497
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w87040e497.txt
CANADA LIFE VUL ACCUMULATOR FORM 497
PROSPECTUS
MAY 19, 2003
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Accumulator
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
Issued by
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
and
CANADA LIFE INSURANCE COMPANY OF AMERICA
Home Office Variable Life Service Center
6201 POWERS FERRY ROAD, N.W. P.O. BOX 105662
ATLANTA, GA 30339 ATLANTA, GA 30348-5662
1-800-232-1335 1-800-905-1959
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This prospectus describes Accumulator, an individual, flexible premium variable
life insurance policy (the Policy) issued by Canada Life Insurance Company of
America (we, our, us, or the Company). The Policy offers lifetime insurance
protection, with a life insurance benefit payable if the insured dies while the
Policy is in effect.
This prospectus provides basic information that you should know before
purchasing the Policy. You should consider the Policy in conjunction with other
insurance you own. REPLACING ANY EXISTING LIFE INSURANCE WITH THIS POLICY MAY
NOT BE TO YOUR ADVANTAGE. IN ADDITION, IT MAY NOT BE TO YOUR ADVANTAGE TO
FINANCE THE PURCHASE OR TO MAINTAIN THIS POLICY THROUGH A LOAN OR THROUGH
WITHDRAWALS FROM ANOTHER POLICY.
Your Policy allows you to choose how you want to invest your net payments (that
is, your payments minus the 6% payment expense charge). You have the option to
choose from 30 Subaccounts and the Fixed Account. Money you put in a Subaccount
is invested exclusively in a single Portfolio that is managed by a professional
investment adviser. Your investments in the Portfolios through the Subaccounts
are not guaranteed and involve varying degrees of investment risk. Money you
direct to the Fixed Account earns interest at an annual rate guaranteed by us
not to be less than 3%.
A prospectus for each of the Portfolios available through the Subaccounts of
this Policy must accompany this prospectus. Please read these documents before
investing and save them for future reference. The Portfolios available through
this Policy are:
[ ] THE ALGER AMERICAN FUND (CLASS O SHARES)
Growth Portfolio
Leveraged Allcap Portfolio
Midcap Growth Portfolio
Small Capitalization Portfolio
[ ] THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
(INITIAL SHARES)
[ ] DREYFUS VARIABLE INVESTMENT FUND (INITIAL SHARES)
Appreciation Portfolio
Growth and Income Portfolio
[ ] FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS
(INITIAL CLASS)
Asset Manager(SM) Portfolio
Contrafund(R)Portfolio
Growth Opportunities Portfolio
Growth Portfolio
High Income Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
Money Market Portfolio
Overseas Portfolio
[ ] GOLDMAN SACHS VARIABLE INSURANCE TRUST
Capital Growth Fund
Core(SM) U.S. Equity Fund
Growth and Income Fund
[ ] JANUS ASPEN SERIES
Flexible Income Portfolio (Service Shares)
International Growth Portfolio (Institutional Shares)
[ ] THE MONTGOMERY FUNDS III
Emerging Markets Fund
[ ] SELIGMAN PORTFOLIOS, INC.
Communications and Information Portfolio (Class 1)
Frontier Portfolio (Class 1)
Global Technology Portfolio (Class 2)
Small-Cap Value Portfolio (Class 2)
[ ] VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Absolute Return Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
INVESTMENT RISK - Your Policy Value will vary according to the investment
performance of the Portfolio(s) in which you invest, the Policy charges we
deduct from your Policy Value, the payments you make to the Subaccounts and the
Fixed Account, and the effects of Policy transactions (such as partial
withdrawals, loans and transfers). You bear investment risk on amounts you
allocate to the Subaccounts. You may be required to make additional payments to
keep the Policy in force. The Policy is not suitable for short-term investment
because the surrender charge is considerable.
LOANS AND WITHDRAWALS - You may borrow against or withdraw money from this
Policy, within limits. Loans and withdrawals reduce the Policy's life insurance
benefit and cash surrender value, and increase your risk that the Policy will
lapse without value. If your Policy lapses while loans are outstanding, you will
have no Policy Value and you will likely have to pay a significant amount in
additional taxes.
PLEASE NOTE THAT THE POLICY AND THE PORTFOLIOS:
- are not guaranteed to provide any benefits;
- are not insured by the FDIC or any other governmental agency;
- are not bank deposits or other obligations of a bank and are not bank
guaranteed; and
- are subject to risks, including loss of the amount invested, tax risks and
Policy lapse.
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THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THE POLICY OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is May 19, 2003.
TABLE OF CONTENTS
POLICY BENEFITS/RISKS SUMMARY............................. 1
Policy Benefits........................................ 1
The Policy in General............................... 1
Payments............................................ 1
No-Lapse Guarantee.................................. 1
Variable Death Benefit.............................. 2
Surrender and Partial Withdrawals................... 2
Transfers........................................... 2
Loans............................................... 3
Supplemental Benefits and Riders.................... 3
Personalized Illustrations.......................... 3
Policy Risks........................................... 4
Risk of Poor Investment Performance................. 4
Risk of Increase in Current Fees and Expenses....... 4
Risk of Policy Lapse................................ 4
Tax Risks........................................... 4
Surrender and Partial Withdrawal Risks.............. 5
Loan Risks.......................................... 5
Portfolio Risks..................................... 5
FEE TABLE................................................. 6
THE POLICY................................................ 13
Purchasing a Policy................................. 13
Applying for a Policy............................... 13
When Insurance Coverage Takes Effect................ 14
Accounting Benefit Feature.......................... 14
Backdating.......................................... 14
Canceling a Policy (Right to Examine Period)........ 14
State Variations.................................... 15
Ownership Rights.................................... 15
Modifying the Policy................................ 15
Other Policies...................................... 15
Conversion Rights Following the Date of Issue or
Increase in Face Amount ............................ 15
PAYMENTS.................................................. 16
Flexible Payments................................... 16
Minimum Initial Payment............................. 16
Minimum Monthly Payments - No Lapse Guarantee....... 16
Periodic Planned Payment Schedule................... 16
Electronic Funds Transfer........................... 17
Payment Limitations................................. 17
Allocating Net Payments............................. 17
Payments Before the Date of Acceptance.............. 18
Payments During the Right to Examine Period......... 18
VALUES UNDER THE POLICY................................... 18
Policy Value........................................ 18
Cash Surrender Value................................ 18
Subaccount Value.................................... 19
Unit Value.......................................... 19
Fixed Account Value................................. 19
DEATH BENEFIT............................................. 20
Death Benefit On or Before the Final Payment Date... 20
Death Benefit After the Final Payment Date.......... 20
Base Death Benefit Options.......................... 20
Minimum Death Benefit............................... 21
Changing Death Benefit Options...................... 21
Selecting and Changing the Face Amount and/or the
Target Death Benefit Schedule ...................... 21
Decreasing the Face Amount and/or the Target Death
Benefit Schedule ................................... 22
Payment Options for the Death Benefit and on
Surrender .......................................... 23
Adjustable Term Insurance Rider..................... 23
Accelerated Death Benefit Rider..................... 23
Extended Coverage Option............................ 24
Guaranteed Death Benefit Rider...................... 24
LOANS..................................................... 25
Types of Loans...................................... 25
Loan Collateral..................................... 25
Cost of the Loan.................................... 25
Interest Earned on the Loan Collateral.............. 25
Repayment of the Outstanding Loan Balance........... 26
Effect of a Policy Loan on the Policy............... 26
Paid-Up Life Insurance Rider........................ 26
SURRENDERS AND PARTIAL WITHDRAWALS........................ 27
Surrenders.......................................... 27
Partial Withdrawals................................. 27
Effects of Partial Withdrawals...................... 28
Postponement of Payments............................ 28
TRANSFERS................................................. 29
TELEPHONE AND FACSIMILE REQUESTS.......................... 30
POLICY LAPSE AND REINSTATEMENT............................ 30
Lapse............................................... 30
Reinstatement....................................... 31
THE COMPANY AND THE FIXED ACCOUNT......................... 32
Canada Life Insurance Company of America............ 32
The Fixed Account................................... 32
THE VARIABLE ACCOUNT AND THE PORTFOLIOS................... 32
The Variable Account................................ 32
Changes to the Variable Account..................... 33
The Portfolios...................................... 33
Addition, Deletion and Substitution of Portfolios... 36
Voting Portfolio Shares............................. 36
CHARGES AND DEDUCTIONS.................................... 36
Payment Expense Charge.............................. 37
Monthly Deduction................................... 37
Surrender Charge.................................... 39
Partial Withdrawal Charge........................... 40
Transfer Charge..................................... 40
Processing Charge................................... 41
Loan Charge......................................... 41
Portfolio Expenses.................................. 41
FEDERAL TAX CONSIDERATIONS................................ 41
Tax Treatment of Policy Benefits.................... 41
SUPPLEMENTAL BENEFITS AND RIDERS.......................... 45
ILLUSTRATIONS............................................. 45
Hypothetical Values Based on Current Insurance
Charges ............................................ 46
Hypothetical Values Based on Guaranteed Maximum
Charges ............................................ 47
SALE OF THE POLICIES...................................... 47
LEGAL PROCEEDINGS......................................... 48
FINANCIAL STATEMENTS...................................... 48
APPENDIX A - DEATH BENEFIT OPTIONS 1 AND 2--GUIDELINE
PREMIUM TEST ............................................ A-1
APPENDIX B - DEATH BENEFIT OPTION 3--CASH VALUE
ACCUMULATION TEST ....................................... B-1
APPENDIX C - MAXIMUM MONTHLY EXPENSE CHARGES.............. C-1
APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES..... D-1
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS..... S-1
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POLICY BENEFITS/RISKS SUMMARY
This summary describes the Policy's important benefits and risks. The sections
in the prospectus following this summary discuss the Policy's benefits and other
provisions in more detail. FOR YOUR CONVENIENCE, WE HAVE PROVIDED A GLOSSARY AT
THE END OF THIS PROSPECTUS THAT DEFINES CERTAIN WORDS AND PHRASES USED IN THIS
PROSPECTUS.
POLICY BENEFITS
THE POLICY IN GENERAL
- TAX-DEFERRED ACCUMULATION. Accumulator is a flexible premium variable life
insurance policy. The Policy offers lifetime insurance protection, with a
death benefit payable if the insured dies while the Policy is in effect.
The Policy also provides the opportunity for tax-deferred accumulation of
Policy Value. Your Policy Value will increase or decrease depending on the
investment performance of the Subaccounts, the payments you make, the fees
and charges we deduct, the interest we credit to the Fixed Account, and the
effects of any Policy transactions (loans, withdrawals, transfers) on your
Policy Value.
- FIXED ACCOUNT. You may place money in the Fixed Account where it earns at
least 3% annual interest. We may declare higher rates of interest, but are
not obligated to do so. Money you place in the Fixed Account will be
reduced by the fees and charges we deduct. The Fixed Account is part of our
general account.
- VARIABLE ACCOUNT. You may direct the money in your Policy to any of the
Subaccounts of the Variable Account. Each Subaccount invests exclusively in
one of the Portfolios listed on the cover of this prospectus. Money you
place in each Subaccount is subject to investment risk (that is, it may
increase or decline in value) and its value will vary each valuation day
according to the investment performance of the Portfolio in which each
Subaccount invests.
