have different fees and expenses.
Substitution may be made with respect to existing investments or
the investment of future premium payments, or both. 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 may close subaccounts to allocations of premium
payments or account value, or both, at any time in its sole
discretion.
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.
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
---------------------------------------------------------------
Introduction
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 tax situations.
This discussion is not intended as tax advice. Counsel or other
competent tax advisors should be consulted for more complete
information. This discussion is based upon our understanding of
the present Federal income tax laws. No representation is made
as to the likelihood of continuation of the present Federal
income tax laws or as to how they may be interpreted by the
Internal Revenue Service.
Tax Status of the Policy
In order to qualify as a life insurance contract for Federal
income tax purposes and to receive the tax treatment normally
accorded life insurance contracts under Federal tax law, a life
insurance policy must satisfy certain requirements which are set
forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we
believe that a policy issued on a standard basis should satisfy
the applicable requirements. There is less guidance, however,
with respect to a policy issued on a substandard basis (i.e., a
premium class with extra rating involving higher than standard
mortality risk) and it is not clear whether such a policy will
in all cases satisfy the applicable requirements. If it is sub-
sequently determined that a policy does not satisfy the
applicable requirements, we may take appropriate steps to bring
the policy into compliance with such requirements and we reserve
the right to modify the policy as necessary in order to do so.
In certain circumstances, owners of variable life insurance
policies have been considered for Federal income tax purposes to
be the owners of the assets of the variable account supporting
their contracts due to their ability to exercise investment
control over those assets. Where this is the case, the
policyowners have been currently taxed on income and gains
attributable to variable account assets. There is little
guidance in this area, and some features of the policy, such as
the flexibility of the owner to allocate premium payments and
account value, have not been explicitly addressed in published
rulings. While we believe that the policy does not give the
owner investment control over variable account assets, we
reserve the right to modify the policy as necessary to prevent
the owner from being treated as the owner of the variable
account assets supporting the policy.
In addition, the Code requires that the investments of the
subaccounts be "adequately diversified" in order for the policy
to be treated as a life insurance contract for Federal income
tax purposes. It is intended that the subaccounts, through the
portfolios, will satisfy these diversification requirements.
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. We believe that the death benefit under a policy
should be excludible from the gross income of the beneficiary.
Federal, state and local estate, inheritance, transfer, and
other tax consequences of ownership or receipt of policy
proceeds depend on the circumstances of each owner or
beneficiary. A tax adviser should be consulted on these
consequences.
Generally, the owner of a policy will not be deemed to be in
constructive receipt of the account value until there is a
distribution. When distributions from a policy occur, or when
loans are taken out from or secured by a policy, the tax
consequences depend on whether the policy is classified as a
"Modified Endowment Contract."
Modified Endowment Contracts. Under the Internal Revenue Code,
certain life insurance contracts are classified as "Modified
Endowment Contracts," with less favorable tax treatment than
other life insurance contracts. Due to the flexibility of the
policy as to premium payments and benefits, the individual
circumstances of each policy will determine whether it is
classified as a Modified Endowment Contract. The rules are too
complex to be summarized here, but generally depend on the
amount of premium payments made during the first seven policy
years. Certain changes in a policy after it is issued could
also cause it to be classified as a Modified Endowment Contract.
A current or prospective owner should consult with a competent
adviser to determine whether a policy transaction will cause the
policy to be classified as a Modified Endowment Contract.
Distributions Other Than Death Benefits from Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts
are subject to the following tax rules:
(1) All distributions other than death benefits from a Modified
Endowment Contract, including distributions upon surrender and
withdrawals, will be treated first as distributions of gain
taxable as ordinary income and as tax-free recovery of the
owner's investment in the policy only after all gain has been
distributed.
(2) Loans taken from or secured by a policy classified as a
Modified Endowment Contract are treated as distributions and
taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount
subject to tax except where the distribution or loan is made
when the owner has attained age 59-1/2 or is disabled, or where the
distribution 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 or designated beneficiary.
If a policy becomes a modified endowment contract, distributions
that occur during the policy year will be taxed as distributions
from a modified endowment contract. In addition, distributions
from a policy within two years before it becomes a modified
endowment contract will be taxed in this manner. This means that
a distribution made from a policy that is not a modified
endowment contract could later become taxable as a distribution
from a modified endowment contract.
Distributions Other Than Death Benefits from Policies that are
not Modified Endowment Contracts. Distributions other than death
benefits from a policy that is not classified as a modified
endowment contract are generally treated first as a recovery of
the owner's investment in the policy and only after the recovery
of all investment in the policy as taxable income. However,
certain distributions which must be made in order to enable the
policy to continue to qualify as a life insurance contract for
Federal income tax purposes if policy benefits are reduced
during the first 15 policy years may be treated in whole or in
part as ordinary income subject to tax.
Loans from or secured by a policy that is not a Modified
Endowment Contract are generally not treated as distributions.
The tax consequences associated with loans taken out after the
first 10 policy years are less clear and a tax adviser should be
consulted about such loans.
Finally, neither distributions from nor loans from or secured by
a policy that is not a Modified Endowment Contract are subject
to the 10 percent additional income tax.
Investment in the Policy. Your investment in the policy is
generally your aggregate premiums. When a distribution is taken
from the policy, your investment in the policy is reduced by the
amount of the distribution that is tax-free.
Policy Loans. In general, interest on a policy loan will not be
deductible. Before taking out a policy loan, you should consult
a tax adviser as to the tax consequences.
Multiple Policies. All Modified Endowment Contracts that are
issued by us (or our affiliates) to the same owner during any
calendar year are treated as one Modified Endowment Contract for
purposes of determining the amount includible in the owner's
income when a taxable distribution occurs.
Business Uses of the Policy. Businesses can use the policy in
various arrangements, including nonqualified deferred
compensation or salary continuance plans, split dollar insurance
plans, executive bonus plans, tax exempt and nonexempt welfare
benefit plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the
particular facts and circumstances. If you are purchasing the
policy for any arrangement the value of which depends in part on
its tax consequences, you should consult a qualified tax
adviser. In recent years, moreover, Congress has adopted new
rules relating to life insurance owned by businesses. Any
business contemplating the purchase of a new policy or a change
in an existing policy should consult a tax adviser.
Possible Tax Law Changes. Although the likelihood of
legislative changes is uncertain, there is always the
possibility that the tax treatment of the policy could change by
legislation or otherwise. Consult a tax adviser with respect to
legislative developments and their effect on the policy.
Possible Charges 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 may be attributable to the subaccounts or to
the policies. We reserve the right to charge the subaccounts
for any future taxes or economic burden we may incur.
OTHER INFORMATION ABOUT THE POLICIES AND UNION CENTRAL
---------------------------------------------------------------
Sale of the Policies
The policies will be offered to the public on a continuous
basis, but 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 an Ohio corporation, formed on November 9, 1983,
and qualified to do business in all fifty states. 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. We may also
compensate sales managers.
Carillon Investments will receive the 12b-1 fees assessed
against shares of the Templeton International Securities Fund
Class 2 portfolio attributable to the policies as compensation
for providing certain services.
Union Central Directors and Executive Officers
See Appendix B for a list of the names, ages, addresses and
principal occupations of Union Central's directors and executive officers.
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 Carillon Life Account at December
31, 1999 and 1998 and for the years then ended, and of The Union
Central Life Insurance Company at December 31, 1999 and 1998 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 reports thereon
appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such reports 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 LLP of Washington, D.C. has provided
advice on certain matters relating to the federal securities
laws.
Financial Statements
The financial statements of the separate account and 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>
Financial Statements
Carillon Life Account
December 31, 1999
<PAGE>
Report of Independent Auditors
===============================================================
To the Contract holders of Carillon Life
Account and the Board of Directors of
The Union Central Life Insurance Company
We have audited the accompanying statement of assets and
liabilities of the Carillon Life Account (comprised of the
Carillon Fund, Inc.'s Equity, Balanced Index, Bond, S&P MidCap
400 Index, and S&P 500 Index Subaccounts, the Scudder Variable
Life Investment Fund's Money Market, Capital Growth, and
International Subaccounts, MFS Variable Insurance Trust's Growth
with Income, High Income, Total Return, and Emerging Growth
Subaccounts, the AIM Variable Insurance Fund, Inc.'s Capital
Appreciation Subaccount, and the Templeton Variable Products
Series Fund's International Subaccount) as of December 31, 1999,
the related statement of operations for the year then ended and
the statements of changes in net assets for each of the two
years in the period then ended for the Carillon Fund, Inc.'s
Equity, Bond, and S&P 500 Index Subaccounts, the Scudder
Variable Life Investment Fund's Money Market, Capital Growth and
International Subaccounts, MFS Variable Insurance Trust's Growth
with Income, High Income and Emerging Growth Subaccounts, the
Templeton Variable Products Series Fund's International
Subaccount, the related statement of operations and the
statement of changes in net assets for the period from October
22, 1999 to December 31, 1999 for the Carillon Fund, Inc.'s
Balanced Index and S&P MidCap 400 Index Subaccounts, MFS
Variable Insurance Trust's Total Return Subaccount, and the AIM
Variable Insurance Fund, Inc.'s Capital Appreciation Subaccount,
and the related statement of operations for the period January
1, 1999 to October 22, 1999 and the statement of changes in net
assets for the year ended December 31, 1998 and the period
January 1, 1999 to October 22, 1999 for the Carillon Fund,
Inc.'s Capital Subaccount and the American Century Variable
Portfolio, Inc.'s Capital Appreciation Subaccount. 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 auditing standards
generally accepted in the United States. 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. Our procedures included confirmation of
securities owned as of December 31, 1999, by correspondence with
the applicable transfer agent. 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 financial statements referred to above
present fairly, in all material respects, the financial position
of each of the respective subaccounts constituting the Carillon
Life Account at December 31, 1999, the results of their
operations for the year then ended and changes in net assets for
each of the two years in the period then ended or for the period
October 22, 1999 to December 31, 1999 in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Cincinnati, Ohio
February 28, 2000
<TABLE>
<CAPTION>
CARILLON LIFE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
Carillon Fund, Inc.
(affiliated issuers)
----------------------------------------------------
--
S&P
Balanced S&P MidCap
400
Equity Index Bond 500 Index Index
Subaccount Subaccount Subaccount Subaccount
Subaccount ---------- ---------- ---------- -------
--- ----------
<S> <C> <C> <C> <C> <C>
Investments in
securities of
unaffiliated issuers,
at fair value (cost
$1,170,910; $3,168,689;
$2,031,711; $3,800,015;
$597,960; $2,568,856;
Investments in shares
of Carillon Fund, Inc.,
at fair value (cost
$1,866,210; $273.286;
$678,121; $10,284,167;
$10,992) $1,578,793 $294,276 $644,439 $12,501,402
$11,516
Total Invested Assets 1,578,793 294,276 644,439 12,501,402
11,516
OTHER ASSETS &
(LIABILITIES) (47,505) (16,763) (1,157) 114,214
22
NET ASSETS (Contract
Owners' Equity) $1,531,288 $277,513 $643,282 $12,615,616
$11,538
---------- --------- --------- ----------- ------
-
Accumulation units 126,103.11 25,915.97 53,005.63 536,981.82
993.87
Accumulation units value $12.14314 $10.70819 $12.13610 $23.49356
$11.60909
<CAPTION>
Scudder Variable Life
Investment Fund
(unaffiliated issuers)
------------------------------------------
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
Investments in securities
of unaffiliated
issuers, at fair value
(cost $1,170,910;
$3,168,689; $2,031,711;
$3,800,015; $597,960;
$2,568,856; $1,867;
$1,179,010; $788,166) $1,170,910 $4,053,992 $2,821,562
Investments in shares of
Carillon Fund, Inc.,
at fair value (cost
$1,866,210; $273.286;
$678,121; $10,284,167;
$10,992)
Total Invested Assets $1,170,910 $4,053,992 $2,821,562
OTHER ASSETS & (LIABILITIES) 34,875 74,006 58,634
NET ASSETS (Contract
Owners' Equity) $1,205,785 $4,127,998 $2,880,196
Accumulation units 101,684.92 165,129.19 132,236.98
Accumulation units value $11.85806 $24.99859 $21.78057
<CAPTION>
MFS Variable
Insurance
Trust
(unaffiliated issuers)
----------------------------------------------
Growth High Emerging
with Income Income Growth Return
Subaccount Subaccount Subaccount Subaccount
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investments in securities
of unaffiliated
issuers, at fair value
(cost $1,170,910;
$3,168,689; $2,031,711;
$3,800,015; $597,960;
$2,568,856; $1,867;
$1,179,010; $788,166) $4,247,489 $584,568 $4,308,151 $1,890
Investments in shares of
Carillon Fund, Inc.,
at fair value (cost
$1,866,210; $273.286;
$678,121; $10,284,167;
$10,992)
Total Invested Assets $4,247,489 $584,568 $4,308,151 $1,890
OTHER ASSETS & (LIABILITIES) (9,169) 2,794 41,162 ---
NET ASSETS (Contract
Owners' Equity) $4,238,320 $587,362 $4,349,313 $1,890
Accumulation units 222,207.83 48,415.77 149,356.95 183.83
Accumulation units value $19.07368 $12.13162 $29.12026 $10.28147
<CAPTION>
AIM Variable Templeton Variable
Insurance Fund, Inc. Products Series
Fund
(unaffiliated issuers) (unaffiliated
issuers)
---------------------- -------------------
-
Capital
Appreciation International
Subaccount Subaccount
---------- ----------
<S> <C> <C>
Investments in securities
of unaffiliated
issuers, at fair value
(cost $1,170,910; $3,168,689;
$2,031,711; $3,800,015;
$597,960; $2,568,856;
$1,867; $1,179,010;
$788,166) 1,510,721 882,380
Investments in shares of
Carillon Fund, Inc.,
at fair value (cost $1,866,210;
$273.286; $678,121;
$10,284,167; $10,992)
Total Invested Assets 1,510,721 882,380
OTHER ASSETS & (LIABILITIES) 8,836 18,249
NET ASSETS
(Contract Owners' Equity) $1,519,557 $900,629
Accumulation units 112,933.63 62,146.55
Accumulation units value $13.45531 $14.49202
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 (A)
CARILLON LIFE ACCOUNT
STATEMENT OF OPERATIONS
Carillon Fund, Inc.