- BANDING OF FACE AMOUNT. We offer 2 bands of initial face amount under this
Policy (Band One: $50,000 to $149,999, and Band Two: $150,000 and higher).
Each band has its own cost of insurance rates. The cost of insurance rates
for Band Two policies are lower than Band One policies.
PAYMENTS
- FLEXIBLE PAYMENTS. After you make the initial payment, you can make
additional payments at any time while the insured is alive and the Policy
is in force, and before the final payment date. You may make total payments
up to the maximum payment limits that apply to your Policy. PLEASE CONTACT
OUR VARIABLE LIFE SERVICE CENTER OR YOUR AGENT TO LEARN MORE ABOUT YOUR
PAYMENT LIMITS. If you establish a schedule of planned periodic payments,
we will bill you at regular intervals. Making scheduled payments will not
guarantee that your Policy will stay in force, except as otherwise provided
under the no-lapse guarantee of this Policy. You may also choose to have
payments automatically deducted monthly from your bank account or other
source under our automatic payment plan.
- RIGHT TO EXAMINE PERIOD. You have the right to examine this Policy and if
not satisfied, you may return the Policy to our Variable Life Service
Center or to your agent before the end of your free look period and receive
a refund. Your right to examine period begins on the day you receive your
Policy and generally lasts 10 days. We will mail a refund to you within 7
days after our receipt of the returned Policy. The amount of your refund
will depend on whether your state requires a full refund of payments or a
refund of the Policy Value.
NO-LAPSE GUARANTEE
- We guarantee that your Policy will not lapse for the length of the Minimum
Payment Period (48 Policy Months from the Policy Date), so long as you meet
certain conditions. For this guarantee to stay in force, we require that,
on each monthly processing date, you have made total payments (MINUS any
outstanding loan balance, and MINUS any partial withdrawals and partial
withdrawal charges, excluding the transaction fee) that equal or exceed the
sum of the minimum monthly payments (as set forth in your current Policy
Details page) in effect for each month from the Policy Date up to and
including the current monthly processing date. At the end of the Minimum
Payment Period, you may be required to make additional payments to prevent
lapse.
- WE MAY INCREASE THE AMOUNT OF YOUR MINIMUM MONTHLY PAYMENT IF YOU INCREASE
YOUR FACE AMOUNT, OR IF YOU ADD OR CHANGE A RIDER.
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VARIABLE DEATH BENEFIT
- DEATH BENEFIT. If the insured dies while the Policy is in force, we will
pay the death benefit to the beneficiary. The amount of the death benefit
depends upon the face amount of insurance you select, as well as the death
benefit option and any riders in effect on the date of the insured's death.
Before paying the beneficiary, we will reduce the death benefit by any
outstanding loan and unpaid charges.
- If the insured dies on or before the final payment date, the death
benefit equals the base death benefit in effect on the insured's date
of death, plus any additional death benefits provided by any rider(s)
you selected, minus any outstanding loan balance and any unpaid
monthly deduction.
- After the final payment date, the death benefit is calculated
differently.
- CHOICE AMONG THREE DEATH BENEFIT OPTIONS. You may choose one of the three
death benefit options under the Base Policy when you apply for the Policy.
We offer the following:
- DEATH BENEFIT OPTIONS 1 AND 3. The base death benefit is equal to the
greater of: (1) the face amount (which is the amount of insurance you
select); OR (2) the minimum death benefit.
- DEATH BENEFIT OPTION 2. The base death benefit is equal to the greater
of: (1) the face amount PLUS the Policy Value on the date of the
insured's death; or (2) the minimum death benefit.
- Your choice of death benefit will affect the amount of the death
benefit and the monthly deductions from the Policy, among other
things. The death benefit option will also affect the amount and
frequency of the payments you must make to keep the Policy in force
and the maximum payments you may make under the Policy.
- CHOICE OF TAX TESTS. The Policy allows you to choose between two tax tests:
the Guideline Premium Test (Death Benefit Options 1 and 2) and the Cash
Value Accumulation Test (Death Benefit Option 3). Your election may affect
the amount of the death benefit and the monthly deduction. There are two
main differences between the two tests. First, the Guideline Premium Test
limits the amount of payments you may make with your Policy, while no such
limits apply under the Cash Value Accumulation Test. Second, the factors
that determine the minimum death benefit under the Guideline Premium Test
are different from those under the Cash Value Accumulation Test. You may
not change tests. YOU SHOULD CONSULT A TAX ADVISER WHEN CHOOSING THE TAX
TEST.
- EXTENDED COVERAGE OPTION. Under the Extended Coverage Option, we guarantee
that, if the insured dies after the final payment date, the beneficiary
will receive the greater of the Base Policy's face amount as of the final
payment date or the Policy Value as of the insured's date of death (minus
any unpaid charges or outstanding loan balance as of the insured's date of
death). If you elect this option, all Policy Value will be transferred to
the Fixed Account on the final payment date. This option may be elected
only at issue. You may revoke this election at any time before the final
payment date. There is no charge for selecting this option. The tax
consequences associated with continuing the Policy beyond the insured's
100th birthday are unclear. YOU SHOULD CONSULT A TAX ADVISER IF YOU ELECT
THE EXTENDED COVERAGE OPTION.
SURRENDER AND PARTIAL WITHDRAWALS
- Your Policy may develop net cash values that you can access at any time
prior to the death of the insured.
- SURRENDER. At any time while the Policy is in force and the insured is
living, you may submit a written request to surrender the Policy for its
cash surrender value. Surrender charges may apply. A SURRENDER MAY HAVE
ADVERSE TAX CONSEQUENCES.
- PARTIAL WITHDRAWALS. After the first Policy Year, you may submit a written
request to withdraw part of the cash surrender value, subject to certain
limitations. Each partial withdrawal must be at least $200. Charges may
apply. PARTIAL WITHDRAWALS MAY HAVE ADVERSE TAX CONSEQUENCES AND MAY
DECREASE YOUR POLICY'S FACE AMOUNT.
TRANSFERS
- TRANSFERS. Before the final payment date while the insured is still living
and the Policy is in force, you may transfer amounts between the Fixed
Account and the Subaccounts or among the Subaccounts, within limits. You
will not be charged for the first 12 transfers in a Policy Year. We may
charge up to $25 for each additional transfer during a Policy Year.
- DOLLAR COST AVERAGING AND ACCOUNT REBALANCING. We offer both services with
this Policy.
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LOANS
- LOANS. You may borrow up to 95% of the (Policy Value minus any surrender
charges) minus any outstanding loan balance as of the date of the loan. Two
types of loans are available to you:
- STANDARD LOAN. A standard loan option is always available to you. We
will charge interest daily on the amount of the loan at a current
annual rate of 3.80%. This current rate of interest may change, but is
guaranteed not to exceed 5.00%. However, we also will credit interest
on the Policy Value securing the loan. The annual interest rate
credited to the Policy Value securing a standard loan is 3.00%.
- PREFERRED LOAN. A preferred loan option is automatically available to
you unless you request otherwise. The preferred loan option is
available on that part of the outstanding loan balance that is
attributable to earnings on your Policy Value. We will charge interest
daily on the amount of the loan at a current annual rate of 3.00%.
This current rate of interest may change, but is guaranteed not to
exceed 3.50%. The annual interest rate credited to the Policy Value
securing a preferred loan is 3.00%.
- THERE ARE RISKS ASSOCIATED WITH POLICY LOANS. There is a risk that the
Policy may lapse, if you do not repay the outstanding loan balance. LOANS
MAY HAVE ADVERSE TAX CONSEQUENCES. PLEASE CONSULT A TAX ADVISER BEFORE
BORROWING AGAINST YOUR POLICY VALUE.
- OPTIONAL PAID-UP LIFE INSURANCE RIDER. Under the Paid-Up Life Insurance
Rider, we prevent your Policy from lapsing after the insured has reached an
age of at least 75, when certain conditions are met. The Policy will
automatically become paid-up life insurance when the rider is exercised.
All other riders under the Policy will terminate. The rider can only be
exercised when: (i) the outstanding loan balance is at least 95% of the
Policy Value; (ii) the Policy has been in force for at least 15 years;
(iii) the total amount of all partial withdrawals equals or exceeds the
total payments made; and (iv) the outstanding loan balance equals or
exceeds the face amount of the Policy. The tax treatment of the Paid-Up
Life Insurance Rider is uncertain. ANYONE CONTEMPLATING THE PURCHASE OF THE
POLICY WITH THE PAID-UP LIFE INSURANCE RIDER SHOULD CONSULT A TAX ADVISER.
SUPPLEMENTAL BENEFITS AND RIDERS
- We offer several optional insurance benefits and riders that provide
supplemental benefits under the Policy. We deduct any monthly charges for
these options and riders from the Policy Value as part of the monthly
deduction. Your agent can help you determine whether these options and
riders are suitable for you. These riders may not be available in all
states. Among the available riders are:
- ACCELERATED DEATH BENEFIT RIDER. This rider provides the insured with
a portion of the present value of the death benefit in a stream of
payments under either the nursing home option or the terminal illness
option. The death benefit provided after the insured's death will be
reduced by the amount of the rider benefit. We will also reduce the
Policy Value in the same proportion as the reduction in the death
benefit. We do not assess an administrative charge for this rider;
however, we do reduce the accelerated death benefit by a discount
factor (currently 6%) at our discretion to compensate us for lost
income due to the early payment of the death benefit.
- ADJUSTABLE TERM INSURANCE RIDER. This rider provides a death benefit
upon the death of the insured that is a supplement to the base death
benefit under the Base Policy (the Policy without any supplemental
riders). The amount of the death benefit payable under this rider can
adjust over time.
- GUARANTEED DEATH BENEFIT RIDER. Under the Guaranteed Death Benefit
Rider, we guarantee that (i) your Policy will not lapse, regardless of
the performance of the Subaccounts, provided certain conditions are
met, and (ii) you will receive a guaranteed death benefit after the
final payment date. This rider may be elected only at issue and, once
terminated, may not be reinstated. In order to maintain the rider, a
certain level of payments must be made. Certain transactions (for
example, a preferred loan or partial withdrawal after the final
payment date) will result in the termination of the rider.
PERSONALIZED ILLUSTRATIONS
- You may receive personalized illustrations from your agent or the Variable
Life Service Center in connection with the purchase of this Policy that
reflect your own particular circumstances (your age, gender and
underwriting class). These hypothetical illustrations may help you to
understand the long-term effects of the Policy's charges and deductions and
different levels of investment performance on your Policy Value and death
benefit under the Policy. They also may help you compare the Policy to
other life insurance policies. The personalized illustrations are based on
hypothetical rates of return and are not a representation or guarantee of
investment returns, death benefit, or cash surrender value.
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POLICY RISKS
RISK OF POOR INVESTMENT PERFORMANCE
If you invest your Policy Value in one or more Subaccounts, then you will be
subject to the risk that investment performance of the Subaccounts will be
unfavorable and that the Policy Value will decrease. You could lose everything
you invest and your Policy could lapse without value, unless you make additional
payments. In addition, we deduct Policy fees and charges from your Policy Value,
which can significantly reduce your Policy Value in the Subaccounts and the
Fixed Account. During times of declining investment performance, the deduction
for charges based on the net amount at risk could accelerate and further reduce
your Policy Value in the Subaccounts and the Fixed Account. If you allocate net
payments to the Fixed Account, then we credit your Policy Value (in the Fixed
Account) with a declared rate of interest. You assume the risk that the interest
rate on the Fixed Account may decrease, although it will never be lower than a
guaranteed minimum annual effective rate of 3%.