(affiliated issuers)
--------------------------------------------------------------------
-
S&P
Balanced S&P MidCap
400
Equity Capital Index Bond 500 Index Index
Subaccount Subaccount Subaccount Subaccount Subaccount
Subaccount ---------- ---------- ---------- ---------- ---------
- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income $276,325 $3,781 --- $33,849 $124,222 $21
EXPENSES
Mortality and expense
risk charge 8,381 1,333 17 1,803 63,203 6
NET INVESTMENT
INCOME (LOSS) 267,944 2,448 (17) 32,046 61,019 15
REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS
Net realized
gain (loss)
on investments (356,391) (9,540) 158 (18,786) 333,698 1
Net unrealized
appreciation
(depreciation)
of investments 108,837 --- 20,990 (24,327) 1,240,113 523
NET REALIZED AND
UNREALIZED
GAIN (LOSS)
ON INVESTMENTS (247,554) (9,540) 21,148 (43,113) 1,573,811 524
NET INCREASE
(DECREASE)
IN NET ASSETS FROM
OPERATIONS $20,390 $(7,092) $21,131 $(11,067) $1,634,830 $539
<CAPTION>
Scudder Variable Life
Investment Fund
(unaffiliated issuers)
------------------------------------------
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income $43,994 $230,475 $142,679
EXPENSES
Mortality and expense
risk charge 6,872 21,995 24,776
NET INVESTMENT
INCOME (LOSS) 37,122 208,480 117,903
REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS
Net realized
gain (loss)
on investments --- 99,554 47,426
Net unrealized
appreciation
(depreciation)
of investments --- 607,971 727,138
NET REALIZED AND
UNREALIZED
GAIN (LOSS)
ON INVESTMENTS --- 707,525 774,564
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $37,122 $916,005 $892,467
<CAPTION>
MFS Variable
Insurance
Trust
(unaffiliated issuers)
----------------------------------------------
Growth High Emerging
with Income Income Growth Return
Subaccount Subaccount Subaccount Subaccount
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income $21,006 $28,531 --- ---
EXPENSES
Mortality and expense
risk charge 7,324 197 30,313 ---
NET INVESTMENT
INCOME (LOSS) 13,682 28,334 (30,313) ---
REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS
Net realized
gain (loss)
on investments 154,899 (8,488) 134,478 ---
Net unrealized
appreciation
(depreciation)
of investments 51,814 4,084 1,560,781 23
NET REALIZED AND
UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 206,713 (4,404) 1,695,259 23
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $220,395 $23,930 $1,664,946 $23
<CAPTION>
American Templeton
Century AIM Variable Variable
Portfolios, Insurance Fund, Products
Series
Inc. Inc. Fund
------------ --------------- -------------
--
Capital Capital
Appreciation Appreciation International
Subaccount Subaccount Subaccount
------------ ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income --- $31,122 $63,237
EXPENSES
Mortality and
expense risk
charge 5,646 3,328 4,554
NET INVESTMENT
INCOME (LOSS) (5,646) 27,794 58,683
REALIZED AND
UNREALIZED
GAIN (LOSS)
ON INVESTMENTS
Net realized
gain (loss)
on investments 35,409 4,038 (7,986)
Net unrealized
appreciation
(depreciation)
of investments --- 331,712 92,058
NET REALIZED AND
UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 135,409 335,750 84,072
NET INCREASE
(DECREASE)
IN NET ASSETS
FROM
OPERATIONS $129,763 $363,544 $142,755
</TABLE>
(A) Year ended December 31, 1999 for the Carillon Fund, Inc.'s
Equity, Bond, and S&P 500 Index Subaccounts, the Scudder
Variable Life Investment Fund's Money Market, Capital Growth,
and International Subaccounts, MFS Variable Insurance Trust's
Growth with Income, High Income, and Emerging Growth
Subaccounts, and the Templeton Variable Products Series Fund's
International Subaccount.
Period from October 22, 1999 to December 31, 1999 for the
Carillon Fund, Inc.'s Balanced Index and S&P MidCap 400 Index
Subaccounts, MFS Variable Insurance Trust's Total Return
Subaccount, and the AIM Variable Insurance Fund, Inc.'s Capital
Appreciation Subaccount.
Period from January 1, 1999 to October 22, 1999 for the Carillon
Fund, Inc.'s Capital Subaccount and the American Century
Variable Portfolios, Inc.'s Capital Appreciation Subaccount.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Carillon Fund, Inc.
Bond Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $32,046 $26,826
Net realized gain (loss) on investments (18,786) 1,508
Net unrealized depreciation of investments (24,327) (11,968)
-------- --------
Net increase (decrease) in net assets
resulting from operations (11,067) 16,366
-------- --------
EQUITY TRANSACTIONS
Contract purchase payments 285,434 117,035
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 245,577 330,813
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (282,138) (145,201)
Surrenders (43,945) (6,653)
-------- --------
Net proceeds from equity transactions 204,928 295,994
-------- --------
NET INCREASE IN NET ASSETS 193,861 312,360
NET ASSETS (Beginning of year) 449,421 137,061
-------- --------
NET ASSETS (End of year) $643,282 $449,421
======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Carillon Fund, Inc.
Equity Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $267,944 $208,326
Net realized loss on investments (356,391) (7,857)
Net unrealized appreciation (depreciation)
of investments 108,837 (475,951)
---------- ----------
Net increase (decrease) in net assets
resulting from operations 20,390 (275,482)
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 660,557 757,917
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 177,155 527,933
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (991,073) (463,174)
Surrenders (51,749) (18,068)
---------- ----------
Net proceeds (withdrawals)
from equity transactions (205,110) 804,608
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS (184,720) 529,126
NET ASSETS (Beginning of year) 1,716,008 1,186,882
---------- ----------
NET ASSETS (End of year) $1,531,288 $1,716,008
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MFS Variable Insurance Trust
Emerging Growth Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment loss $(30,313) $ (146)
Net realized gain on investments 134,478 2,607
Net unrealized appreciation of investments 1,560,781 183,496
---------- ----------
Net increase in net assets resulting
from operations 1,664,946 185,957
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 995,340 309,922
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 1,203,759 526,772
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (556,685) (150,046)
Surrenders (30,556) (5,969)
---------- ----------
Net proceeds from equity transactions 1,611,858 680,679
---------- ----------
NET INCREASE IN NET ASSETS 3,276,804 866,636
NET ASSETS (Beginning of year) 1,072,509 205,873
---------- ----------
NET ASSETS (End of year) $4,349,313 $1,072,509
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MFS Variable Insurance Trust
Growth with Income Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income (loss) $13,682 $(11,388)
Net realized gain on investments 154,899 7,164
Net unrealized appreciation of investments 51,814 318,080
---------- ----------
Net increase in net assets resulting
from operations 220,395 313,856
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 1,505,108 828,591
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 1,206,837 850,023
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (997,197) (454,281)
Surrenders (76,259) (19,193)
---------- ----------
Net proceeds from equity transactions 1,638,489 1,205,140
---------- ----------
NET INCREASE IN NET ASSETS 1,858,884 1,518,996
NET ASSETS (Beginning of year) 2,379,436 860,440
---------- ----------
NET ASSETS (End of year) $4,238,320 $2,379,436
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MFS Variable Insurance Trust
High Income Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $28,334 $16,944
Net realized gain (loss) on investments (8,488) 910
Net unrealized appreciation (depreciation)
of investments 4,084 (25,221)
-------- --------
Net increase (decrease) in net assets
resulting from operations 23,930 (7,367)
-------- --------
EQUITY TRANSACTIONS
Contract purchase payments 216,829 140,444
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 94,797 202,109
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (116,379) (82,593)
Surrenders (11,269) (4,684)
-------- --------
Net proceeds from equity transactions 183,978 255,276
-------- --------
NET INCREASE IN NET ASSETS 207,908 247,909
NET ASSETS (Beginning of year) 379,454 131,545
-------- --------
NET ASSETS (End of year) $587,362 $379,454
======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Scudder Variable Life Investment Fund
Money Market Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $37,122 $15,965
---------- ----------
Net increase in net assets resulting
from operations 37,122 15,965
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 5,800,168 3,170,692
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 683,556 248,631
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (5,871,123) (3,354,918)
Surrenders (42,557) (17,624)
---------- ----------
Net proceeds from equity transactions 570,044 46,781
---------- ----------
NET INCREASE IN NET ASSETS 607,166 62,746
NET ASSETS (Beginning of year) 598,619 535,873
---------- ----------
NET ASSETS (End of year) $1,205,785 $598,619
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Carillon Fund, Inc.
S&P 500 Index Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $61,019 $100,323
Net realized gain on investments 333,698 187,721
Net unrealized appreciation of investments 1,240,113 733,968
----------- ----------
Net increase in net assets resulting
from operations 1,634,830 1,022,012
----------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 4,143,314 2,070,371
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 3,455,784 1,058,473
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (1,921,022) (1,568,399)
Surrenders (174,541) (41,604)
----------- ----------
Net proceeds from equity transactions 5,503,535 1,518,841
----------- ----------
NET INCREASE IN NET ASSETS 7,138,365 2,540,853
NET ASSETS (Beginning of year) 5,477,251 2,936,398
----------- ----------
NET ASSETS (End of year) $12,615,616 $5,477,251
=========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION> Scudder Variable Life Investment Fund
Capital Growth Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $208,480 $48,003
Net realized gain on investments 99,554 28,543
Net unrealized appreciation of investments 607,971 185,265
---------- ----------
Net increase in net assets resulting
from operations 916,005 261,811
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 1,304,093 758,565
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 909,519 572,746
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (706,932) (434,241)
Surrenders (103,604) (25,144)
---------- ----------
Net proceeds from equity transactions 1,403,076 871,926
---------- ----------
NET INCREASE IN NET ASSETS 2,319,081 1,133,737
NET ASSETS (Beginning of year) 1,808,917 675,180
---------- ----------
NET ASSETS (End of year) $4,127,998 $1,808,917
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION> Scudder Variable Life Investment Fund
International Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $117,903 $91,452
Net realized gain on investments 47,426 4,157
Net unrealized appreciation of investments 727,138 38,361
---------- ----------
Net increase in net assets resulting
from operations 892,467 133,970
---------- ----------
EQUITY TRANSACTIONS
Contract purchase payments 768,038 495,334
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 643,433 207,840
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (552,932) (314,317)
Surrenders (31,226) (16,592)
---------- ----------
Net proceeds from equity transactions 827,313 372,265
---------- ----------
NET INCREASE IN NET ASSETS 1,719,780 506,235
NET ASSETS (Beginning of year) 1,160,416 654,181
---------- ----------
NET ASSETS (End of year) $2,880,196 $1,160,416
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Templeton Variable Products Series Fund
International Subaccount
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $58,683 $9,864
Net realized gain (loss) on investments (7,986) 538
Net unrealized appreciation on investments 92,058 3,770
-------- --------
Net increase in net assets resulting
from operations 142,755 14,172
-------- --------
EQUITY TRANSACTIONS
Contract purchase payments 330,231 254,306
Transfers from other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company 215,307 188,403
Transfers to other subaccounts and
Guaranteed Account of The Union
Central Life Insurance Company (268,809) (99,573)
Surrenders (3,913) (2,041)
-------- --------
Net proceeds from equity transactions 272,816 341,095
-------- --------
NET INCREASE IN NET ASSETS 415,571 355,267
NET ASSETS (Beginning of year) 485,058 129,791
-------- --------
NET ASSETS (End of year) $900,629 $485,058
======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
==============================================================
DECEMBER 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Life Account of The Union Central Life Insurance Company (the
Life Account) is a separate account registered under the Investment
Company Act of 1940, as amended, as a unit investment trust. The Life
Account was established on July 10, 1995 under Ohio law and by resolution
of the Board of Directors of The Union Central life Insurance Company
(Union Central) and commenced operations on December 29, 1995. The Life
Account is comprised of fourteen subaccounts, each of which invests in a
corresponding Portfolio of Carillon Fund, Inc., Scudder Variable Life
Investment Fund, MFS Variable Insurance Trust, AIM Variable Insurance
Fund, Inc., or Templeton Variable Products Series Fund (the Funds).
The Funds are no-load, diversified, open-end management investment
companies registered under the Investment Company Act of 1940, as
amended. The shares of Carillon Fund, Inc. are sold only to Union
Central and its separate accounts to fund the benefits under certain
variable life policies and variable annuity contracts. Carillon
Investments, Inc. (the Distributor), a broker-dealer registered under the
Securities Exchange Act of 1934 and a wholly-owned subsidiary of Union
Central, serves as the distributor of variable life policies and variable
annuity contracts issued by Carillon Fund, Inc. The shares of Scudder
Variable Life Investment Fund, MFS Variable Insurance Trust, AIM Variable
Insurance Fund, Inc., and Templeton Variable Products Series Fund, are
available and are being marketed exclusively as a pooled funding vehicle
for life insurance companies writing all types of variable life insurance
policies and variable annuity contracts. Scudder Investor Services,
Inc., a wholly-owned subsidiary of Scudder Stevens & Clark Inc., serves
as distributor of variable life insurance policies and variable annuity
contracts issued by Scudder Variable Life Investment Fund. MFS Fund
Distributors, Inc., a wholly-owned subsidiary of Massachusetts Financial
Services Company, serves as distributor of shares issued by the MFS
Variable Insurance Trust. AIM Distributors, Inc. is the distributor of
the shares issued by AIM Variable Insurance Fund, Inc. Franklin
Templeton Distributors, Inc. serves as the distributor of variable
annuity and variable life insurance contracts issued by Templeton
Variable Products Series Fund.
On October 22, 1999, the Life Account began operations in the Carillon
Fund, Inc.'s Balanced Index and S&P MidCap 400 Index Subaccounts, the MFS
Variable Insurance Trust's Total Return Subaccount, and the AIM Variable
Insurance Fund, Inc.'s Capital Appreciation Subaccount. On October 29,
1999, the Life Account terminated the operations of the Carillon Funds,
Inc.'s Capital Subaccount (Capital Account) and the American Century
Variable Portfolios, Inc.'s Capital Appreciation Subaccount (American
Century Account). At the date of termination, all funds in the Capital
Account and the American Century Account were transferred to the Carillon
Funds, Inc.'s Balanced Index and the AIM Variable Insurance Fund, Inc.'s
Capital Appreciation Subaccounts, respectively.
The assets of the Life Account are segregated from the other assets of
Union Central and the investment performance of the Life Account is
independent of the investment performance of both Union Central's general
assets and other separate accounts.
Investment valuation - Assets of the Life Account are invested in shares
of the Funds at the net asset value of the Funds' shares. Investments in
the Funds' shares are subsequently valued at the net asset value of the
Funds' shares held.
Use of estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Securities transactions and investment income - Securities transactions
are recorded on the trade date (the date the order to buy or sell is
executed), and dividend income is recorded on the ex-dividend date.
Gains and losses on sales of the Funds' shares are calculated on the
first-in, first-out basis for financial reporting and tax purposes. All
dividends and distributions from the Subaccount are reinvested in
additional shares of the respective Subaccount at the net asset value per
share.
Federal income taxes - The operations of the Life Account form a part of
and are taxed with the operations of Union Central. Union Central is
taxed as a life insurance company under Subchapter L of the Internal
Revenue Code. Under existing federal income tax law, separate account
investment income and capital gains are not taxed to the extent they are
applied to increase reserves under a contract issued in connection with
the Life Account. Investment income and realized capital gains and
losses on assets of the Life Account are automatically applied to
increase or decrease reserves under the contract. Accordingly, no
provision for federal income taxes has been made in these financial
statements.
NOTE 2 - INVESTMENT IN AFFILIATED & NON-AFFILIATED FUNDS
The subaccounts of the Life Account held the following investment in the
corresponding Portfolios of Carillon Fund, Inc., Scudder Variable Life
Investment Fund, MFS Variable Insurance Trust, and Templeton Variable
Products Series Fund as of December 31, 1999:
<TABLE>
<CAPTION>
Carillon Fund, Inc
----------------------------------------------------------
Balanced S&P 500 S&P MidCap
Equity Index Bond Index 400 Index
Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value per share $ 12.62 $ 10.41 $ 10.36 $ 23.12 $ 11.04
Number of shares 125,102 28,269 62,205 540,718 1,043
<CAPTION>
Scudder Variable Life
Investment Fund
---------------------------------------
Money Capital
Market Growth International
Subaccount Subaccount Subaccount
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value per share $ 1.00 $ 29.13 $ 20.34
Number of shares 1,170,910 139,169 138,720
<CAPTION>
MFS Variable Insurance Trust
-----------------------------------------------
Growth Emerging
with Income High Income Growth Total Return
Subaccount Subaccount Subaccount Subaccount
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value per share $ 21.31 $ 11.49 $ 37.94 $ 17.75
Number of shares 199,319 50,876 113,552 107
<CAPTION>
AIM
-------
Capital
Appreciation
Subaccount
------------
<S> <C>
Net asset value per share $ 35.58
Number of shares 42,460
<CAPTION>
Templeton Variable Products Series Fund
---------------------------------------
International
Subaccount
----------
<S> <C>
Net asset value per share $ 22.13
Number of shares 39,873
</TABLE>
<PAGE>
NOTE 3 - ACCOUNT CHARGE
Mortality and expense risk charge - A mortality and expense risk charge
for Union Central at an annual rate of .75% of the net assets during the
first ten policy years and .25% of net assets thereafter of the Life
Account is determined daily. 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 assumed by Union Central 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.
NOTE 4 - IMPACT OF YEAR 2000 (UNAUDITED)
Union Central has made a successful transition to the Year 2000. Union
Central's computer systems and facilities are fully operational and Union
Central is prepared to continue to serve its customers in the twenty-
first century.
Union Central began preparations for the Year 2000 in 1996. From 1996 to
2000, significant resources in both time and money were allocated to the
Year 2000 project. Union Central's efforts included Year 2000 system
modifications, future date testing for virtually all of Union Central's
computer systems, Year 2000 readiness of Union Central's building systems
(i.e. heating, lighting, and security systems), and formal communications
with all significant vendors, suppliers and business partners to
determine their Year 2000 status.
The goal was to continue to meet Union Central's obligations to its
customers and business partners without interruption as Union Central
transitioned to the Year 2000. Union Central has achieved that goal and
is not aware of any Year 2000 problems occurring in its computer systems
or embedded systems.
Union Central is continuing to monitor all systems closely as there is
still the potential for Year 2000 related problems to occur. Union
Central is confident, however, that it will not encounter any problems
that have a material effect on its ability to continue to provide service
to its customers and business partners.
NOTE 5- RELATED PARTY TRANSACTIONS
Investment advisory fees - The Portfolios within Carillon Fund, Inc. (the
CFI Funds) pay investment advisory fees to Carillon Advisers, Inc. (the
Adviser), under terms of an Investment Advisory Agreement (the
Agreement). Certain officers and directors of the Adviser are affiliated
with the CFI Funds. The CFI Funds pay the Adviser, as full compensation
for all services and facilities furnished, a monthly fee computed
separately for each Portfolio on a daily basis, at an annual rate, as
follows:
(a) for the Equity Portfolio - .65% of the first
$50,000,000, .60% of the next $100,000,000, and
.50% of all over $150,000,000 of the current net
asset value.
(b) for the Bond Portfolio - .50% of the first
$50,000,000, .45% of the next $100,000,000, and
.40% of all over $150,000,000 of the current net
asset value.
(c) for the S&P 500 Index Portfolio - .30% of the
current net asset value.
(d) for the S&P MidCap 400 Index Portfolio - .30% of the
current net asset value.
(e) for the Balanced Index Portfolio - .30% of the
current net asset value.
The Agreement provides that if the total operating expenses of the CFI
Funds, exclusive of the advisory fee and certain other expenses as
described in the Agreement, for any fiscal quarter exceed an annual rate
of 1% of the average daily net assets of the Equity or Bond Portfolios,
the Adviser will reimburse the CFI Funds for such excess, up to the
amount of the advisory fee for that year. The Adviser has agreed to pay
any other expenses of the S&P 500 Index Portfolio, the S&P MidCap 400
Index Portfolio, and the Balanced Index Portfolio, other than the
advisory fee for that Portfolio, to the extent that such expenses exceed
0.30% of its average annual net assets. As a result, for the period
ended December 31, 1999, the adviser reimbursed the S&P MidCap 400 Index
Portfolio $12,912 and the Balanced Index Portfolio $13,736.
In addition to providing investment advisory services, the Adviser is
responsible for providing certain administrative functions to the CFI
Funds. The Adviser has entered into an Administration Agreement with the
Distributor under which the Distributor furnishes substantially all of
such services for an annual fee of .20% of the CFI Funds' average net
assets for the Equity and Bond Portfolios, and .05% of the CFI Funds'
average net assets for the S&P 500 Index Portfolio, the S&P MidCap 400
Index Portfolio, and the Balanced Index Portfolio. The fee is borne by
the Adviser, not the CFI Funds.
The Adviser is a wholly-owned subsidiary of Union Central.
NOTE 6 - SELECTED PER UNIT DATA
The following selected per unit data is computed on the basis of an
accumulation unit outstanding at December 31 (ratio of expenses and total
return are of the underlying funds):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
CARILLON FUND, INC.