RISK OF INCREASE IN CURRENT FEES AND EXPENSES
Certain fees and expenses are currently assessed at less than their maximum
levels. We may increase these current charges in the future up to the guaranteed
maximum levels. If fees and expenses are increased, you may need to increase the
amount and/or frequency of payments to keep the Policy in force.
RISK OF POLICY LAPSE
Your Policy will generally lapse (that is, terminate without value) if your
Policy Value, minus any outstanding loan balance and surrender charges, on a
monthly processing date is insufficient to pay the monthly deduction due and if
the requirements of the Minimum Payment Period have not been met. If this
situation occurs, your Policy will be in default and you will be given a grace
period to make a specified amount of new payments to prevent your Policy from
lapsing. After the final payment date, you may not make additional payments to
prevent your Policy from lapsing. However, you generally may make loan
repayments after the final payment date. Your Policy generally will not lapse:
(1) during the Minimum Payment Period, if you meet the payment conditions; (2)
if you purchase a Guaranteed Death Benefit Rider and meet the conditions of the
rider; (3) if the Paid-up Insurance Option has been exercised; or (4) if your
Policy is in default and you make a timely payment which, after deduction of the
payment expense charge, will cover the balance of the monthly deduction due plus
an amount to keep this Policy and any riders in force for a period of 3 months.
You may reinstate a lapsed Policy, subject to certain conditions. A POLICY LAPSE
MAY HAVE ADVERSE TAX CONSEQUENCES.
The risk of lapse will likely be increased by the use of partial withdrawals,
Policy loans, any increase in face amount, any increases in current cost of
insurance rates, and any unfavorable investment performance of the Subaccounts.
You should periodically review your Policy to make sure that it is performing as
expected and to determine whether you should adjust the amount or frequency of
your payments, or, if applicable, reduce the outstanding loan by repaying some
or all of the Policy's outstanding loan.
TAX RISKS
We anticipate that the Policy should generally qualify as a life insurance
contract under Federal tax law. However, if your Policy is issued on a
substandard basis, there is some risk that your Policy will not be treated as a
life insurance policy under Federal tax law, particularly if you make the full
amount of payments permitted under the Policy. If your Policy is not treated as
a life insurance contract under Federal tax law, increases in the Policy's cash
value will be taxed currently. Assuming that a Policy qualifies as a life
insurance contract for Federal income tax purposes, you should not be subject to
Federal income tax on the Policy Value in most instances. However, if your
Policy lapses while you have an outstanding loan balance, the outstanding loan
balance will be treated as income, and you will likely be required to pay
Federal income tax on the amount of the outstanding loan.
Death benefits payable under the Policy should be excludable from the gross
income of the beneficiary. As a result, the beneficiary generally should not
have to pay Federal income tax on the death benefit, although other taxes, such
as estate taxes, may apply. Depending on the total amount of payments you make,
the Policy may be treated as a modified endowment contract (MEC) under Federal
tax laws. If a Policy is treated as a MEC, then surrenders, partial withdrawals,
and loans under the Policy will be taxable as ordinary income to the extent
there are earnings in the Policy. In addition, a 10% penalty tax may be imposed
on surrenders, partial withdrawals, and loans taken before you reach age 59 1/2.
If the Policy is not a MEC, distributions (such as withdrawals) generally will
be treated first as a return of your investment in the Policy and then as
taxable income. Moreover, standard loans will generally not be treated as
distributions, but the tax treatment of
4
preferred loans is uncertain. Finally, neither distributions nor loans from a
Policy that is not a MEC are subject to the 10% penalty tax.
This Policy may be purchased with the intention of accumulating cash value on a
tax-free basis for some period (such as, until retirement) and then periodically
borrowing from the Policy without allowing the Policy to lapse. Such a strategy
can be pursued, for example, by using the Paid-Up Life Insurance Rider with a
Policy that is not a MEC. Anyone contemplating the purchase of the Policy with
the intention of pursuing this strategy should be aware that, among other risks,
it has not been ruled on by the IRS or the courts, and it may be possible that
any outstanding loan balance could be treated as a taxable distribution when the
Paid-Up Life Insurance Rider takes effect. YOU SHOULD CONSULT A QUALIFIED TAX
ADVISER FOR ASSISTANCE IN ALL POLICY-RELATED TAX MATTERS.
SURRENDER AND PARTIAL WITHDRAWAL RISKS
If you surrender the Policy or take a partial withdrawal during the first 9
Policy Years after the Policy Date (or any increase in the face amount), we will
assess a surrender charge. It is possible that you will receive no cash
surrender value if you surrender your Policy in the first few Policy Years. You
should purchase the Policy only if you have the financial ability to keep it in
force for a substantial period of time. You should not purchase the Policy if
you intend to surrender all or part of the Policy Value in the near future. We
designed the Policy to meet long-term financial goals. THE POLICY IS NOT
SUITABLE AS A SHORT-TERM SAVINGS VEHICLE.
Even if you do not ask to surrender your Policy, surrender charges may play a
role in determining whether your Policy will lapse without value. This is
because surrender charges decrease the cash surrender value that is a measure we
use to determine whether your Policy will lapse if sufficient new payments are
not made.
Partial withdrawals are not permitted during the first Policy Year. We will
reduce the face amount by the amount of the partial withdrawal if Death Benefit
Option 1 or Death Benefit Option 3 is in effect. If you have selected the
Adjustable Term Insurance Rider, a partial withdrawal will reduce the Target
Death Benefit (that is, the sum of the base death benefit under the Policy, plus
the death benefit under the Adjustable Term Insurance Rider) by the amount of
the withdrawal under every death benefit option. If you take a partial
withdrawal after the final payment date, the Guaranteed Death Benefit Rider will
terminate. A SURRENDER OR PARTIAL WITHDRAWAL MAY HAVE ADVERSE TAX CONSEQUENCES.
LOAN RISKS
A Policy loan, whether or not repaid, will affect Policy Value over time. This
will occur because we subtract the amount of the loan from the Subaccounts
and/or Fixed Account as collateral, and hold it in the Fixed Account. This loan
collateral does not participate in the investment performance of the
Subaccounts, and it will not be credited with any higher current interest rates
available to the Fixed Account. We will reduce the amount of the death benefit
we pay on the insured's death by the amount of any outstanding loan balance. If
you surrender the Policy or allow it to lapse while a Policy loan is
outstanding, you will generally have to pay a significant amount of Federal
income taxes on the amount of the outstanding loan balance. If you take a
preferred loan after the final payment date, the Guaranteed Death Benefit Rider
will terminate. A LOAN MAY HAVE ADVERSE TAX CONSEQUENCES.
Loan interest is charged on the outstanding loan and, if not paid in cash, is
added to the outstanding loan. Therefore, over time, your outstanding loan will
increase, unless you make a loan repayment. In addition, your Policy will
automatically go into the grace period if the cash surrender value is less than
the amount needed to make a monthly deduction on a monthly processing date, even
when the Monthly Payment Period is in effect. The Policy will lapse without
value unless you make sufficient additional payments by the end of the grace
period.
PORTFOLIO RISKS
A comprehensive discussion of the risks of each Portfolio may be found in each
Portfolio's prospectus. Please refer to the prospectuses for the Portfolios for
more information. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE
ITS STATED INVESTMENT OBJECTIVE.
5
FEE TABLE
The following tables describe the fees and charges that you will pay when
buying, owning, and surrendering the Policy. If the amount of a charge depends
on the personal characteristics of the insured or the owner, then the fee table
lists the minimum and maximum charges we assess under the Policy, and the fees
and charges of a typical policyowner with the characteristics described below.
These charges may not represent the charges you will pay.
The first table describes the fees and expenses that you will pay at the time
when you make payments, take cash withdrawals, surrender the Policy, increase
the face amount, exercise certain riders, or transfer Policy Value among the
Subaccounts and the Fixed Account.
TRANSACTION FEES
---------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED-
MAXIMUM GUARANTEED AMOUNT DEDUCTED - CURRENT
CHARGE WHEN CHARGE IS DEDUCTED CHARGE(1) CHARGE(1)
---------------------------------------------------------------------------------------------------------------------------------
PAYMENT EXPENSE CHARGE Upon receipt of each 6.00% of each payment, 6.00% of each payment,
payment consisting of the following: consisting of the following:
Front-end Sales Load 3.00% of each payment 3.00% of each payment
Premium Tax Charge 2.00% of each payment 2.00% of each payment
Deferred Acquisition Cost ("DAC 1.00% of each payment 1.00% of each payment
Tax") Charge
---------------------------------------------------------------------------------------------------------------------------------
SURRENDER CHARGE(2) Upon surrender, decrease Per $1,000 of face amount Per $1,000 of face amount
in face amount, or certain surrendered or decreased surrendered or decreased
partial withdrawals
- Minimum Charge during first during the first 9 Policy $ 3.35 $ 3.35
Policy Year(4) Years or 9 Policy Years
from the date of any
- Maximum Charge during first increase in the face amount(3) $54.09 $54.09
Policy Year(5)
- Charge for a Policy insuring a $29.69 $29.69
male, 45 years old at issue in
the preferred non-tobacco
underwriting class during first
Policy Year
---------------------------------------------------------------------------------------------------------------------------------
TRANSFER FEES Upon transfer First 12 transfers in a First 12 transfers in a
Policy Year are free, $25 Policy Year are free, $10
for each subsequent for each subsequent
transfer transfer
---------------------------------------------------------------------------------------------------------------------------------
------------------------------
(1) We may charge fees and rates lower than the maximum guaranteed charge.
Current charges are the fees and rates currently in effect. Any changes in
current charges will be prospective and will never exceed the maximum guaranteed
charge.
(2) The surrender charge will vary based on the age, sex and underwriting class
of the insured. The surrender charge decreases every Policy Year until it
reaches zero by the beginning of the tenth Policy Year after the Policy Date or
date of face amount increase. The surrender charge shown in the table may not be
typical of the charges you will pay. The Policy Details page of your Policy will
indicate the surrender charges that apply to your Policy. If you have elected
the Accounting Benefit Feature, your surrender charge rate will be lower than
the rates for a standard Policy without the Accounting Benefit Feature. For a
discussion of the Accounting Benefit Feature, see "Accounting Benefit Feature"
in this prospectus. You can obtain more detailed information concerning the
surrender charges you would pay from our Variable Life Service Center and from a
personalized illustration.
(3) If either Death Benefit Option 1 or 3 is in effect, we will assess a
surrender charge on each partial withdrawal that is equal to a proportional
amount of the reduction in the face amount due to the partial withdrawal. No
surrender charges are assessed on a preferred partial withdrawal (that is, the
portion of the withdrawal amount and the sum of the prior withdrawal amounts in
the same Policy Year that do not exceed 10% of the Policy Value as of the
beginning of the Policy Year).
(4) This minimum surrender charge is based on an insured with the following
characteristics: Female, age 0 at issue in the youth underwriting class who
chose the Accounting Benefit Feature.
(5) This maximum surrender charge is based on an insured with the following
characteristics: Female, age 66 at issue in the non-tobacco underwriting class.
6
TRANSACTION FEES
---------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED-
MAXIMUM GUARANTEED AMOUNT DEDUCTED - CURRENT
CHARGE WHEN CHARGE IS DEDUCTED CHARGE(1) CHARGE(1)
---------------------------------------------------------------------------------------------------------------------------------
PARTIAL WITHDRAWAL CHARGE Upon partial withdrawal 2.00% of the amount 2.00% of the amount
withdrawn, not to exceed withdrawn, not to exceed
$25 plus. (In addition, if $25 plus. (In addition, if
either Death Benefit either Death Benefit
Options 1 or 3 is in Options 1 or 3 is in
effect, a proportional effect, a proportional
amount of the applicable amount of the applicable
surrender charge on the surrender charge on the
amount of the partial amount of the partial
withdrawal that exceeds withdrawal that exceeds the
the preferred partial preferred partial
withdrawal amount) withdrawal amount)
---------------------------------------------------------------------------------------------------------------------------------
PROCESSING CHARGE Upon change of allocation $25 $0
instructions for net
payments
---------------------------------------------------------------------------------------------------------------------------------
OPTIONAL RIDER CHARGES:
---------------------------------------------------------------------------------------------------------------------------------
GUARANTEED DEATH BENEFIT RIDER When rider is elected $25 $25
---------------------------------------------------------------------------------------------------------------------------------
PAID-UP LIFE INSURANCE RIDER When rider is exercised 4% of Policy Value on 4% of Policy Value on rider
rider exercise date if you exercise date if you have
have elected Death elected Death
Benefit Option 3(6) Benefit Option 3(6)
---------------------------------------------------------------------------------------------------------------------------------
--------------------------
(6) The rider charge is 3% of Policy Value on the rider exercise date if you
have selected either Death Benefit Option 1 or 2.
7
The next table describes the fees and expenses that you will pay periodically
during the time that you own the Policy, not including Portfolio fees and
expenses.
------------------------------------------------------------------------------------------------------------------------------
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED -
MAXIMUM GUARANTEED AMOUNT DEDUCTED -
CHARGE WHEN CHARGE IS DEDUCTED CHARGE (1) CURRENT CHARGE (1)
------------------------------------------------------------------------------------------------------------------------------
THE MONTHLY DEDUCTION CONSISTS OF On each monthly
THE FOLLOWING CHARGES (PLUS ANY processing date
OPTIONAL RIDER CHARGES SHOWN LATER IN
THIS FEE TABLE):
------------------------------------------------------------------------------------------------------------------------------
1. COST OF INSURANCE (7) (WITHOUT EXTRA On each monthly
RATINGS) (8) processing date until the
final payment date
- Minimum Charge (9) (Band 2) $.01 per $1000 of net $.01 per $1000 of net
amount at risk per month (10) amount at risk per month
- Maximum Charge (11) (Band 1) $83.33 per $1000 of net $28.48 per $1000 of net
amount at risk per month amount at risk per month
- Initial Charge for a Policy $.04 per $1000 of net $.04 per $1000 of net
insuring a male, 45 years old at amount at risk per month amount at risk per month
issue in the preferred non-
tobacco underwriting class
(Band 2)
------------------------------------------------------------------------------------------------------------------------------
2. MONTHLY MORTALITY AND On each monthly For first 120 months the For first 120 months the
EXPENSE RISK CHARGE processing date Policy is in force: 0.60% Policy is in force: 0.35%
(annually) of your daily (annually) of your daily
Policy Value in each Policy Value in each
Subaccount; thereafter Subaccount; thereafter
0.30% (annually) 0.10% (annually)
------------------------------------------------------------------------------------------------------------------------------
3. MONTHLY ADMINISTRATION FEE On each monthly $7.50 $7.50
processing date until the
final payment date
------------------------------------------------------------------------------------------------------------------------------
-------------------------
(7) Cost of insurance charges are based on the insured's issue age, sex,
underwriting class, Policy Year, and the net amount at risk. Your cost of
insurance rates generally will increase each year with the age of the insured.
Cost of insurance rates on a Policy with a face amount of $150,000 and above are
lower than that of a Policy with a face amount less than $150,000. The cost of
insurance charges shown in the table may not be typical of the charges you will
pay. The Policy Details page of your Policy will indicate the guaranteed cost of
insurance charge that applies to your Policy. You can obtain more detailed
information concerning your cost of insurance charges from the Variable Life
Service Center and from a personalized illustration.
(8) Extra ratings are additional charges assessed on Policies insuring
individuals considered to have higher mortality risks based on our underwriting
standards and guidelines. If the insured possesses additional mortality risks,
we may add a surcharge to the cost of insurance rates of up to $15 monthly per
$1,000 of net amount at risk or 400% of your monthly cost of insurance
deduction.
(9) This minimum charge is based on an insured with the following
characteristics: Female, age 26 at issue in the preferred plus underwriting
class, with an initial face amount above $150,000 (Band 2). The rate will be
higher for policies with a face amount below $150,000 (Band 1).
(10) The net amount at risk equals the death benefit on the monthly processing
date minus the Policy Value on the monthly processing date, calculated before
the monthly deduction is taken.
(11) This maximum charge is based on an insured with the following
characteristics: Male, age 99 in the standard tobacco underwriting class, with
an initial face amount below $150,000 (Band 1).
8
------------------------------------------------------------------------------------------------------------------------------
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED -
MAXIMUM GUARANTEED AMOUNT DEDUCTED -
CHARGE WHEN CHARGE IS DEDUCTED CHARGE (1) CURRENT CHARGE (1)
------------------------------------------------------------------------------------------------------------------------------
4. MONTHLY EXPENSE CHARGE (12) On monthly processing
- Minimum Charge (13) date for the first ten $.03 per $1000 of face $.03 per $1000 of face
Policy Years after Policy amount per month amount per month
Date or increase in face
- Maximum Charge (14) amount $1.33 per $1000 of face $1.33 per $1000 of face
amount per month amount per month
- Charge for a Policy insuring a $.29 per $1000 of face $.29 per $1000 of face
male, 45 years old at issue in amount per month amount per month
the preferred non-tobacco
underwriting class
------------------------------------------------------------------------------------------------------------------------------
LOAN INTEREST SPREAD (15) Upon each Policy Standard Loans: 2.0% on Standard Loans: 0.8% on
Anniversary for the prior the outstanding loan the outstanding loan
Policy Year (16) balance not attributable balance not attributable
to earnings to earnings
Preferred Loans: 0.5% on Preferred Loans: 0.0% on
the outstanding loan the outstanding loan
balance attributable to balance attributable to
earnings earnings
------------------------------------------------------------------------------------------------------------------------------
------------------------
(12) The Monthly Expense Charge for a standard Policy is a level 10-year charge
that is set based on the insured's age, gender and underwriting class on the
Policy Date (or on the date of face amount increase). If you have elected the
Accounting Benefit Feature, your Monthly Expense Charge rate will be different
than the rates for a standard Policy without the Accounting Benefit Feature. For
a discussion of the Accounting Benefit Feature, see the "Accounting Benefit
Feature" in this prospectus. Because the Accounting Benefit Feature defers the
monthly expense charge, you will have a lower Monthly Expense Charge rate in the
first few Policy Years than Policyowners who elected a standard Policy. In the
later years of the Policy, Policyowners who elected the Accounting Benefit
Feature will have a higher Monthly Expense Charge rate than Policyowners who
elected a standard Policy. The Monthly Expense Charge rate shown in the table
may not be typical of the charges you will pay. The Policy Details page of your
Policy will indicate the Monthly Expense Charge rate that applies to your
Policy. You can obtain more detailed information concerning your Monthly Expense
Charge from the Variable Life Service Center.
(13) This minimum charge is based on an insured with the following
characteristics: Male, age 0 at issue in the youth non-tobacco underwriting
class who chose the Accounting Benefit Feature I.
(14) This maximum charge is charged during the 10th Policy year and is based on
an insured with the following characteristics: Male, age 65 at issue, in the
tobacco underwriting class who chose Accounting Benefit Feature I.
(15) The Loan Interest Spread is the difference between the amount of interest
we charge you for a loan which is currently 3.8% annually for a standard loan
(guaranteed not to exceed 5.0% annually) and the amount of interest we credit to
the amount in your Loan Account, which is 3.0% annually, both current and
guaranteed, on a standard loan. For that part of the outstanding loan balance
that is attributable to earnings, you may elect preferred loan rates. The
current preferred loan rate charged is 3.0%, guaranteed not to exceed 3.5%.
(16) While a Policy loan is outstanding, loan interest is charged in arrears on
each Policy Anniversary or, if earlier, on the date of Policy lapse, surrender,
or the insured's death.
9
--------------------------------------------------------------------------------------------------------------------------------
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED -
MAXIMUM GUARANTEED AMOUNT DEDUCTED -
CHARGE WHEN CHARGE IS DEDUCTED CHARGE (1) CURRENT CHARGE (1)
--------------------------------------------------------------------------------------------------------------------------------
OPTIONAL RIDER CHARGES: (17)
--------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE TERM INSURANCE RIDER (18) When the rider is elected
- Minimum Charge (19) and on each monthly $.01 per $1,000 of rider $.01 per $1,000 of rider
processing date thereafter face amount per month face amount per month
- Maximum Charge (20) $83.33 per $1,000 of rider $25.90 per $1,000 of rider
face amount per month face amount per month
- Initial Charge for a rider $.03 per $1,000 of rider $.03 per $1,000 of rider
insuring a male, 45 years old at face amount per month face amount per month
issue in the preferred
non-tobacco underwriting class
--------------------------------------------------------------------------------------------------------------------------------
DISABILITY WAIVER OF MONTHLY When the rider is elected
DEDUCTION RIDER (21) and on each monthly
processing date thereafter
- Minimum Charge (22) $.04 per $1,000 of net $.04 per $1,000 of net
amount at risk per month amount at risk per month
- Maximum Charge (23) $.22 per $1,000 of net $.22 per $1,000 of net
amount at risk per month amount at risk per month
- Charge for a 45 year old $.06 per $1,000 of net $.06 per $1,000 of net
amount at risk per month amount at risk per month
--------------------------------------------------------------------------------------------------------------------------------
DISABILITY WAIVER OF MONTHLY PAYMENT When the rider is elected
RIDER (21) and on each monthly
processing date thereafter
- Minimum Charge (22) $.04 per $1,000 of net $.04 per $1,000 of net
amount at risk per month amount at risk per month
- Maximum Charge (23) $.22 per $1,000 of net $.22 per $1,000 of net
amount at risk per month amount at risk per month
- Charge for a 45 year old $.06 per $1,000 of net $.06 per $1,000 of net
amount at risk per month amount at risk per month
--------------------------------------------------------------------------------------------------------------------------------
(17) Optional rider charges (except for the Guaranteed Death Benefit Rider and
the Paid-Up Life Insurance Rider) are added to the monthly deduction and vary
based on some or all of the following factors: the insured's issue or actual
age, sex, and underwriting class, Policy Year, and rider face amount or net
amount at risk. The rate of the charges may increase as the insured ages. The
rider charges shown in the table may not be typical of the charges you will pay.