EQUITY SUBACCOUNT
Accumulation unit value $12.14 $11.99 $14.26
Number of accumulation units outstanding,
end of period 126,103.11 143,131.22
83,212.46
Ratio of expenses to average net assets 0.69% 0.62% 0.62%
Total return 2.05% -15.31% 20.56%
BALANCED INDEX SUBACCOUNT
Accumulation unit value $10.71<F1>
Number of accumulation units outstanding,
end of period 25,915.97
Ratio of expenses to average net assets 0.47%
Total return 5.31%
BOND SUBACCOUNT
Accumulation unit value $12.14 $12.37 $11.70
Number of accumulation units outstanding,
end of period 53,005.63 36,346.01 11,719.47
Ratio of expenses to average net assets 0.60% 0.58% 0.60%
Total return -1.11% 6.52% 11.02%
S&P 500 INDEX SUBACCOUNT
Accumulation unit value $23.49 $19.64 $15.39
Number of accumulation units outstanding,
end of period 536,981.82 278,881.06
190,744.45
Ratio of expenses to average net assets 0.39% 0.43% 0.50%
Total return 20.52% 28.54% 32.72%
S&P MIDCAP 400 INDEX SUBACCOUNT
Accumulation unit value $11.61<F2>
Number of accumulation units outstanding,
end of period 993.87
Ratio of expenses to average net assets 0.60%
Total return 11.14%
SCUDDER VARIABLE LIFE INVESTMENT FUND
MONEY MARKET SUBACCOUNT
Accumulation unit value $11.86 $11.38 $10.89
Number of accumulation units outstanding,
end of period 101,684.92 52,611.47
49,222.39
Ratio of expenses to average net assets 0.43% 0.44% 0.46%
Total return 4.99% 5.29% 5.25%
CAPITAL GROWTH SUBACCOUNT
Accumulation unit value $25.00 $18.62 $15.23
Number of accumulation units outstanding,
end of period 165,129.19 97,127.10
44,339.15
Ratio of expenses to average net assets 0.49% 0.50% 0.51%
Total return 35.23% 23.23% 35.76%
INTERNATIONAL SUBACCOUNT
Accumulation unit value $21.78 $14.20 $12.08
Number of accumulation units outstanding,
end of period 132,236.98 81,705.84
54,168.43
</TABLE>
<PAGE>
Consolidated Financial Statements
The Union Central Life Insurance Company
and Subsidiaries
Years ended December 31, 1999 and 1998
with Report of Independent Auditors
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
CONTENTS
Page
Report of Independent Auditors...............................1
Consolidated Balance Sheets..................................2
Consolidated Statements of Income............................3
Consolidated Statements of Equity............................4
Consolidated Statements of Cash Flows........................5
Notes to Consolidated Financial Statements ..................6
<PAGE>
Ernst & Young LLP 1300 Chiquita Center Phone: 513 621 6454
250 East Fifth Street
Cincinnati, Ohio 45202
Report of Independent Auditors
To the Board of Directors of
The Union Central Life Insurance Company
We have audited the accompanying consolidated balance sheets of
The Union Central Life Insurance Company and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated
statements of income, equity, 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 auditing standards
generally accepted in the United States. 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of The Union Central Life Insurance Company and
subsidiaries at December 31, 1999, and 1998, and the consolidated
results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
February 4, 2000
<PAGE>
The Union Central Life Insurance Company and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
-----------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale at fair
value (amortized cost: 1999 - $2,526,023
and 1998 - $2,637,815) $2,407,439 $2,674,832
Equity securities available-for-sale at fair
value (cost: 1999 - $82,269 and 1998 - $100,429) 70,539 82,269
Cash and short-term investments 1,892 57,376
Other invested assets 42,666 49,810
Mortgage loans 726,753 790,337
Real estate 42,509 43,205
Policy loans 150,703 201,958
---------- ----------
Total investments 3,442,501 3,899,787
Accrued investment income 42,963 46,857
Deferred policy acquisition costs 432,401 382,971
Property, plant and equipment, at cost,
less accumulated depreciation (1999 - $64,069
and 1998 - $60,201) 33,154 25,272
Federal income tax recoverable 5,720 6,415
Deferred federal income tax asset 5,877 --
Other assets 154,151 101,735
Separate account assets 1,919,566 1,530,755
---------- ----------
Total assets $6,036,333 $5,993,792
========== ==========
LIABILITIES AND EQUITY
Policy liabilities:
Future policy benefits $3,210,466 $3,411,158
Deposit funds 101,187 131,225
Policy and contract claims 31,163 34,499
Policyholders' dividends 12,275 37,192
---------- ----------
Total policy liabilities 3,355,091 3,614,074
Deferred revenue 101,477 101,823
Other liabilities 88,812 84,792
Deferred federal income tax liability -- 15,744
Surplus notes payable 49,767 49,758
Separate account liabilities 1,916,954 1,524,810
---------- ----------
Total liabilities 5,512,101 5,391,001
MINORITY INTEREST IN SUBSIDIARY'S EQUITY -- 36,320
EQUITY
Policyholders' equity 593,349 571,895
Accumulated other comprehensive loss (69,117) (5,424)
---------- ----------
Total equity 524,232 566,471
---------- ----------
Total liabilities and equity $6,036,333 $5,993,792
========== ==========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
-----------------
<S> <C> <C>
REVENUE
Insurance revenue:
Traditional insurance premiums $149,343 $138,358
Universal life policy charges 61,907 82,729
Annuities 43,540 43,778
Net investment income 277,382 307,839
Net realized losses on investments (20,256) (12,535)
Other 17,665 8,999
-------- --------
Total revenue 529,581 569,168
BENEFITS AND EXPENSES
Benefits 168,288 188,217
Increase in reserves for future policy benefits 7,307 1,791
Interest expense:
Universal life 55,643 57,364
Investment products 82,107 89,150
Underwriting, acquisition and insurance expense 146,052 158,887
Policyholders' dividends 16,225 20,626
Impairment loss on subsidiary 5,689 --
-------- --------
Total benefits and expenses 481,311 516,035
Income before federal income tax expense
and minority interest in subsidiary loss 48,270 53,133
Federal income tax expense 26,816 16,687
-------- --------
Income before minority interest in
subsidiary loss 21,454 36,446
Minority interest in subsidiary loss -- 3,045
-------- --------
Net Income $21,454 $39,491
======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive Policyholders'
Income (Loss) Equity Total
------------- -------------- -----
<S> <C> <C> <C>
Balance at January 1, 1998 $ 24,100 $532,404 $556,504
Net income 39,491 39,491
Unrealized losses on securities,
net of tax and reclassification
adjustment (23,393) (23,393)
Minimum pension liability
adjustment (6,131) (6,131)
-------
Comprehensive income 9,967
-------- -------- --------
Balance at December 31, 1998 (5,424) 571,895 566,471
-------- -------- --------
Net income 21,454 21,454
Unrealized losses on securities,
net of tax and reclassification
adjustment (62,358) (62,358)
Minimum pension liability
adjustment (1,335) (1,335)
Comprehensive loss (42,239)
-------- -------- --------
Balance at December 31, 1999 $(69,117) $593,349 $524,232
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
THE UNION CENTRAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
-----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 21,454 $ 39,491
Adjustments to net income not affecting cash:
Impairment loss on subsidiary 5,689 --
Interest credited to universal life policies 82,107 57,364
Interest credited to interest sensitive products 55,643 89,150
Accrual of discounts on investments, net 940 628
Net realized losses on investments 20,256 12,535
Depreciation 4,750 5,081
Amortization of deferred policy acquisition costs 21,910 34,559
Amortization of deferred revenue (3,900) (10,267)
Deferred federal income tax expense (benefit) 11,916 (71)
Change in operating assets and liabilities:
Accrued investment income (1,742) 1,989
Policy cost deferred (60,779) (43,382)
Revenue deferred 3,555 1,959
Policy liabilities (28,944) (27,465)
Other liabilities (26,963) (21,515)
Other items, net 13,005 (3,312)
---------- ----------
Cash Provided by Operating Activities 118,897 136,744
---------- ----------
INVESTING ACTIVITIES
Costs of investments acquired (2,612,555) (2,421,256)
Proceeds from sale, maturity or repayment
of investments 2,413,784 2,399,096
Decrease in policy loans 3,409 1,523
Purchases of property and equipment, net (11,598) (5,780)
---------- ----------
Cash Used in Investing Activities (206,960) (26,417)
---------- ----------
FINANCING ACTIVITIES
Receipts from universal life and
investment contracts 695,971 733,489
Withdrawals from universal life and
investment contracts (663,392) (791,312)
---------- ----------
Cash Provided (Used) by Financing Activities 32,579 (57,823)
---------- ----------
Increase (decrease) in cash and short term
investments (55,484) 52,504
---------- ----------
Cash and short term investments
at beginning of year 57,376 4,872
---------- ----------
Cash and short term investments at end of year $ 1,892 $ 57,376
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for federal income taxes $ 13,680 $ 24,277
Cash paid during the year for interest
on surplus notes $ 4,100 $ 4,100
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
The Union Central Life Insurance Company and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation and Organization
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the U.S. (GAAP) and include the accounts of The
Union Central Life Insurance Company (Union Central) and the
following subsidiaries: Carillon Advisors, Inc., wholly-owned, a
registered investment advisor; Carillon Investments, Inc.,
wholly-owned, a registered broker-dealer that offers investment
products and related services through its registered
representatives; Payday of America, LLC, wholly-owned, a payroll
company; and Family Enterprise Institute, Inc., wholly-owned, a
national membership organization for family business owners.
The consolidated company will be referred to as "the Company".
At December 31, 1998, the consolidated company included the
Manhattan Life Insurance Company (MLIC). In accordance with the
impairment loss recognized on MLIC in 1999 (see discussion
below), MLIC was not included in the consolidated company at
December 31, 1999. All significant intercompany accounts and
transactions have been eliminated in the accompanying
consolidated financial statements. Union Central also has the
following unconsolidated investment affiliates: Carillon Fund,
Inc., a registered investment company consisting of five
investment portfolios (Carillon S&P Midcap 400 Index Portfolio,
Carillon Lehman Aggregate Bond Index Portfolio, Carillon Equity
Fund, Carillon NASDAQ 100 Index Fund and Carillon Russel 2000
Index Fund) and Summit Investment Trust, consisting of two
mutual funds (Summit Emerging Markets Bond Fund, an emerging
markets corporate and government bond fund and Summit High Yield
Fund, a high yield bond mutual fund). In 1999, the Company
formally dissolved the Carillon Investment Trust, a registered
investment company, and withdrew its entire investment in the
Carillon Capital Fund, the sole mutual fund that was offered
through the Carillon Investment Trust.
The Company provides a wide spectrum of financial products and
related services for the benefit of individual, group and
pension policyholders. Such products and services include
insurance to provide for financial needs resulting from loss of
life or income and management of funds accumulated for
preretirement and retirement needs.
The Company is licensed to do business in all 50 states of the
United States.
The preparation of financial statements requires management to
make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates
and assumptions could change in the future as more information
becomes known, which could impact the amounts reported and
disclosed herein.
On May 27, 1999, the Company entered into a definitive agreement
to sell all of the Company's guarantee capital shares in MLIC to
Connecticut Reassurance Corporation (CRC), an insurance company
formed under Connecticut law, for $27,250,000. On January 26,
2000, the New York Insurance Department approved the sale of
MLIC to CRC, and on February 2, 2000, the sale was completed.
Because the proceeds from the sale of MLIC to CRC were less than
the net assets of MLIC, an impairment loss was recognized in
1999 ($5,689,000 loss before federal income tax expense of
$5,621,000). The $5,689,000 pre-tax loss is presented in
"Impairment loss on subsidiary" in the Statements of Income, and
the federal income tax expense of $5,621,000 recognized on the
impairment was included in "Federal income tax expense" in the
Statements of Income. As the purchase price of $27,250,000 was
received subsequent to December 31, 1999, it was recorded as a
receivable in "Other assets" in the Balance Sheets at December
31, 1999. Also, the impairment loss on MLIC included the
write-off of unamortized goodwill of $2,200,000 recorded by
Union Central related to expenses Union Central incurred in
becoming the sole shareholder in MLIC. As of December 31, 1999
and 1998, respectively, MLIC reported assets of $431,425,000 and
$482,935,000, liabilities of $387,585,000 and $416,260,000,
policyholders' equity of $14,884,000 and $36,320,000 (reported
as "Minority interest in subsidiary equity" in the Balance
Sheets at December 31, 1998) and shareholders' equity of
$28,956,000 and $30,355,000. MLIC reported revenue of
$54,732,000 and $66,031,000 and expenses of $64,176,000 and
$69,555,000 for the years ended December 31, 1999 and 1998,
respectively. MLIC reported policyholders' share of net loss of
$10,938,000 and $3,045,000 (reported as "Minority interest in
subsidiary loss" in the Statements of Income for the year ended
December 31, 1998) and shareholders' share of net income of
$101,000 and $1,172,000 for the years ended December 31, 1999
and 1998, respectively.
During the third quarter of 1999, the Company entered into an
agreement with Swiss Re to reinsure Swiss Re's entire group
operations (formally Royal Maccabees and Royal Life). The block
was reinsured on a 100% coinsurance basis with an effective date
of January 1, 1999. As part of the agreement, the Company paid
an allowance of $13,400,000 to Swiss Re, which was capitalized
in "Deferred Policy Acquisition Costs" in the Balance Sheets.
During the third quarter of 1999, the Company formed Payday of
America, LLC. The Company contributed $1,600,000 of paid in
capital related to the formation of Payday of America.
During 1999, the Company recognized a realized gain of
$5,040,000 recorded in "Net realized losses on investments" in
the Statements of Income resulting from sales of mortgage loans
to a third party. The realized gain was computed in accordance
with Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" (FAS 125) and represented the present value of
compensation related to the mortgage loan sales that Union
Central will receive over the life of the mortgage loans sold.
Also, at December 31, 1999, an interest-only strip asset of
$4,354,000 was recorded in "Other assets" in the Balance Sheets.
The asset represented the present value of compensation of
$5,040,000 related to the mortgage loan sales, less amortization
expense of $684,000, which was recorded in "Net investment
income" in the Statements of Income.