The Policy Details page of your Policy or the specifications page(s) for the
rider will indicate the rider charges that apply to your Policy. You can obtain
more detailed information concerning these rider charges from our Variable Life
Service Center.
(18) The charge for this rider is based on the insured's (or other insured's)
age, gender and underwriting class. The rates you will pay for this rider will
generally increase each year with the age of the insured (or other insured).
(19) This minimum charge is based on an insured with the following
characteristics: Female, age 26 at issue in the preferred plus underwriting
class.
(20) This maximum charge is based on an insured with the following
characteristics: Male, age 99 in the tobacco underwriting class.
(21) The rider charges are based on the age of the insured and will increase
each year with the age of the insured.
(22) This minimum charge is based on an insured with the following
characteristics: age 0.
(23) This maximum charge is based on an insured with the following
characteristics: age 59.
10
--------------------------------------------------------------------------------------------------------------------------------
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT DEDUCTED -
MAXIMUM GUARANTEED AMOUNT DEDUCTED -
CHARGE WHEN CHARGE IS DEDUCTED CHARGE (1) CURRENT CHARGE (1)
--------------------------------------------------------------------------------------------------------------------------------
OTHER INSURED TERM INSURANCE RIDER (18) When rider is elected and
on each monthly
processing date thereafter
- Minimum Charge (24) $.01 per $1,000 of rider $.01 per $1,000 of rider
face amount per month face amount per month
- Maximum Charge (25) $83.33 per $1,000 of rider $40.31 per $1,000 of rider
face amount per month face amount per month
- Charge for a 45 year old, male, $.06 per $1,000 of rider $.06 per $1,000 of rider
preferred insured face amount per month face amount per month
-------------------------------------------------------------------------------------------------------------------------------
The following table shows the range of Portfolio fees and expenses for the
fiscal year ended December 31, 2002. Expenses of the Portfolios may be higher or
lower in the future. You can obtain more detailed information concerning each
Portfolio's fees and expenses in the prospectus for each Portfolio.
RANGE OF ANNUAL OPERATING EXPENSES FOR THE PORTFOLIOS (1)
--------------------------------------------------------------------------------------------------------------
MINIMUM MAXIMUM
--------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES (total of all expenses that are 0.29% 2.96%
deducted from Portfolio assets, including management fees, 12b-1 fees, and other
expenses)
--------------------------------------------------------------------------------------------------------------
(1) The Portfolio expenses used to prepare this table were provided to us by the
fund(s). We have not independently verified such information. The expenses are
those incurred as of December 31, 2002. Current or future expenses may be
greater or less than those shown.
The following table shows the fees and expenses charged by each Portfolio for
the fiscal year ended December 31, 2002.
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio
assets):
---------------------------------------------------------------------------------------------------------------------------
GROSS
TOTAL
MANAGEMENT 12b-1 OTHER ANNUAL
PORTFOLIO FEES FEES EXPENSES EXPENSES
---------------------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND (CLASS O SHARES)
---------------------------------------------------------------------------------------------------------------------------
Growth Portfolio 0.75% 0.00% 0.10% 0.85%
---------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio 0.85% 0.00% 0.11% 0.96%
---------------------------------------------------------------------------------------------------------------------------
MidCap Growth Portfolio 0.80% 0.00% 0.13% 0.93%
---------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio 0.85% 0.00% 0.12% 0.97%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. (INITIAL
SHARES) 0.75% 0.00% 0.05% 0.80%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND
---------------------------------------------------------------------------------------------------------------------------
Appreciation Portfolio 0.75% 0.00% 0.03% 0.78%
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Portfolio 0.75% 0.00% 0.05% 0.80%
---------------------------------------------------------------------------------------------------------------------------
----------------------
(24) This minimum charge is based on an other insured with the following
characteristics: Female, age 8 at issue in the youth underwriting class.
(25) This maximum charge is based on an other insured with the following
characteristics: Male, age 99 in the tobacco underwriting class.
11
---------------------------------------------------------------------------------------------------------------------------
GROSS
TOTAL
MANAGEMENT 12b-1 OTHER ANNUAL
PORTFOLIO FEES FEES EXPENSES EXPENSES
---------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (INITIAL CLASS)
---------------------------------------------------------------------------------------------------------------------------
Asset Manager (SM) Portfolio (1) 0.53% 0.00% 0.10% 0.63%
---------------------------------------------------------------------------------------------------------------------------
Contrafund (R) Portfolio (1) 0.58% 0.00% 0.10% 0.68%
---------------------------------------------------------------------------------------------------------------------------
Growth Opportunities Portfolio (1) 0.58% 0.00% 0.12% 0.70%
---------------------------------------------------------------------------------------------------------------------------
Growth Portfolio (1) 0.58% 0.00% 0.09% 0.67%
---------------------------------------------------------------------------------------------------------------------------
High Income Portfolio 0.58% 0.00% 0.12% 0.70%
---------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio (2) 0.24% 0.00% 0.09% 0.33%
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio (3) 0.43% 0.00% 0.11% 0.54%
---------------------------------------------------------------------------------------------------------------------------
Money Market Portfolio 0.20% 0.00% 0.09% 0.29%
---------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio (1) 0.73% 0.00% 0.17% 0.90%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST (4)
---------------------------------------------------------------------------------------------------------------------------
Capital Growth Fund 0.75% 0.00% 0.85% 1.60%
---------------------------------------------------------------------------------------------------------------------------
CORE (SM) U.S. Equity Fund 0.70% 0.00% 0.16% 0.86%
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund 0.75% 0.00% 0.46% 1.21%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
---------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio (Service Shares) 0.61% 0.25% 0.05% 0.91%
---------------------------------------------------------------------------------------------------------------------------
International Growth Portfolio (Institutional Shares) 0.65% 0.00% 0.09% 0.74%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
THE MONTGOMERY FUNDS III
---------------------------------------------------------------------------------------------------------------------------
Emerging Markets Funds 1.25% 0.00% 0.43% 1.68%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. (5)
---------------------------------------------------------------------------------------------------------------------------
Communications and Information Portfolio (Class 1) 0.75% 0.00% 0.23% 0.98%
---------------------------------------------------------------------------------------------------------------------------
Frontier Portfolio (Class 1) 0.75% 0.00% 0.48% 1.23%
---------------------------------------------------------------------------------------------------------------------------
Global Technology Portfolio (Class 2) 1.00% 0.15% 0.80% 1.95%
---------------------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio (Class 2) 1.00% 0.19% 0.18% 1.37%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
VAN ECK WORLDWIDE INSURANCE TRUST
---------------------------------------------------------------------------------------------------------------------------
Worldwide Absolute Return Fund (6) 2.50% 0.00% 0.46% 2.96%
---------------------------------------------------------------------------------------------------------------------------
Worldwide Emerging Markets Fund (7) 1.00% 0.00% 0.36% 1.36%
---------------------------------------------------------------------------------------------------------------------------
Worldwide Hard Assets Fund (6) 1.00% 0.00% 0.23% 1.23%
---------------------------------------------------------------------------------------------------------------------------
Worldwide Real Estate Fund (6) 1.00% 0.00% 0.48% 1.48%
---------------------------------------------------------------------------------------------------------------------------
(1) Actual annual class operating expenses were lower because a portion of the
brokerage commissions that the Portfolio paid was used to reduce the Portfolio's
expenses. In addition, through arrangements with the Portfolio's custodian,
credits realized as a result of uninvested cash balances are used to reduce a
portion of the Portfolio's custodian expenses. After taking into account these
voluntary offsets, the Net Total Annual Expenses for the Fidelity VIP Asset
Manager Portfolio, Fidelity VIP Contrafund Portfolio, Fidelity VIP Growth
Portfolio, Fidelity VIP Growth Opportunities Portfolio, and Fidelity VIP
Overseas Portfolio during 2002 were 0.61%, 0.64 %, 0.61%, 0.66%, and 0.86%,
respectively. These offsets may be discontinued at any time.
(2) The Fidelity VIP Index 500 Portfolio's manager has voluntarily agreed to
reimburse the class to the extent that Net Total Annual Expenses (excluding
interest, taxes, certain securities lending costs, brokerage commissions, and
extraordinary expenses) exceed 0.28% of the average daily net assets. This
arrangement can be discontinued by the manager at any time.
(3) Through arrangements with the Portfolio's custodian, credits realized as a
result of uninvested cash balances are used to reduce a portion of the
Portfolio's custodian expenses. After taking into account these voluntary
offsets, the Net Total Annual Expenses for the Fidelity VIP Investment Grade
Bond Portfolio during 2002 were 0.53%. These offsets may be discontinued at any
time.
(4) Goldman Sachs Asset Management, L.P., the investment adviser to the funds,
has voluntarily agreed to reduce or limit certain "Other Expenses" of such funds
(excluding management fees, transfer agent fees, taxes, interest, brokerage
fees, litigation, indemnification, shareholder meeting and other extraordinary
expenses) to the extent such expenses exceed a certain percentage of the fund's
average daily net assets. After taking into account these voluntary
arrangements, the Net Total Annual Expenses for the Goldman Sachs VIT Capital
Growth Fund and the Goldman Sachs VIT Growth and Income Fund during 2002 were
each 1.04%. For the calendar year ended
12
December 31, 2002, there were no expense reductions and limitations for the
Goldman Sachs VIT CORE(SM) U.S. Equity Fund. In no event would the Net Total
Annual Expenses for the Goldman Sachs VIT CORE(SM) U.S. Equity Fund exceed
0.94%. These expense reductions and limitations may be discontinued or modified
by the investment adviser at its discretion at any time.
(5) The fund manager has voluntarily agreed to reimburse the Seligman
Portfolios, Inc. Communications and Information Portfolio, Seligman Portfolios,
Inc. Frontier Portfolio, Seligman Portfolios, Inc. Global Technology Portfolio,
and Seligman Portfolios, Inc. Small-Cap Value Portfolio to the extent that
"Other Expenses" exceed 0.40%, 0.75%, 0.40%, and 0.20% of the average daily net
assets, respectively. After taking into account these voluntary arrangements,
the Net Total Annual Expenses for the Seligman Portfolios, Inc. Global
Technology Portfolio during 2002 were 1.55%.
(6) The adviser for the Van Eck Worldwide Insurance Trust Worldwide Absolute
Return Fund, Van Eck Worldwide Insurance Trust Worldwide Hard Assets Fund, and
Van Eck Worldwide Insurance Trust Worldwide Real Estate Fund have voluntarily
agreed to reduce or limit the "Other Expenses" for the funds. After taking into
account these voluntary arrangements, the Net Total Annual Expenses for Van Eck
Worldwide Insurance Trust Worldwide Absolute Return Fund, Van Eck Worldwide
Insurance Trust Worldwide Hard Assets Fund, and Van Eck Worldwide Insurance
Trust Worldwide Real Estate Fund during 2002 were 2.50%, 1.20%, and 1.46%,
respectively.
(7) The adviser for the Van Eck Worldwide Insurance Trust Worldwide Emerging
Markets Fund has voluntarily agreed to reduce or limit the "Other Expenses" for
the fund. The net effect of the expense reimbursement by the fund's adviser was
0.03% to the average daily net assets. After taking into account these voluntary
arrangements, Net Total Annual Expenses for the fund during 2002 were 1.30%.
THE POLICY
PURCHASING A POLICY
To purchase a Policy, you must submit a completed application to us through one
of our licensed insurance agents who is also a registered representative of
Canada Life of America Financial Services, Inc. (CLAFS), the principal
underwriter for the Policy, or through one of our agents who has a selling
arrangement with CLAFS.
The minimum initial amount of insurance coverage (or face amount) is $50,000.
You may increase or decrease the face amount by written request before the final
payment date within certain limits.
Generally, the Policy is available for insureds between issue ages 0-85.
REPLACING EXISTING INSURANCE. It may not be in your best interest to exchange
your existing life insurance policy or annuity contracts in order to purchase
this Policy. Before making an exchange, you should compare both insurance
policies carefully. Remember that if you exchange another life insurance policy
for this Policy, you may have to pay a surrender charge on your old policy,
other charges may be higher (or lower) and the benefits may be different. Talk
to your financial professional or tax adviser to make sure the exchange will be
tax-free. If, for example, you surrender your existing policy for cash and then
buy the Policy, you may have to pay Federal income tax, possibly including a 10%
penalty tax, on the surrender. Because we will not issue the Policy until we
have received an initial payment, the issuance of the Policy may be delayed. You
should not exchange another life insurance policy for this one unless you
determine, after knowing all the facts, that the exchange is in your best
interest and not just better for the person selling you the Policy (that person
generally earns a commission if you buy this Policy through an exchange or
otherwise.)
APPLYING FOR A POLICY
On your application, you must select a death benefit option and a tax test. (See
"Death Benefit"). You may also select Accounting Benefit Feature I or II (as
described below).
After receiving your completed application, we will begin the underwriting
process to decide the insurability of the proposed insured. We must receive
evidence of insurability that satisfies our underwriting standards before we
will issue a Policy. We may require medical examinations and other information
before deciding insurability. We will issue a Policy only after underwriting has
been completed. We reserve the right to modify our minimum face amount and
underwriting requirements at any time, and to reject an application for any
reason permitted by law.
In most cases, if you make an initial payment with your application of at least
one minimum monthly payment, we will provide initial conditional insurance
during underwriting. The initial conditional insurance will be the insurance
applied for, up to a maximum of $500,000, depending on the age and underwriting
class of the proposed insured. This coverage will continue for no more than 90
days from the date of the application and, if required, the completed medical
exam. If death is by suicide during this coverage, we will return only the
payments made to us.
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If you have made payments before we issue the Policy, even if no initial
conditional insurance is in effect, we will allocate those net payments to a
non-interest bearing account. If the Policy is not issued and accepted, we will
return payments to you without interest.
WHEN INSURANCE COVERAGE TAKES EFFECT
We will issue the Policy only if the underwriting process has been completed,
the application has been approved (or we receive your written consent to any
changes to the application, if necessary), the proposed insured is alive on the
Date of Issue and in the same condition of health as described in the
application, and the minimum initial payment also has been made. Full insurance
coverage under the Policy will take effect on the Policy Date. The Policy Date
may be different from the Date of Issue. The Policy Date is printed on the
Policy Details page of your Policy. We use the Policy Date to measure monthly
processing dates, Policy Years and Policy Anniversaries. We begin to charge the
monthly deduction from your Policy Value on the Policy Date (if your Policy is
backdated, we begin to charge monthly deductions as of the backdated Policy
Date.)
ACCOUNTING BENEFIT FEATURE
At the time of application only, you may elect the Accounting Benefit Feature I
or II. The Accounting Benefit Feature will enhance cash values during the early
Policy Years by lowering the surrender charge and deferring the monthly expense
charge until the later Policy Years. However, during the later Policy Years,
Policy Values are less than they would be than if you did not select the
Accounting Benefit Feature because you must pay the deferred monthly expense
charge. If you elect this feature, we apply a different monthly expense charge
schedule and a different surrender charge schedule to your Policy. For tables
showing the maximum monthly expense charges under the Accounting Benefit
Feature, see Appendix C of this prospectus and call the Variable Life Service
Center for a free copy of the Statement of Additional Information. For tables
showing the maximum surrender charges under the Accounting Benefit Feature, call
the Variable Life Service Center for a free copy of the Statement of Additional
Information.
BACKDATING
We may sometimes backdate a Policy, at your request, by assigning a Policy Date
earlier than the Date of Issue so that you can obtain lower minimum monthly
payments and cost of insurance rates, based on a younger insurance age. We will
backdate the Policy Date no more than six months before the Date of Issue.
When deciding whether or not backdating is appropriate for you, please take into
consideration what the consequences of an earlier Policy Date may be. Backdating
will cause the Policy to reach its final payment date sooner. On the first
monthly processing date after the Date of Issue, you will have to pay all of the
monthly deductions for the backdated period. However, all net payments received
before the Date of Issue will be credited with interest at the current Fixed
Account rate for the backdated period. We will also use the Policy Date to
determine the amount of minimum monthly payments necessary to guarantee that the
Policy will not lapse during the Minimum Payment Period. As a result, you will
not receive the benefits of protection from lapse for as long a period as
someone who has purchased a Policy that is not backdated. However, you will also
be subject to a shorter surrender charge period and a shorter monthly expense
charge period than someone who has not backdated the Policy.
CANCELING A POLICY (RIGHT TO EXAMINE PERIOD)
INITIAL RIGHT TO EXAMINE PERIOD. You have the right to examine and cancel your
Policy by returning the Policy to our Variable Life Service Center (or one of
our representatives) on or before 10 days after you receive the Policy. There
may be longer periods in some jurisdictions. See the "Right to Examine"
provision of your Policy. If you decide to cancel the Policy during the right to
examine period, we will treat the Policy as if it were never issued. We will
refund monies owed within 7 days after we receive the returned Policy at our
Variable Life Service Center.
If you live in a state that requires us to return a full refund of payment, we
will refund the greater of:
- your entire payment(s) as of the date we receive the returned Policy; or
- the Policy Value as of the date we receive the returned Policy, plus
deductions under the Policy for taxes, charges or fees. (Surrender charges
will not be assessed.)
If you live in a state that requires us to return Policy Value, we will refund:
- your Policy Value as of the date we receive the returned Policy, plus
- any deductions under the Policy for taxes, charges or fees. (Surrender
charges will not be assessed).
We may postpone payment of the refund under certain conditions.
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RIGHT TO EXAMINE PERIOD FOR AN INCREASE IN FACE AMOUNT. Similarly, after an
increase in face amount, we will mail or deliver to you a right to examine
notice for the increase. You will have the right to cancel the increase on or
before 10 days after you receive the notice. If you cancel the increase, you
will receive a credit to your Policy Value of the charges deducted for the
increase. We will waive any surrender charge computed for the increase.
STATE VARIATIONS
Any state variations in the Policy, any endorsements and any riders are
described in a special form for use in that state. This prospectus provides a
general description of the Policy. Your actual Policy and any endorsements and
riders are the controlling documents. If you would like to receive a replacement
copy of your Policy and any of its endorsements and riders, contact the Variable
Life Service Center.
OWNERSHIP RIGHTS
The Policy belongs to the person named as owner in the application (you), unless
later changed. You are the insured unless you specify a different person in the
application as the insured or the Policyowner is changed thereafter. While the
insured is living, you may exercise all of the rights and options granted in the
Policy, with the consent of any irrevocable beneficiary and subject to the terms
of any assignment of the Policy. Your principal rights as Policyowner are as
follows:
- to appoint or change beneficiaries;
- to receive amounts payable before the death of the insured;
- to assign the Policy (if you assign the Policy, your rights and the rights
of anyone who is to receive payment under the Policy are subject to the
terms of that assignment);
- to change the Policyowner of this Policy; and
- to change the face amount or Target Death Benefit Schedule of this Policy.
No appointment or change in appointment of a Policyowner will take effect unless
you send (and we receive) a written request to the Variable Life Service Center.
When we receive it, the request will take effect as of the date you signed it,
subject to payment or other action taken by us before it was received.
MODIFYING THE POLICY
Any modification or waiver of our rights or requirements under the Policy must
be in writing and signed by our president, secretary or chief actuary. No agent
may bind us by making any promise not contained in the Policy.
Upon notice to you, we may modify the Policy:
- to make the Policy or the Variable Account comply with any law (or
regulation issued by a governmental agency) to which we are subject;
- to assure continued qualification of the Policy as a life insurance
contract under the Code or other Federal or state laws relating to variable
life policies;
- to reflect a change in the operation of the Variable Account; or
- to provide additional Variable Account and/or fixed accumulation options.
If we modify the Policy, we will make appropriate endorsements to the Policy. If
any provision of the Policy conflicts with the laws of any governmental agency
to which we are subject, we reserve the right to amend the provision to conform
to these laws.
OTHER POLICIES
We offer other variable life insurance policies and variable annuity policies
that may invest in the same Portfolios of the Funds. We also offer a full line
of traditional life insurance and annuity policies through our affiliated
company, The Canada Life Assurance Company. For more information about these
policies, please contact our Home Office or one of our representatives.
CONVERSION RIGHTS FOLLOWING THE DATE OF ISSUE OR INCREASE IN FACE AMOUNT
Within 24 months of the Date of Issue or of an increase in the face amount, you
may convert your Policy into a fixed policy by transferring all Policy Value in
the Subaccounts to the Fixed Account. The conversion will take effect as of the
end of the valuation period in which we receive your written notice of
conversion that is satisfactory to us. There is no charge for this conversion.
We will allocate all future payments to the Fixed Account. We will not assess
any transfer or other charges in connection with this conversion, and this
transfer will not count toward the 12 "free" transfers permitted each Policy
Year. SUCH AN EXCHANGE MAY HAVE TAX CONSEQUENCES.
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PAYMENTS
FLEXIBLE PAYMENTS
You have the flexibility to determine the frequency and the amount of the
payments you make. Unlike conventional insurance policies, you do not have to
make your payments according to a rigid and inflexible schedule. You may make
additional payments at any time while the insured is alive and the Policy is in
force, before the final payment date, and subject to any applicable maximum
payment limitations. You may send your payment by mail to our Variable Life
Service Center. We will not begin processing any payment until we receive it at
our Variable Life Service Center.
If you have an outstanding Policy loan, YOU MUST ASK US TO APPLY THE PAYMENT AS
A LOAN REPAYMENT OR WE WILL ALLOCATE THE NET PAYMENT TO THE SUBACCOUNTS AND/OR
THE FIXED ACCOUNT. You also may choose to have payments automatically deducted
periodically from your bank account or other source under an electronic funds
transfer plan (described below).
You may stop making payments at any time and your Policy will continue in force
until the date when either: (i) the insured dies; (ii) the Policy lapses without
a sufficient payment; or (iii) we receive your written request to surrender the
Policy.
MINIMUM INITIAL PAYMENT
You must make the minimum initial payment for full insurance coverage to begin.
The minimum initial payment will vary based upon your Policy's face amount, and
the insured's age, underwriting class and gender. This amount is the only
payment you are required to make under this Policy. However, you greatly
increase your risk of lapse if you do not regularly make payments according to
the Minimum Payment Period schedule.