Investments
Fixed maturity and equity securities classified as available-
for-sale are carried at fair value with net unrealized gains and
losses reported as a separate component of equity.
Other investments are reported on the following bases:
- Mortgage loans on real estate are carried at their
aggregate unpaid balance less unamortized discount and less an
allowance for possible losses.
- Real estate acquired through foreclosure is carried at the
lower of cost or its net realizable value.
- Policy loans are reported at unpaid balances.
- Cash and short-term investments presented on the Balance
Sheets consist of cash-in-bank, cash-in-transit and commercial
paper that has a maturity date of 90 days or less from the date
acquired.
The Company's carrying value of investments in limited
partnerships are adjusted to reflect the GAAP earnings of the
investments underlying the limited partnership portfolios.
During 1998, the Company declared two of its hedge fund limited
partnerships permanently impaired and recorded a realized loss
of $15,800,000.
The fair values of fixed maturity and equity securities
represent quoted market values from published sources or
calculated market values using the "yield method" if no quoted
market values are obtainable.
Realized gains and losses on sales of investments are recognized
on a first-in, first-out basis. Declines in the value of
investments judged to be other-than-temporary are recognized on
a specific identification basis.
Interest is not accrued on mortgage loans or bonds for which
principal or interest payments are determined to be
uncollectible.
The Company purchases call options to hedge insurance contracts
whose credited interest is linked to returns in Standard &
Poor's 500 Stock Index (Index) based on a formula which applies
participation rates to the returns in the Index. Call options
are contracts which give the option purchaser the right, but not
the obligation, to buy securities at a specified price during a
specified period. The Company holds call options which expire
quarterly until December 29, 2000. The Company paid initial
fees (the option premium) to enter the option contracts. The
Index call options give the Company the right to receive cash at
settlement if the closing Index value is above the strike price.
These proceeds do not result in income to the Company because
the hedged insurance contracts would be credited interest for an
equivalent amount.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to the call options. To
minimize this risk, the Company only enters into private options
contracts with counterparties having Standard & Poor's credit
ratings of AA- or above or listed contracts guaranteed by the
Chicago Board Options Exchange. The credit exposure is limited
to the value of the call options at a particular point in time.
The value of the call options was $5,382,000 at December 31,
1999.
The call options were carried at their fair value of $5,382,000
at December 31, 1999, and were reflected in "Other invested
assets" in the Balance Sheets. The liabilities for the hedged
insurance contracts were adjusted based on the returns in
Standard & Poor's 500 Stock Index, and were reflected in
"Deposit funds" in the Balance Sheets.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable agency expenses have been deferred.
Deferred policy acquisition costs are amortized consistent with
the methods described in "Policy Liabilities, Revenues, Benefits
and Expenses". Amortization of deferred policy acquisition
costs totalled $21,910,000 and $34,559,000 for the years ended
December 31, 1999 and 1998, respectively, and were included in
"Underwriting, acquisition and insurance expense" in the
Statements of Income. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains on available-
for-sale securities. Adjustments (increasing) or decreasing
deferred policy acquisition costs related to unrealized gains or
losses totalled $(37,373,000) and $11,474,000 at 1999 and 1998,
respectively.
In 1999 and 1998, the Company revised its estimates of future
gross profits, and as a result amortization of deferred policy
acquisition costs included in "Underwriting, acquisition and
insurance expense" in the Statements of Income decreased
$12,022,000 and $2,991,000 for the years ended 1999 and 1998,
respectively.
Property, Plant and Equipment
Property, plant and equipment is valued at historical cost less
accumulated depreciation in the Balance Sheets. It consists
primarily of Union Central's home office, capital leases for
furniture and equipment, furniture and fixtures and electronic
data processing equipment.
Depreciation is computed with the straight-line method over the
estimated useful lives of the respective assets, not to exceed
10 years for office furniture and 5 years for electronic data
processing equipment. Depreciation is computed for leasehold
improvements with the straight-line method over the shorter of
the remaining lease term or useful life of the improvements.
Capitalization of Software Costs
In 1999, the Company adopted Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires that
certain software costs be capitalized and subsequently amortized
over the software's estimated useful life. The asset of
$5,669,000 established due to the capitalization of certain
software costs was recorded in "Other assets" in the Balance
Sheets.
Deposit Funds
The liability for deposit funds is generally established at the
policyholders' accumulated cash values plus amounts provided for
guaranteed interest.
Policy Claims
Policy claim reserves represent the estimated ultimate net cost
of all reported and unreported claims incurred. In addition, a
claim adjustment expense reserve is held to account for the
expenses associated with administering these claims. The
reserves for unpaid claims are estimated using individual case
basis valuations and statistical analyses. The claim adjustment
expense reserve is estimated using statistical analyses. These
estimates are subject to the effects of trends in claim severity
and frequency. Although some variability is inherent in such
estimates, management believes that the reserves for claims and
claim related expenses are adequate. The estimates are
continually reviewed and adjusted as necessary as experience
develops or new information becomes known and such adjustments
are included in current operations.
Dividends to Policyholders
The Company's dividend liability is the amount estimated to have
accrued to policyholders' as of each year end.
Separate Accounts
Separate account assets and liabilities reported in the
accompanying financial statements (excluding seed money provided
by the Company) represent funds that are separately administered
for the individual annuity, group annuity and variable universal
life lines of business, and for which the contract holders
rather than the Company bear the investment risk. Separate
account contract holders 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 contract holders
and are not included in the accompanying financial statements.
Union Central derives certain fees for maintaining and managing
the separate accounts, but bears no investment risk on these
assets, except to the extent that it participates in a
particular separate account.
Policy Liabilities, Revenues, Benefits and Expenses
Traditional Insurance Products
Traditional insurance products include those products with fixed
and guaranteed premiums and benefits and consist primarily of
whole life insurance policies, term insurance policies and
disability income policies. Premiums for traditional products
are recognized as revenue when due.
The liability for future policy benefits for participating
traditional life is computed using a net level premium method
and the guaranteed mortality and dividend fund interest. The
mortality and interest assumptions are equivalent to statutory
assumptions. The liabilities for future policy benefits and
expenses for nonparticipating traditional life policies and
disability income policies are generally computed using a net
level premium method and assumptions for investment yields,
morbidity, and withdrawals based principally on company
experience projected at the time of policy issue, with provision
for possible adverse deviations. Interest assumptions for
participating traditional life reserves for all policies ranged
from 2.3% to 6.0% for the years ended 1999 and 1998.
The costs of acquiring new traditional business, principally
commissions, certain policy issue and underwriting expenses
(such as medical examination and inspection report fees) and
certain agency expenses, all of which vary with and are
primarily related to the production of new and renewal business,
are deferred to the extent that such costs are deemed
recoverable through future gross premiums. Such non-
participating deferred acquisition costs are amortized over the
anticipated premium paying period of the related policies,
generally not to exceed the premium paying lifetime of the
policies using assumptions consistent with those used to develop
policy benefit reserves. For participating life insurance
products, deferred policy acquisition costs are amortized in
proportion to estimated gross margins of the related policies.
Gross margins are determined for each issue year and are equal
to premiums plus investment income less death claims, surrender
benefits, administrative costs, policyholder dividends, and the
increase in reserves for future policy benefits. The future
investment yields are assumed to range from 7.1% to 8.9% and
from 5.7% to 8.8% for the years ended 1999 and 1998,
respectively. Changes in dividend payouts are assumed with
changes in yields.
Universal Life and Other Interest Sensitive Products
Interest sensitive products include universal life, single
premium whole life and annuity products. They are distinguished
by the existence of a separately definable fund that is credited
with interest and from which any policy charges are taken.
Revenues for these products consist of policy charges for the
cost of insurance, policy administration charges, and surrender
charges that have been assessed against policyholder account
balances during the period.
Benefit reserves for universal life and other interest sensitive
products are computed in accordance with the retrospective
deposit method and represent policy account balances before
applicable surrender charges. Policy benefits that are charged
to expense include benefit claims incurred in the period in
excess of related policy account balances and interest credited
to account balances. Interest crediting rates ranged from 4.5%
to 8.2% and from 4.5% to 7.5% for the years ended 1999 and 1998,
respectively.
The cost of acquiring universal life and other interest
sensitive products, principally commissions, certain policy
issue and underwriting expenses (such as medical examination and
inspection report fees) and certain agency expenses, all of
which vary with and are primarily related to the production of
new and renewal business, are deferred to the extent that such
costs are deemed recoverable through future estimated gross
profits. Acquisition costs for universal life and other
interest sensitive products are amortized over the life of the
policies in proportion to the present value of expected gross
profits from surrender charges and investment, mortality and
expense margins. The amortization is adjusted retrospectively
when estimates of current or future gross profits (including the
impact of investment gains and losses) to be realized from a
group of products are revised.
Amounts assessed policyholders that represent revenue for
services to be provided in future periods are reported as
unearned revenue and recognized in income over the life of the
policies, using the same assumptions and factors as are used to
amortize deferred acquisition costs. These charges consist of
policy fees and premium loads that are larger in the initial
policy years than they are in the later policy years.
Amortization of unearned revenue totalled $3,900,000 and
$10,267,000 for the years ended December 31, 1999 and 1998,
respectively, and was included in "Universal life policy
charges" in the Statements of Income.
In 1999 and 1998, the Company revised its estimates of future
gross profits, and as a result amortization of unearned revenue
included in "Universal life policy charges" in the Statements of
Income was increased by $1,000,000 and $545,000 for the years
ended 1999 and 1998, respectively.
Group Products
Group products consist primarily of group life insurance, and
group long and short term disability income products. Premiums
for group insurance products are recognized as revenue when due.
The liabilities for future policy benefits and expenses for
group life and disability income products are computed using
statutory methods and assumptions, which approximate net level
premium reserves using assumptions for investment yields,
mortality, and withdrawals based principally on company
experience projected at the time of policy issue, with
provisions for possible adverse deviations. Interest
assumptions are based on assumed investment yields that ranged
from 8.3% to 8.4% for the years ended 1999 and 1998.
The costs of acquiring new group life and disability income
business, principally commissions, certain policy issue and
underwriting expenses (such as medical examination and
inspection report fees) and certain agency expenses, all of
which vary with and are primarily related to the production of
new and renewal business, are deferred to the extent that such
costs are deemed recoverable through future gross premiums.
Such deferred acquisition costs are amortized over the
anticipated premium paying period of the related policies,
generally not to exceed ten years.
Pension Products
Pension products include deferred annuities and payout
annuities. Revenues for the deferred annuity products consist
of investment income on policy funds, mortality and expense
charges, contract administration fees, and surrender charges
that have been assessed against policyholder account balances.
Expenses for deferred annuity products include the interest
credited on policy funds and expenses incurred in the
administration and maintenance of the contracts. For payout
annuities, premiums are recognized as revenue when due while
expenses exclude the interest credited on policy funds.
Benefit reserves for the deferred annuity contracts represent
the policy account balances before applicable surrender charges.
Interest assumptions on payout annuities are based on assumed
investment yields that ranged from 2.0% to 8.0% for the years
ended 1999 and 1998, respectively.
Commissions and other related costs of acquiring annuity
contracts that vary with and are primarily related to the
production of new and renewal business are deferred to the
extent that such costs are deemed recoverable through future
estimated gross profits. Acquisition costs are amortized over
the life of the contracts in direct proportion to the present
value of expected gross profits from surrender charges and
investment and expense margins. The amortization is adjusted
retrospectively when estimates of current or future gross
profits (including the impact of investment gains or losses) to
be realized on a group of contracts are revised.
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 and benefits are reported net of reinsured amounts.
Allocation of Manhattan Life's Income and Equity
MLIC's charter provides for the allocation of its profits
between its shareholders and its policyholders on a one-
eighth/seven eighths basis. The profits allocated are equal to
income after taxes and interest on the Guaranteed Capital
Reserve, but before policyholders' dividends. At December 31,
1998, MLIC's policyholders' share of MLIC's net loss was
recorded as "Minority Interest in Subsidiary Loss" in the Income
Statements and MLIC's policyholders' share of MLIC'S equity was
recorded as "Minority Interest in Subsidiary's Equity" in the
Balance Sheets. Due to the impairment loss recognized on MLIC
by Union Central in 1999 (discussed previously), MLIC's
policyholders' share of MLIC's net loss and MLIC's equity was
not recorded in 1999.