MINIMUM MONTHLY PAYMENTS - NO LAPSE GUARANTEE
The minimum monthly payment is the monthly payment amount you must make in order
for us to guarantee that your Policy will not lapse during the Minimum Payment
Period. The length of the Minimum Payment Period is 48 Policy Months after the
Policy Date.
MINIMUM PAYMENT PERIOD REQUIREMENT. If, on each monthly processing date, the sum
of all payments you have made, less the outstanding loan balance, partial
withdrawals, and partial withdrawal charges (excluding the transaction fee),
equals or exceeds the cumulative sum of minimum monthly payments in effect for
each month from the Policy Date up to and including the current monthly
processing date, then we guarantee that your Policy will not lapse during the
Minimum Payment Period.
To guarantee that your Policy will not lapse, the minimum monthly payments that
you would have to make could be significant.
If, during the Minimum Payment Period, you change the face amount, or if you
change, add or delete a benefit rider, we will recalculate the minimum monthly
payment and notify you of the new amount you must pay to provide you with a
guarantee against lapse. The new minimum monthly payment will apply from the
date of the change.
Your Policy Details page will show a Minimum Payment Period and minimum monthly
payment for your Policy, which is based on the insured's issue age, sex,
underwriting class, face amount, and riders.
After the end of the Minimum Payment Period, the Policy will be kept in force
only as long as the cash surrender value is sufficient to cover the amount of
each monthly deduction when due. Payment of only the minimum monthly payment
during the Minimum Payment Period may result in a cash surrender value that is
not sufficient to meet future monthly deductions beyond the Minimum Payment
Period. YOU MAY BE REQUIRED TO MAKE ADDITIONAL PAYMENTS IN ORDER TO KEEP YOUR
POLICY IN FORCE.
PERIODIC PLANNED PAYMENT SCHEDULE
If you decide to establish a schedule of periodic planned payments, we will bill
you at regular intervals. You may request that we send you a signed receipt of
the payment. You may change the planned payment schedule; you may make
unscheduled payments; and you may skip planned payments. You may not make any
payments after the Policy's final payment date. MAKING PERIODIC PLANNED PAYMENTS
DOES NOT GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE. The Policy will not
necessarily lapse if you fail to make periodic planned payments.
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ELECTRONIC FUNDS TRANSFER
You may choose to have monthly or periodic planned payments automatically
collected from your checking or savings account pursuant to an electronic funds
transfer (EFT) agreement. You may terminate the EFT method of payment after 30
days by written request, and we may terminate the EFT method of payment at any
time if a payment has not been made by your bank. The EFT method of payment is
not available on the 29th, 30th or 31st day of each month. There is no charge
for this feature.
PAYMENT LIMITATIONS
No payments may be made after the final payment date.
TAX LIMITATIONS. There are no limits on the total amount of payments you may
make if you have selected Death Benefit Option 3 that applies the Cash Value
Accumulation Tax test. Even so, we will not accept a payment that will cause the
Policy to become a modified endowment contract without your consent (as
described below).
IF YOUR DEATH BENEFIT OPTION IS EITHER 1 OR 2, WE MAY LIMIT OR REFUND ANY
PAYMENT OR PORTION OF A PAYMENT IF:
- the payment would disqualify the Policy as a life insurance contract under
or the Code;
- the payment would increase the base death benefit by more than the amount
of such payment (unless you provide us with satisfactory evidence of
insurability).
We have established procedures to monitor whether aggregate payments made under
a Policy exceed the current maximum payment limitations that qualify the Policy
as life insurance according to Federal tax laws. We will not allow you to make
any payments that would cause the total amount of the payments you have made to
exceed those limits. If you make a payment that would cause your total payments
to be greater than the maximum payment limitations, we will accept only that
portion of the payment that would make total payments equal the maximum amount
that may be made under the Policy. We will apply any excess first to repay any
outstanding loan balance; if there are remaining excess payments, we will return
the excess to you. However, we will accept payment needed to prevent Policy
lapse during a Policy Year. For more information on the available death benefit
options, see "Base Death Benefit Options" in this prospectus.
REFUND OF EXCESS PAYMENT FOR MODIFIED ENDOWMENT CONTRACTS (MECS). We will refund
the amount of any payment received which would cause the Policy to become a MEC
unless you provide us with written notice stating it is acceptable to you that
your Policy becomes a MEC. You should consult a tax adviser to discuss the
potential tax effects of allowing this Policy to become a MEC particularly if
you have an outstanding loan balance.
TAX-FREE EXCHANGES (1035 EXCHANGES). We may accept as part of your initial
payment, money from another life insurance contract that qualified for a
tax-free exchange under Section 1035 of the Code. You should consult a tax
adviser to discuss the potential tax effects of such a transaction.
ALLOCATING NET PAYMENTS
Each net payment we receive after the Date of Issue (or the Right to Examine
period as described below) will be allocated as of the valuation day it is
received at the Variable Life Service Center to the Fixed Account and/or
Subaccounts in accordance with your payment allocation instructions then in
effect.
When you apply for a Policy, you must instruct us in the application to allocate
your net payment to one or more Subaccounts and/or to the Fixed Account
according to the following rules:
- Allocation percentages must be in whole numbers, with the total allocation
to all selected accounts equaling 100%.
- We will allocate the net payment as of the valuation day we receive it at
our Variable Life Service Center according to your current payment
allocation instructions, unless otherwise specified.
- We process net payments allocated to a Subaccount based on the Subaccount's
unit value next determined at the end of the valuation day (usually 4:00
p.m. Eastern Time) on which we receive them. Net payments received after
the end of the valuation day are processed using unit values determined at
the end of the next valuation day.
- You may change the allocation instructions for additional net payments by
written request or by telephone request. Any change in allocation
instructions will be effective on the date we record the change. No charge
is currently imposed for changing payment allocation instructions. We may
impose a processing charge of up to $25 in the future.
- You may make a different allocation for one net payment per Policy Year
without submitting new payment allocation instructions to us. You must
specify that you do not wish to change the payment allocation instructions
that we have on file.
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Investment returns from amounts allocated to the Subaccounts will vary with the
investment performance of these Subaccounts and will be reduced by Policy
charges and partial withdrawals. YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS
YOU ALLOCATE TO THE SUBACCOUNTS. You should periodically review your allocation
schedule in light of market conditions and your overall financial objectives.
PAYMENTS BEFORE THE DATE OF ACCEPTANCE
If you make a payment with your application for the Policy, or at any time
before the date of Acceptance, we will hold the net payment in a non-interest
bearing account. If you have backdated your Policy, we will credit the net
payments with interest at the current Fixed Account rate for the backdated
period. If the Policy is not issued and accepted, we will refund all payments
made by you without interest.
PAYMENTS DURING THE RIGHT TO EXAMINE PERIOD
If your Policy provides for a refund of Policy Value under the Right to Examine
provision, we will allocate your initial net payments on the date of Acceptance
in accordance with the allocation instructions in the application or in a
subsequent written request.
If your Policy provides for a full refund of payments under the Right to Examine
provision, we will allocate to the Fidelity VIP Money Market Subaccount any
initial and subsequent net payments you request to be allocated to the
Subaccounts that we receive at the Variable Life Service Center within 14 days
from the date of Acceptance. However, we will allocate such net payments to the
Fidelity VIP Money Market Subaccount for:
- 24 days from the date of Acceptance, if this Policy is issued in states
with a 20-day right to examine; or
- 34 days from the date of Acceptance, for California citizens age 60 and
older who have a 30-day right to examine.
Immediately after this period, the Policy Value in the Fidelity VIP Money Market
Subaccount will be reallocated in accordance with your allocation instructions
in the application or in a subsequent written request.
VALUES UNDER THE POLICY
POLICY VALUE
The Policy Value serves as the starting point for calculating values under a
Policy.
POLICY VALUE: - equals the sum of all values in the
Fixed Account, including any
outstanding loan balance, and in the
Variable Account;
- is determined first on the Date of
Issue and then on each valuation day;
and
- has no guaranteed minimum amount and
may be more or less than payments
made.
Policy Value varies from day to day, depending on such factors as the investment
performance of the Subaccounts you choose, interest we credit to the Fixed
Account, charges we deduct, and any other transactions (e.g., transfers, partial
withdrawals, and loans). WE DO NOT GUARANTEE A MINIMUM POLICY VALUE.
CASH SURRENDER VALUE
The cash surrender value is the amount we pay to you when you surrender your
Policy. We determine the cash surrender value at the end of the valuation day on
which we receive your Policy and a written request to surrender at the Variable
Life Service Center. If we receive your written surrender request after the
close of a valuation day, usually 4:00 p.m. Eastern Time, we will determine the
cash surrender value as of the end of the next valuation day.
CASH SURRENDER VALUE AT THE - the Policy Value as of such date;
END OF ANY VALUATION DAY minus
EQUALS:
- any surrender charge as of such date;
minus
- any outstanding loan balance as of
such date.
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SUBACCOUNT VALUE
At the end of any valuation period, the Subaccount Value is equal to the number
of units in the Subaccount multiplied by the unit value of that Subaccount.
THE NUMBER OF UNITS IN ANY - the initial units purchased at unit
SUBACCOUNT AT THE END OF ANY value on the Date of Issue; plus
VALUATION DAY EQUALS:
- units purchased with any additional
net payments; plus
- units purchased when Policy Value is
transferred from another Subaccount
or the Fixed Account; minus
- units redeemed to pay a pro-rata
share of the monthly deduction
allocated to the Subaccount; minus
- units redeemed to pay a pro-rata
share of partial withdrawals (and any
applicable partial withdrawal
charge); minus
- units redeemed as part of transfers
to another Subaccount and/or the
Fixed Account (and any applicable
transfer charges); minus
- units redeemed to pay a pro-rata
share of transaction charges
allocated to the Subaccount for
changes in face amount of the Policy.
Every time you allocate or transfer money to or from a Subaccount, we convert
that dollar amount into units. We determine the number of units we credit to, or
subtract from, your Policy by dividing the dollar amount of the transaction by
the unit value for that Subaccount that is next determined at the end of the
valuation day on which we receive your payment or transaction request.
Certain events will reduce the number of units of a Subaccount credited to a
Policy. Partial withdrawals or transfers of Subaccount Value will result in the
redemption of the appropriate number of units of that Subaccount, as will
surrender of the Policy, payment of death benefit proceeds, transfer of loan
collateral, and the deduction of a monthly deduction. Units are redeemed as of
the end of the valuation period in which we receive written notice of the event.
UNIT VALUE
The value (or price) of each Subaccount will reflect the investment performance
of the Portfolios in which the Subaccount invests. Unit values will vary among
Subaccounts. The unit value may increase or decrease from one valuation period
to the next.
THE UNIT VALUE OF ANY - the unit value of the Subaccount on
SUBACCOUNT AT THE END OF ANY the immediately preceding valuation
VALUATION DAY EQUALS: day; multiplied by
- the net investment factor for that
Subaccount on that valuation day.
THE NET INVESTMENT FACTOR: - measures the investment performance
of a Subaccount from one valuation
period to the next;
- increases to reflect investment
income and capital gains (realized
and unrealized) for the shares of the
underlying Portfolio; and
- decreases to reflect any capital
losses (realized and unrealized) for
the shares of the underlying
Portfolio, as well as the insurance
charge.
FIXED ACCOUNT VALUE
On the date of Acceptance, the Fixed Account Value is equal to the net payments
allocated to the Fixed Account, minus the portion of the first monthly deduction
taken from the Fixed Account.
THE FIXED ACCOUNT VALUE - the net payment(s) allocated to the
AT THE END OF ANY VALUATION Fixed Account; plus
DAY IS EQUAL TO:
- any amounts transferred to the Fixed
Account (including any outstanding
loan balance); plus
- interest credited to the Fixed
Account; minus
- amounts withdrawn from the Fixed
Account (including any applicable
withdrawal charges); minus
- amounts transferred from the Fixed
Account (including any outstanding
loan balance) to a Subaccount
including any applicable transfer
fees; minus
- any other transaction charges
allocated to the Fixed Account; minus
- amounts deducted to pay for monthly
deductions.
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DEATH BENEFIT
If the insured dies while the Policy is in force, we will pay the death benefit
to the beneficiary once we receive at our Variable Life Service Center
satisfactory proof of the insured's death. We may require that the Policy is
returned to us.
We will generally pay interest on the death benefit from the date of the
insured's death to the date the death benefit is paid. You may choose for the
death benefit to be paid out either as a lump sum or under one of the payment
options provided by the Policy. If the death benefit is paid in a lump sum, we
will credit interest at the greater of (i) 3.00% annually, or (ii) any higher
rate required by applicable law. For more information on payment of death
benefit proceeds, call the Variable Life Service Center for a free copy of the
Statement of Additional Information.
DEATH BENEFIT ON OR BEFORE THE FINAL PAYMENT DATE
IF THE ADJUSTABLE TERM - the base death benefit (described
INSURANCE RIDER IS NOT IN below) in effect on the insured's
EFFECT ON THE INSURED'S DATE date of death; MINUS
OF DEATH, THE DEATH BENEFIT
EQUALS: - any monthly deductions due and unpaid
through the month that the insured
dies; and MINUS
- any outstanding loan balance on the
insured's date of death.
IF THE ADJUSTABLE TERM - the Target Death Benefit Schedule
INSURANCE RIDER IS IN EFFECT amount (described below) as of the
ON THE INSURED'S DATE OF insured's date of death; MINUS
DEATH, THE DEATH BENEFIT
EQUALS: - any monthly deductions due and unpaid
through the month that the insured
dies; and MINUS
- any outstanding loan balance on the
insured's date of death.
DEATH BENEFIT AFTER THE FINAL PAYMENT DATE
IF THE EXTENDED COVERAGE - the Policy Value on the insured's
OPTION IS NOT IN EFFECT, THE date of death; MINUS
DEATH BENEFIT EQUALS:
- any mortality and expense risk
charges due and unpaid through the
month that the insured dies; and
MINUS
- any outstanding loan balance as of
the insured's date of death.
IF THE EXTENDED COVERAGE - the face amount in effect on the
OPTION IS IN EFFECT AS OF THE final payment date; MINUS any
FINAL PAYMENT DATE, THE DEATH outstanding loan balance on the date
BENEFIT WILL BE THE GREATER OF: of death, and any partial withdrawals
and partial withdrawal charges after
the final payment date; or
- the Policy Value on the insured's
date of death; MINUS any outstanding
loan balance on the insured's date of
death.
IF THE GUARANTEED DEATH - the Policy Value on the insured's
BENEFIT RIDER IS IN EFFECT, date of death; MINUS any outstanding
THE DEATH BENEFIT EQUALS THE loan balance on the date of death;
GREATER OF: MINUS any mortality and expense risk
charges due and unpaid through the
month that the insured dies; or
- the face amount in effect on the
final payment date; MINUS any
outstanding loan balance on the
insured's date of death; and MINUS
any mortality and expense risk
charges due and unpaid through the
month that the insured dies.
BASE DEATH BENEFIT OPTIONS
In the application for the Base Policy, you may choose between three death
benefit options: Option 1--Level Guideline Premium Test; Option 2--Adjustable
Guideline Premium Test; and Option 3--Level Cash Value Accumulation Test. We
will not issue a Policy to you unless you have selected a death benefit option.
We calculate the amount available under each death benefit option as of the date
of the insured's death.
If you have selected Death Benefit Option 1 or 3, a partial withdrawal will
reduce the face amount by the amount of the withdrawal.
20
THE BASE DEATH BENEFIT UNDER - the face amount; OR
OPTION 1 AND OPTION 3 IS THE
GREATER OF: - the minimum death benefit equal to
the Policy Value (determined on the
valuation day on or next following
the date of the insured's death)
multiplied by the applicable factor
for the insured's age (see Appendix A
for Option 1 and Appendix B for
Option 3).
THE BASE DEATH BENEFIT UNDER - the face amount plus the Policy Value
OPTION 2 IS THE GREATER OF: on the date of the insured's death;
or
- the minimum death benefit equal to
the Policy Value (determined on the
valuation day on or next following
the date of the insured's death
multiplied by the applicable
Guideline Premium factor for the
insured's age (see Appendix A)).
WHICH DEATH BENEFIT OPTION TO CHOOSE. If you prefer to have net payments and any
favorable investment performance reflected partly in the form of an increasing
death benefit, you should consider choosing Option 2. If you are satisfied with
the amount of the insured's existing insurance coverage and prefer to have net
payments and any favorable investment performance reflected to the maximum
extent in the Policy Value (thus potentially reducing cost of insurance
charges), you should consider choosing Options 1 or 3.
- Under Options 1 and 3, the base death benefit will generally be level and
will vary with the Policy Value only when the Policy Value multiplied by
the applicable factor for the insured's age is greater than the face
amount.
- Under Option 2, the base death benefit will always vary with the Policy
Value.
Your choice of death benefit will affect the amount of the death benefit and the
monthly deductions from the Policy. The death benefit option will also affect
the amount and frequency of the payments you must make to keep the Policy in
force and the maximum payments you may make under the Policy.
MINIMUM DEATH BENEFIT
To qualify as "life insurance" under the Federal tax laws, this Policy must
provide a minimum death benefit. The minimum death benefit will be determined as
of the date of death of the insured. Under current Federal tax law, either the
"Guideline Premium/Cash Value Corridor" test or the "Cash Value Accumulation"
test may be used to determine whether the Policy qualifies as "life insurance"
under the Code.
You must elect one of the tax tests at the time of application for the Policy.
You may not change tests. If you select the "Guideline Premium/Cash Value
Corridor" test, you must elect either Death Benefit Option 1 or Death Benefit
Option 2. If you elect the "Cash Value Accumulation" test, Death Benefit Option
3 must apply. YOU SHOULD CONSULT A QUALIFIED TAX ADVISER IN CHOOSING BETWEEN THE
"GUIDELINE PREMIUM/CASH VALUE CORRIDOR" AND THE "CASH VALUE ACCUMULATION" TESTS
AND IN CHOOSING A DEATH BENEFIT OPTION. For more information, call the Variable
Life Service Center for a free copy of the Statement of Additional Information.
CHANGING DEATH BENEFIT OPTIONS
After the first Policy Year and before the final payment date, you may change
death benefit options once a year by sending a written request to the Variable
Life Service Center. We reserve the right to require evidence of insurability.
If you are in Death Benefit Options 1 or 2, you may not change to Death Benefit
Option 3. If you are in Death Benefit Option 3, you may not change death benefit
options. The change in the base death benefit will take effect on or following
the monthly processing date the date we approve your request.
Changing the death benefit option may result in a change in face amount. For
more information, call the Variable Life Service Center for a free copy of the
Statement of Additional Information.
Changing the death benefit option also may have tax consequences and may affect
the net amount at risk over time (which would affect the monthly cost of
insurance charge). We will not permit any change that would result in your
Policy being disqualified as a life insurance contract under Section 7702 of the
Code. YOU SHOULD CONSULT A TAX ADVISER BEFORE CHANGING DEATH BENEFIT OPTIONS.
SELECTING AND CHANGING THE FACE AMOUNT AND/OR THE TARGET DEATH BENEFIT SCHEDULE
You select the face amount when you apply for the Policy. If you purchase the
Adjustable Term Insurance Rider, you select the Target Death Benefit Schedule
when you apply for the rider.
The face amount of life insurance you select at the time of application for the
Base Policy determines your Policy's band of the cost of insurance rates.
Policies with initial face amounts at $150,000 and above will be placed in Band
2 and will be
21
charged a lower cost of insurance rate than Policies with initial face amounts
below $150,000 that are placed in Band 1. Neither a face amount increase nor a
face amount decrease will cause a change in your cost of insurance band.
You may change the face amount and the Target Death Benefit Schedule by sending
a written request to the Variable Life Service Center. We may require you to
return your Policy to make the change. We will not permit any change that would
result in your Policy being disqualified as a life insurance contract under
Section 7702 of the Code. HOWEVER, CHANGING THE FACE AMOUNT AND/OR THE TARGET
DEATH BENEFIT SCHEDULE MAY HAVE TAX CONSEQUENCES AND YOU SHOULD CONSULT A TAX
ADVISER BEFORE DOING SO.
INCREASING THE FACE AMOUNT AND/OR THE TARGET DEATH BENEFIT SCHEDULE
After the first Policy Year, you may increase the face amount and/or Target
Death Benefit Schedule of your Policy, subject to the following:
CONDITIONS FOR INCREASING THE - You must send a written application
FACE AMOUNT: and provide evidence of insurability
satisfactory to us at our Variable
Life Service Center.
- The age of the insured must be lower
than age 86.
- We must approve the insured under our
underwriting standards in effect at
the time of the increase.
- You must pay the amount necessary to
keep the Policy in force for three
months if the Policy Value, after the
change, is insufficient to maintain
coverage for the three-month period.
- You must increase both the face
amount and/or the Target Death
Benefit Schedule by a minimum of
$10,000.
- If the Adjustable Term Insurance
Rider is in effect, an increase in
the face amount of the Base Policy
will also apply to all future years
of the Target Death Benefit Schedule.
The increased face amount and/or the Target Death Benefit Schedule will take
effect on or following the first monthly processing date on or following the
date that all of the above requirements are met. We will provide you with new
Policy details pages.
An increase in face amount will be accompanied by: (i) an additional cost of
insurance charge for the increase, which will be based on the age and
underwriting class of the insured at the time of the increase; (ii) a new
minimum monthly payment, if the increase is within the first 48 Policy Months;
(iii) a new monthly expense charge; (iv) a new guideline premium, if applicable;
(v) a new surrender charge rate and period for the Policy; and (vi) a new
guaranteed death minimum payment, if applicable.
An increase in the Target Death Benefit Schedule will be accompanied by a new
Target Death Benefit Schedule.
After increasing the face amount, you will have the right to cancel this
increase during the right to examine period. See "Canceling the Policy (Right to
Examine Period)."
DECREASING THE FACE AMOUNT AND/OR THE TARGET DEATH BENEFIT SCHEDULE
You may decrease the face amount and/or Target Death Benefit Schedule of your
Policy at any time prior to the final payment date provided that the insured is
living, the Base Policy is in force and the following conditions are met:
CONDITIONS FOR DECREASING THE - The face amount and/or Target Death
FACE AMOUNT: Benefit Schedule will be decreased or
eliminated in the following order:
(i) the most recent increase;
(ii) the next most recent increases,
successively; and (iii) the initial
face amount and/or Target Death
Benefit