Federal Income Taxes
The Company accounts for income taxes using the liability method
for financial accounting and reporting of income taxes. Under
this method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying the
applicable tax rate to differences between the financial
statement carrying amounts and the tax bases of existing assets
and liabilities.
Reclassifications
Previously reported amounts for 1998 have in some instances been
reclassified to conform to the 1999 presentation.
NOTE 2 - INVESTMENTS
Available-for-sale securities are summarized as follows:
<TABLE>
<CAPTION>
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
--------- ---------- ---------- -----
(in thousands)
<S> <C> <C> <C> <C>
December 31, 1999:
U.S. treasury securities and
obligations of U.S. government
corporations and agencies $ 109,655 $ 291 $ (1,013) $
108,933
Corporate securities and other 1,483,286 4,231 (69,868)
1,417,649
Mortgage-backed securities,
collateralized mortgage
obligations and other
structured securities 933,082 2,195 (54,420)
880,857
Debt securities issued by foreign
governments -- -- -- --
---------- ------ -------- --------
-- Subtotal 2,526,023 6,717 (125,301)
2,407,439
Equity securities 82,269 592 (12,322)
70,539
---------- ------ -------- --------
--
Total $2,608,292 $7,309 $(137,623)
$2,477,978
========== ====== =========
==========
</TABLE>
<TABLE>
<CAPTION>
Cost or Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
---------- -------- -------- --------
--
(in thousands)
<S> <C> <C> <C> <C>
December 31, 1998:
U.S. treasury securities and
obligations of U.S. government
corporations and agencies $ 19,737 $ 1,897 $ -- $ 21,634
Corporate securities and other 1,542,363 51,352 (21,912) 1,571,803
Mortgage-backed securities,
collateralized mortgage
obligations and other
structured securities 1,068,084 19,811 (14,566) 1,073,329
Debt securities issued by foreign
governments 7,631 436 (1) 8,066
---------- ------- -------- --------
--
Subtotal 2,637,815 73,496 (36,479) 2,674,832
Equity securities 100,429 2,063 (20,223) 82,269
---------- ------- -------- --------
--
Total $2,738,244 $75,559 $(56,702)
$2,757,101
========== ======= ========
==========
</TABLE>
Fixed maturity available-for-sale securities, at December 31, 1999, are
summarized by stated maturity as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
-------- -----
(in thousands)
<S> <C> <C>
Due in one year or less $ 750 $ 752
Due after one year through five years 332,041 322,757
Due after five years through ten years 728,615 691,519
Due after ten years 169,243 160,054
---------- ----------
Subtotal 1,230,649 1,175,082
Mortgage-backed securities 962,854 909,794
Other securities with multiple repayment dates 332,520 322,563
---------- ---------
-
Total $2,526,023 $2,407,439
========== ==========
</TABLE>
Significant components of the unrealized gain (loss) on
available-for-sale securities included in "Accumulated other
comprehensive loss" in the accompanying Balance Sheets are
as follows:
<TABLE>
<CAPTION>
Year Ended December
31,
----------------------
-
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Gross unrealized gain (loss) on available-
for-sale securities $(130,314) $18,857
Amortization of deferred policy acquisition costs 37,373 (11,474)
Minority interests -- (2,853)
Deferred tax asset (liability) 32,530 (2,583)
Net unrealized gain (loss) on available-
for-sale securities $ (60,411) $ 1,947
========= =======
</TABLE>
See Note 9 for discussion of the methods and assumptions used by
the Company in estimating the fair values of available-for-sale
securities.
At December 31, 1999 and 1998, the Company held unrated or less-
than-investment grade (investment grade is defined as "Baa3" and
higher on Moody's ratings and "BBB" and higher on Standard and
Poor's bond ratings) corporate bonds of $161,596,000 and
$198,696,000. Those holdings amounted to 6.8% and 7.4%,
respectively, of the Company's investments in fixed maturities
and 2.7% and 3.3%, respectively, of the Company's total 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.
At December 31, 1999 and 1998, the Company invested $65,578,000
and $62,588,000 in affiliated mutual funds. The Company's
holdings in affiliated mutual funds were included in "Equity
securities available-for-sale at fair value" in the Balance
Sheets.
Proceeds, gross realized gains, and gross realized losses from
the sales and maturities of available-for-sale securities
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Proceeds $2,220,492 $2,220,765
Gross realized gains 15,159 33,774
Gross realized losses 42,898 26,564
</TABLE>
A summary of the characteristics of the Company's mortgage
portfolio (before deducting valuation reserves of $278,000 and
$2,372,000 at December 31, 1999 and 1998, respectively) follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
-------------------- --------------------
Principal Percent of Principal Percent of
Balance Principal Balance Principal
------- --------- ------- ---------
(000's Omitted)
<S> <C> <C> <C> <C>
Region
New England and Mid-Atlantic $ 46,176 6.4% $ 61,616 7.8%
South Atlantic 119,900 16.5 130,361 16.4
North Central 157,812 21.7 188,870 23.8
South Central 76,796 10.6 90,802 11.5
Mountain 135,472 18.6 128,136 16.2
Pacific 190,875 26.2 192,924 24.3
-------- ----- -------- -----
Total $727,031 100.0% $792,709 100.0%
======== ===== ======== =====
Property Type
Apartment and residential $ 75,584 10.4% $111,040 14.0%
Warehouses and industrial 141,597 19.5 143,910 18.2
Retail and shopping center 262,606 36.1 256,406 32.3
Office 202,130 27.8 245,514 31.0
Other 45,114 6.2 35,839 4.5
-------- ----- -------- -----
Total $727,031 100.0% $792,709 100.0%
======== ===== ======== =====
</TABLE>
Real estate consists of investment real estate under lease and
foreclosed real estate. The investment real estate under lease
is depreciated over 40 years. The cost of the property totalled
$18,782,000 and $17,521,000 at December 31, 1999 and 1998,
respectively, and accumulated depreciation totalled $5,391,000
and $4,960,000 at December 31, 1999 and 1998, respectively. The
book value of foreclosed real estate was $29,118,000 and
$30,644,000 at December 31, 1999 and 1998, 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. Reinsurance ceded contracts do not relieve the Company
from its obligations to policyholders. Reinsurance ceded is
recorded in "Other assets" in the Balance Sheets. The Company
remains liable to its policyholders for the portion reinsured to
the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements.
Failure of reinsurers to honor their obligations could result in
losses to the Company; consequently, allowances are established
for amounts deemed or estimated to be uncollectible. To
minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of
its reinsurers and monitors concentrations of credit risk
arising from similar geographic regions, activities, or economic
characteristics of the reinsurers. No losses are anticipated,
and, based on management's evaluation, there are no
concentrations of credit risk at December 31, 1999 and 1998.
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, 1999 and 1998 are summarized as
follows:
<TABLE>
<CAPTION>
December 31, 1999
Direct Assumed (Ceded) Net
------ ------- ----- ---
(in thousands)
<S> <C> <C> <C> <C>
Life insurance in force $39,612,937 $142,772 $(6,303,368) $33,452,341
=========== ======== ===========
===========
Premiums and other
considerations:
Traditional insurance
premiums and universal life $ 197,859 $ 50,345 $ (36,954) $
211,250
Annuity 43,540 -- --
43,540
----------- -------- ----------- ----------
-
Total $241,399 $ 50,345 $ (36,954) $
254,790
=========== ======== =========== ===========
<CAPTION>
December 31, 1998
Direct Assumed (Ceded) Net
------ ------- ----- ---
(in thousands)
<S> <C> <C> <C> <C>
Life insurance in force $30,400,267 $502,058 $(5,627,695)
$25,274,630
=========== ======== =========== ===========
Premiums and other
considerations:
Traditional insurance
premiums and universal life $ 243,287 $ 10,056 $ (32,256) $ 221,087
Annuity 43,778 -- -- 43,778
----------- -------- ----------- ----------
-
Total $ 287,065 $ 10,056 $ (32,256) $
264,865
=========== ======== ===========
===========
</TABLE>
Benefits paid or provided were reduced by $1,844,000 and
$2,454,000 at December 31, 1999 and 1998, respectively, for
estimated recoveries under reinsurance treaties.
The Company nor any of its related parties control, either
directly or indirectly, any reinsurers in which the Company
conducts business. 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.
NOTE 4 - FEDERAL INCOME TAX
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
December 31,
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $139,923 $139,593
Basis differences on bonds and mortgage loans 2,276 26
Unrealized gains - FAS 115 -- 2,583
Partnership income differences 3,069 5,132
Capitalization of software 2,642 --
Impairment loss on subsidiary 5,621 --
Other 2,921 3,145
-------- --------
Total deferred tax liabilities 156,452 150,479
-------- --------
Deferred tax assets:
Policyholders' dividends 2,630 11,295
Future policy benefits 79,098 74,506
Premium - based DAC adjustment 27,437 28,175
Investment valuation reserves 521 826
Retirement plan accruals 13,893 15,229
Investment income differences 2,535 1,343
Unrealized losses - FAS 115 32,530 --
Other 3,685 3,361
-------- --------
Total deferred tax assets 162,329 134,735
-------- --------
Net deferred tax (assets) liabilities $(5,877) $15,744
======== ========
</TABLE>
Significant components of the provision for income taxes
attributable to continuing operations are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
----------------------
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Current $14,900 $16,759
Deferred 11,916 (72)
-------- --------
Total $ 26,816 $ 16,687
======== ========
</TABLE>
Federal income tax expense is calculated based on applying the
statutory corporate tax rate to taxable income, and adjusting
this amount for permanent differences between deductions allowed
for financial statement purposes versus federal income tax
purposes. Significant differences would include the surplus tax
adjustment applicable to Union Central.
NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES
Leases
The Company leases office space for various field agency offices
with lease terms that vary in duration from 1 to 15 years. Some
of these leases include escalation clauses which vary with
levels of operating expense. Rental expense under these
operating leases totalled $2,350,000 and $3,498,000 in 1999 and
1998, respectively. The Company also leases furniture and
equipment under operating leases which expire in 2001. Rental
expense under these leases included in "Underwriting,
acquisition and insurance expense" in the Statements of Income
totalled $88,000 and $116,000 in 1999 and 1998, respectively.
At December 31, 1999, the future minimum lease payments for all
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<C> <C>
2000 $2,358
2001 2,136
2002 1,510
2003 848
2004 537
After 2004 506
------
Total $7,895
======
</TABLE>
The Company also has capital leases for office furniture. Lease
expense under these leases was $369,000 and $434,000 in 1999 and
1998, respectively.
At December 31, 1999 the future minimum lease payments for all
noncancelable capital leases are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(in thousands)
<C> <C>
2000 $470
2001 39
----
Total $509
====
</TABLE>
Other Commitments
At December 31, 1999, the Company had outstanding agreements to
fund mortgages totalling $20,425,000 in early 2000. In
addition, the Company has committed to invest $3,907,000 in
equity-type limited partnerships during the years 2000 to 2002.
These transactions are in the normal course of business for the
Company.
Litigation
In the normal course of business, the Company is party to
various claims and litigation primarily arising from claims made
under insurance policies and contracts. Those actions are
considered by the Company in estimating the policy and contract
liabilities. The Company's management believes that the
resolution of those actions will not have a material adverse
effect on the Company's financial position or results of
operations.
Guaranty Fund Assessments
The economy and other factors have caused an increase in the
number of insurance companies that are under regulatory
supervision. This circumstance is expected to result in an
increase in assessments by state guaranty funds, or voluntary
payments by solvent insurance companies, to fund policyholder
losses or liabilities of insurance companies that become
insolvent. These assessments may, in certain instances, be
offset against future premium taxes. For 1999 and 1998, the
charge to operations related to these assessments was not
significant. The estimated liability of $1,046,000 and
$1,149,000 at December 31, 1999 and 1998, respectively, was
based on data provided by the National Organization of Life and
Health Insurance Guaranty Associations and was included in
"Other liabilities" in the Balance Sheets.
NOTE 6 - STATUTORY SURPLUS AS REPORTED TO REGULATORY AUTHORITIES
Union Central files statutory-basis financial statements with
regulatory authorities. Union Central's statutory-basis
financial statements are prepared in conformity with accounting
practices prescribed or permitted by the Department of Insurance
of Ohio, Union Central's state of domicile. Surplus as
reflected in the statutory-basis financial statements was as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1999 1998
-------- -------
(in thousands)
<S> <C> <C>
Capital and surplus $347,396 $343,896
======== ========
</TABLE>
In 1999, the National Association of Insurance Commissioners
adopted codified statutory accounting practices (Codification).
Codification must be adopted by the various states before it
becomes the prescribed statutory basis of accounting for
insurance companies domiciled in those states. For Codification
to be effective for Union Central, Ohio must adopt Codification
as the prescribed basis of accounting on which Ohio insurers
must report their statutory basis results. During 1999, Ohio
formally adopted Codification with an effective date of January
1, 2001. Codification will likely change prescribed accounting
practices and may result in changes to the accounting practices
that Union Central uses to prepare its statutory basis financial
statements. The effect of the adoption of Codification is not
known at this time.
NOTE 7 - EMPLOYEE BENEFITS
The Company has pension plans covering substantially all of its
employees (The Plans). Effective August 31, 1999, MLIC's defined
benefit pension plan and excess benefit pension plan were merged
with the pension plans of Union Central. MLIC's pension plans
were fully funded at the effective date of the merger. The
accumulated benefit obligation (ABO) of the MLIC pension plans
at the effective date of the merger was $19,700,000.
Benefits are based on years of service and the employee's
highest five consecutive years of compensation out of the last
ten years. The Company's funding policy is determined according
to regulations as specified by ERISA and subsequent amendments.
In 1999, the Company's funding increased due to MLIC fully
funding its pension plans in accordance with the merger of its
pension plans with Union Central's. The contributions totalled
$8,342,000 and $3,994,000 in 1999 and 1998, respectively. The
Company's net periodic pension expense was calculated in
accordance with FAS 87 and was $5,121,000 and $3,869,000 for the
years ended December 31, 1999 and 1998, respectively. Benefits
paid in 1999 and 1998 were $3,688,000 and $3,811,000,
respectively. Plan assets are primarily composed of mutual
funds, unallocated insurance funds, and guaranteed interest
contracts. At December 31, 1999 and 1998, $62,140,000 and
$42,468,000, respectively, was invested in affiliated mutual
funds.
A table setting forth the funded status and the pension
liability included in the Company's Balance Sheets follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Actuarial present value of benefits obligations:
Accumulated benefit obligation, including vested
benefits of $74,603 and $72,321 for 1999 and 1998,
respectively $85,512 $81,244
======= =======
Projected benefit obligation $97,705 $92,376
Plan assets at fair value 66,559 63,066
------- -------
Projected benefit obligation higher than plan assets $31,146 $29,310
======= =======
Pension liability included in "Other liabilities"
at end of year $18,581 $18,178
</TABLE>
Also, $1,335,000 and $6,131,000 (net of tax) was charged
directly to policyholders' equity in 1999 and 1998,
respectively, as a result of recognizing an additional minimum
pension liability adjustment under Statement of Financial
Accounting Standard (SFAS-87) "Employers' Accounting for
Pensions", and was included in "Minimum pension liability
adjustment" in the Statements of Equity.
The unfunded accumulated benefit obligation (ABO) will vary from
year to year as changes in the market value of the plans' assets
differs from changes in the ABO. The ABO varies from year to
year as the rate used to discount future pension benefits
related to the past service of plan participants changes. The
discount rate at each valuation date reflects available rates on
high quality fixed income investments. The investment strategy
for the plans' assets is designed to achieve somewhat higher
yields over the long term than would be achieved by investing
entirely in high quality fixed income investments. Therefore,
the market value of the plans' assets and the ABO do not change
in the same amount from year to year. The Company believes that
its current funding policy will be adequate to meet all future
plan obligations over the long term.
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Assumptions used to determine the
status of the plans were:
Discount rate 7.50% 7.00%
Rate of increase in future compensation levels 4.00% 4.00%
Expected long-term rate of return on assets 8.50% 8.50%
</TABLE>
The Company has contributory savings plans for employees meeting
certain service requirements which qualify under Section 401(k)
of the Internal Revenue Code. These plans allow 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 these Plans were $1,547,000 and
$1,472,000 for 1999 and 1998, respectively. The value of the
Plans' assets were $72,855,000 and $59,649,000 at December 31,
1999 and 1998, respectively. The assets are held in the
Company's deposit fund or under the variable accounts of a group
annuity policy sponsored by the Company. At December 31, 1999
and 1998, $18,884,000 and $18,660,000, respectively, was
invested in affiliated mutual funds. During 1999, the
contributory savings plan of MLIC was merged with the savings
plan of the Company.
NOTE 8 - 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.
Effective August 31, 1999, MLIC's group life and major medical
plans were merged with the Company's. MLIC's group life and
major medical plans were fully funded at the effective date of
the merger. The postretirement benefit obligation of MLIC's
group life and major medical plans at the effective date of the
merger was $3,100,000.
Information related to the postretirement benefits follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Postretirement costs $1,440 $1,143
Cash benefits paid 976 1,494
Employer contributions 1,244 1,231
Participant contributions 123 140
</TABLE>
A summary of the accrued postretirement liability included in
"Other liabilities" in the Consolidated Balance Sheet as
determined by the Plan's actuaries follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Postretirement benefit obligation $17,265 $20,443
Fair value of plan assets 6,149 5,866
------- -------
Unfunded status 11,116 14,577
Unrecognized net gain 5,494 1,949
Other -- (346)
------- -------
Accrued postretirement liability $16,610 $16,180
======= =======
</TABLE>
The discount rate used in determining the accumulated
postretirement benefit obligation was 7.50% and 7.00% at
December 31, 1999 and 1998, respectively. The long-term rate on
assets was 7.00% for 1999 and 1998.
A one percentage point increase in the health care cost trend
rate in each year would not materially impact the postretirement
benefit obligation, the interest cost and estimated eligibility
cost components of the net periodic postretirement benefit cost
as of and for the year ended December 31, 1999.
NOTE 9 - 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 Sheets for these instruments
approximate their fair values.
Investment securities: Fair values for bonds are based on
quoted market prices, where available. 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 "Equity
securities available-for-sale at fair value" in the Balance
Sheets. The fair values for limited partnerships are based
on the quoted market prices of the investments underlying
the limited partnership portfolios.
Mortgage loans: The fair values for commercial 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 in the Balance Sheets.
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 as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
<S> <C> <C> <C> <C>
Mortgage loans $727,031 $697,703 $792,709 $876,287
======== ======== ======== ========
</TABLE>
The carrying amounts and fair values of the Company's
liabilities for investment-type insurance contracts are as
follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
<S> <C> <C> <C> <C>
Direct access $50,271 $50,271 $44,547 $44,547
Traditional annuities 26,674 26,245 26,233 27,324
Supplementary contracts 13,592 13,693 14,436 11,014
GPA not involving life 1,810 1,915 2,284 2,516
Group dividends 30 30 28 28
Traditional life dividends 5,571 5,571 5,611 5,611
Group life dividends 176 176 171 171
Guaranteed interest contracts -- -- 17,277 17,293
Single premium deferred annuities -- -- 20,401 23,480
------- ------- -------- --------
Total $98,124 $97,901 $130,988 $131,984
======= ======= ======== ========
</TABLE>
The Company's other insurance contracts are excluded from
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 the
carrying value and fair value of the Company's investments is
disclosed in Note 2.
NOTE 10 - LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Activity in the liability for unpaid claims and claim adjustment
expense is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-------------------
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Balance as of January 1 $126,859* $130,687
Incurred related to:
Current year 94,448 119,586
Prior years (3,649) (3,931)
-------- --------
Total incurred 90,799 115,655
-------- --------
Paid related to :
Current year 53,114 78,748
Prior years 29,162 35,265
-------- --------
Total paid 82,276 114,013
-------- --------
Balance as of December 31 $135,382 $132,329
======== ========
</TABLE>
* Balance as of January 1, 1999 excludes MLIC (see Note 1 for
discussion of sale of MLIC).
The balance in the liability for unpaid claims and claim
adjustment expenses is included in "Future policy benefits" and
"Policy and contract claims" in the Balance Sheets.
As a result of changes in estimates of insured events in prior
years, the provision of claims and claim adjustment expenses
decreased by $3,649,000 and $3,931,000 in 1999 and 1998,
respectively, due to higher than expected rates of claim
terminations. Included in the above balances are reinsurance
recoverables of $1,952,000 and $2,454,000 at 1999 and 1998,
respectively.
NOTE 11 - SURPLUS NOTES
On November 1, 1996, Union Central issued $50,000,000 of 8.20%
Surplus Notes (Notes). The Notes mature on November 1, 2026 and
may not be redeemed prior to maturity. The Notes are unsecured
and subordinated to all present and future policy claims, prior
claims and senior indebtedness. Subject to prior written
approval of the Superintendent of the Ohio Insurance Department,
these Notes pay interest semi-annually on May 1 and November 1.
Interest expense of $4,100,000 was incurred in 1999 and 1998,
and was recorded as a reduction of "Net investment income" in
the Statements of Income. In connection with issuing the Notes,
Union Central incurred and capitalized $765,000 of issuance
cost. This cost is recorded in "Other assets" in the Balance
Sheets. Issuance cost of $25,000 was amortized in 1999 and
1998, respectively, and recorded to "Underwriting, acquisition
and insurance expense" in the Statements of Income.
Additionally, the Notes have an original issue discount of
$260,000, which is deducted from the balance of the Notes.
Issuance costs and original issue discount will be amortized
under the straight-line method over the term of the Notes.
Amortization relating to original issue discount of $9,000 was
recorded in 1999 and 1998, in "Underwriting, acquisition and
insurance expense" in the Statements of Income.
NOTE 12 - IMPACT OF YEAR 2000 (UNAUDITED)
The Company has made a successful transition to the Year 2000.
The Company's computer systems and facilities are fully
operational and the Company is prepared to continue to serve its
customers in the twenty-first century.
The Company began preparations for the Year 2000 in 1996. From
1996 to 2000, significant resources in both time and money were
allocated to the Year 2000 project. The Company efforts
included Year 2000 system modifications, future date testing for
virtually all of the Company's computer systems, Year 2000
readiness of the Company's building systems (i.e. heating,
lighting, and security systems), and formal communications, with
all significant vendors, suppliers and business partners to
determine their Year 2000 status.
The goal was to continue to meet the Company's obligations to
its customers and business partners without interruption as the
Company transitioned to the Year 2000. The Company has achieved
that goal and is not aware of any Year 2000 problems occurring
in its computer systems or embedded systems.
The Company is continuing to monitor all systems closely as
there is still the potential for Year 2000 related problems to
occur. The Company is confident, however, that it will not
encounter any problems that have a material effect on its
ability to continue to provide service to its customers and
business partners.
NOTE 13 - COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (FAS 130) establishes the requirement for
the reporting and display of comprehensive income and its
components in the financial statements. Comprehensive income is
defined by the FASB as all changes in an enterprise's equity
during a period other than those resulting from investments by
owners and distributions to owners. Comprehensive income
includes net income and other comprehensive income, which
includes all other non-owner related changes to equity and
includes unrealized gains and losses on available-for-sale debt
and equity securities and minimum pension liability adjustments.
FAS 130 also requires separate presentation of the accumulated
balance of other comprehensive income within the equity section
of a statement of financial position. The Company has presented
the required displays of total comprehensive income and its
components, along with the separate presentation of the
accumulated balance of other comprehensive income within the
Consolidated Statements of Equity.
Following are the FAS 130 disclosures of the related tax effects
allocated to each component of other comprehensive income and
the accumulated other comprehensive income balances required by
FAS 130.
The related federal income tax effects allocated to each
component of other comprehensive income are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999
----------------------------
Before-Tax Tax Net-of-Tax
Amount Benefit Amount
---------- ------- ----------
(in thousands)
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized losses arising during 1999 $(96,070) $33,624 $(62,446)
Less: reclassification adjustments
for losses realized in net income 135 (47) 88
-------- ------- --------
Net unrealized losses (95,935) 33,577 (62,358)
-------- ------- --------
Minimum pension liability adjustment (2,054) 719 (1,335)
-------- ------- --------
Other comprehensive income $(97,989) $34,296 $(63,693)
======== ======= ========
<CAPTION>
Year Ended December 31, 1998
----------------------------
Before-Tax Tax Net-of-Tax
Amount Benefit Amount
---------- ------- ----------
(in thousands)
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized losses arising during 1998 $(30,429) $10,650 $(19,779)
Less: reclassification adjustments
for gains realized in net income (5,560) 1,946 (3,614)
-------- ------- --------
Net unrealized losses (35,989) 12,596 (23,393)
-------- ------- --------
Minimum pension liability adjustment (9,432) 3,301 (6,131)
-------- ------- --------
Other comprehensive income $(45,421) $15,897 $(29,524)
======== ======= ========
</TABLE>
<PAGE>
APPENDIX A
-------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF APPLICABLE PERCENTAGES
Attained
Age Percentage
<S> <C>
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%
</TABLE>
<PAGE>
APPENDIX B
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 Positions with Depositor
Business Address* and Background
------------------ ------------------------
<C> <C>
James M. Anderson Director, Union Central; President and CEO,
3333 Burnet Avenue Children's Hospital Medical Center; prior to
Cincinnati, Ohio 45219 1996, Secretary, Access Corporation
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, Bartlett &
36 East Fourth Street Co.
Cincinnati, Ohio 45202
John H. Jacobs* Director, President and Chief Operating
Officer,
Union Central
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,
312 Walnut Street The E. W. Scripps Company; prior to August,
Cincinnati, Ohio 45202 1994, 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
Administration,
Slippery Rock, PA 16057 Slippery Rock University of Pennsylvania
Mary D. Nelson, FSA Director, Union Central; President, Nelson and
105 West Fourth Street Company
Cincinnati, Ohio 45202
Thomas E. Petry Director, Union Central; Former Chairman of
the
250 East Fifth Street Board and CEO, Eagle-Picher Industries, Inc.
Suite 500
Cincinnati, Ohio 45202
Larry R. Pike* Chairman and Chief Executive Officer, Union
Central
Myrtis H. Powell, Ph.D. Director, Union Central; Vice President of
Miami University Student Affairs, Miami University
113 Warfield Hall
Oxford, Ohio 45056
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
Chairman,
506 Oak Street Department of Neurosurgery, University of
Cincinnati, Ohio 45219 Cincinnati Medical Center, and Member,
Mayfield
Clinic
Stephen R. Hatcher* Executive Vice President and Chief Financial
Officer, 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.
<PAGE>
PART II - OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant
hereby undertakes to file with the Securities and Exchange
Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly
adopted pursuant to authority conferred in that section.
RULE 484 UNDERTAKING
Reference is made to the Amended Articles of Incorporation
and Code of Regulations of The Union Central Life Insurance
Company (the "Code of Regulations"), filed as an exhibit to this
Registration Statement. Specifically, Article VII of the Code
of Regulations provides that Depositor shall, to the full extent
permitted by the General Corporation Law of Ohio, indemnify any
person who is or was a director or officer of the Depositor and
whom it may indemnify pursuant thereto. The Depositor may,
within the sole discretion of its Board of Directors, indemnify
in whole or in part any other person whom it may indemnify
pursuant thereto.
Section 1701.13 of the Ohio General Corporation Law
provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify
any person who was or is a party, or is threatened to be
made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by
or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic
or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement actually
and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with
respect to any criminal action or proceeding, if he had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of it
self, create a presumption that the person did not act in
good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was
unlawful.
(2) A corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to made a
party, to any threatened, pending, or completed action or
suit by or in the right of the corporation to procure a
judgement in its favor, by reason of the fact that he is
or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic
or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made
in respect of any of the following:
(a) Any claim, issue, or matter as to which such person
is adjudged to be liable for negligence or misconduct in
the performance of his duty to the corporation unless,
and only to the extent that, the court of common pleas
or the court in which such action or suit was brought
determines, upon application, that, despite the
adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as
the court of common pleas or such other court shall deem
proper;
(b) Any action or suit in which the only liability
asserted against a director is pursuant to section
1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer,
employee, member, manager, or agent has been
successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in
division (E)(1) or (2) of this section, or in defense
of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with
the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of
this section, unless ordered by a court, shall be made by
the corporation only as authorized in the specific case,
upon a determination that indemnification of the director,
trustee, officer, employee, member, manager, or agent is
proper in the circumstances because he has met the
applicable standard of conduct set forth in division
(E)(1) or (2) of this section. Such determination shall
be made as follows:
(a) By a majority vote of a quorum consisting of
directors of the indemnifying corporation who were not
and are not parties to or threatened with the action,
suit, or proceeding referred to in division (E)(1) or
(2) of this section;
(b) If the quorum described in division (E)(4)(a) of
this section is not obtainable or if a majority vote of
a quorum of disinterested directors so directs, in a
written opinion by independent legal counsel other than
an attorney, or a firm having associated with it an
attorney, who has been retained by or who has performed
services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which
the action, suit, or proceeding referred to in division
(E)(1) or (2) of this section was brought.
Any determination made by the disinterested
directors under division (E)(4)(a) or by independent
legal counsel under division (E)(4)(b) of this section
shall be promptly communicated to the person who
threatened or brought the action or suit by or in the
right of the corporation under division (E)(2) of this
section, and, within ten days after receipt of such
notification, such person shall have the right to
petition the court of common pleas or the court in which
such action or suit was brought to review the
reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission
that is the subject of an action, suit, or proceeding
referred to in division (E)(1) or (2) of this section,
the articles or the regulations of a corporation state,
by specific reference to this division, that the
provisions of this division do not apply to the
corporation and unless the only liability asserted
against a director in an action, suit, or proceeding
referred to in division (E)(1) or (2) of this section is
pursuant to section 1701.95 of the Revised Code,
expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding
shall be paid by the corporation as they are incurred,
in advance of the final disposition of the action, suit,
or proceeding, upon receipt of an undertaking by or on
behalf of the director in which he agrees to do both of
the following:
(i) Repay such amount if it is proved by clear and
convincing evidence in a court of competent
jurisdiction that his action or failure to act
involved an act or omission undertaken with
deliberate intent to cause injury to the corporation
or undertaken with reckless disregard for the best
interests of the corporation;
(ii) Reasonably cooperate with the corporation
concerning the action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, member, manager,
or agent in defending any action, suit, or proceeding
referred to in division (E)(1) or (2) of this section,
may be paid by the corporation as they are incurred, in
advance of the final disposition of the action, suit, or
proceeding, as authorized by the directors in the
specific case, upon the receipt of an undertaking by or
on behalf of the director, trustee, officer, employee,
member, manager, or agent to repay such amount, if it
ultimately is determined that he is not entitled to be
indemnified by the corporation.
(6) The indemnification authorized by this section shall
not be exclusive of, and shall be in addition to, any
other rights granted to those seeking indemnification
under the articles, the regulations, any agreement, a vote
of shareholders or disinterested directors, or otherwise,
both as to action in their official capacities and as to
action in another capacity while holding their offices or
positions, and shall continue as to a person who has
ceased to be a director, trustee, officer, employee,
member, manager or agent and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or
furnish similar protection, including, but not limited to,
trust funds, letters of credit, or self-insurance, on
behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a
director, trustee, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership,
joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such,
whether or not the corporation would have the power to
indemnify him against such liability under this section.
Insurance may be purchased from or maintained with a
person in which the corporation has financial interest.
(8) The authority of a corporation to indemnify persons
pursuant to division (E)(1) or (2) of this section does
not limit the payment of expenses as they are incurred,
indemnification, insurance, or other protection that may
be provided pursuant to divisions (E)(5), (6), and (7) of
this section. Divisions (E)(1) and (2) of this section do
not create any obligation to repay or return payments made
by the corporation pursuant to division (E)(5), (6), or
(7).
(9) As used in division (E) of this section, "corporation"
includes all constituent entities in a consolidation or
merger and the new or surviving corporation, so that any
person who is or was a director, officer, employee,
trustee, member, manager, or agent of such a constituent
entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer,
employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit,
a limited liability company, or a partnership, joint
venture, trust, or other enterprise, shall stand in the
same position under this section with respect to the new
or surviving corporation as he would if he had served the
new or surviving corporation in the same capacity.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
REPRESENTATIONS PURSUANT TO SECTION 26(e)
The Union Central Life Insurance Company hereby represents
that the fees and charges deducted under the Policy, in the
aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by
The Union Central Life Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement consists of the following
papers and documents:
The facing sheet.
A reconciliation and tie of the information shown in the
prospectus with the items of Form N-8B-2.
The prospectus consisting of ___ pages.
The Undertaking to File Reports.
The Rule 484 Undertaking.
The signatures.
Written consents of the following persons:
Kristal E. Hambrick, FSA, MAAA (to be filed by amendment)
Sutherland Asbill & Brennan, L.L.P. (to be filed by
amendment)
Ernst & Young LLP (to be filed by amendment)
The following exhibits:
1.A.(1) Resolutions Establishing Carillon Life Account*
(2) None
(3)(a) Underwriting Agreement****
(b) Form of Selling Agreement***
(c) Sales Representatives Agent Agreement
(Including Compensation Schedule)****
(4) None
(5)(a) Specimen of Policy***
(b) Riders and Endorsements **
(6) Amended Articles of Incorporation and Code of
Regulations of The Union Central Life Insurance
Company *
(7) None
(8) None
(9)(a) Participation Agreement - Scudder Variable Life
Investment Fund***
(b) Participation Agreement - TCI Portfolios,
Inc.***
(c) Participation Agreement - MFS Variable Insurance
Trust***
(10) Form of Application for Policy *
2. See Exhibit 3.(i)
3.(i) Opinion and Consent of John F. Labmeier, Esq., As to
the Legality of the Securities Being Registered***
(ii) Opinion and Consent of Kristal E. Hambrick, FSA,
MAAA, As to Actuarial Matters Pertaining to the
Securities Being Registered
4. None
5. Inapplicable
6. Consent of Sutherland, Asbill & Brennan
7. Powers of Attorney *****
8. Notice of Withdrawal Right for Policies***
9. Consent of Ernst & Young LLP
10. Memorandum describing Certain Procedures, filed pursuant
to Rule 6e-3(T)(b)(12)(iii)***
* Incorporated by reference to the Registrant's initial
registration statement on Form S-6 (File No. 33-94858), filed
July 21, 1995.
** Incorporated by reference to the Registrant's initial
registration statement on Form S-6 (File No. 33-94858), filed
July 21, 1995, and to Pre-Effective Amendment No. 1 to the
Registrant's registration statement on Form S-6 (File No. 33-
94858), filed November 30, 1995.
*** Incorporated by reference to Pre-Effective Amendment No. 1
to the Registrant's registration statement on Form S-6 (file No.
33-94858), filed November 30, 1995.
**** Incorporated by reference to Post-Effective Amendment No. 1
to the Registrant's registration statement on Form S-6 (file No.
33-94858), filed April 30, 1996.
***** In addition to the exhibit item filed herewith,
additional items are incorporated by reference to the
Registrant's initial registration statement on Form S-6 (File
No. 33-94858), filed July 21, 1995, and to Pre-Effective
Amendment No. 1 to the Registrant's registration statement on
Form S-6 (File No. 33-94858), filed November 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Carillon Life Account, certifies that it has
duly caused this Post-Effective Amendment to this Registration
Statement to be signed on its behalf by the undersigned
thereunto duly authorized in the City of Cincinnati and the
State of Ohio, on the 31st day of May, 2000.
CARILLON LIFE ACCOUNT
(Registrant)
THE UNION CENTRAL LIFE INSURANCE COMPANY
(SEAL) (Depositor)
ATTEST: /s/ John F. Labmeier By: /s/ John H. Jacobs
John H. Jacobs
President and
Chief Executive Officer
The Union Central Life Insurance Company
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ John H. Jacobs President and 5/31/2000
John H. Jacobs Chief Executive Officer
(Principal Executive Officer)
/s/ Steven R. Hatcher Executive Vice President 5/31/2000
Stephen R. Hatcher and Chief Financial Officer
(Principal Financial and
Accounting Officer)
*/s/ William A. Friedlander Director 5/31/2000
William A. Friedlander
*/s/ William G. Kagler Director 5/31/2000
William G. Kagler
*/s/ Lawrence A. Leser Director 5/31/2000
Lawrence A. Leser
*/s/ Francis V. Mastrianna, Ph.D. Director 5/31/2000
Francis V. Mastrianna, Ph.D.
*/s/ Mary D. Nelson, FAS Director 5/31/2000
Mary D. Nelson, FSA
*/s/ Thomas E. Petry Director 5/31/2000
Thomas E. Petry
*/s/ Myrtis H. Powell, Ph.D. Director 5/31/2000
Myrtis H. Powell, Ph.D.
*/s/ Dudley S. Taft Director 5/31/2000
Dudley S. Taft
*/s/ John M. Tew, Jr., M.D. Director 5/31/2000
John M. Tew, Jr., M.D.
</TABLE>
*/ By John F. Labmeier, pursuant to Power of Attorney
previously filed.
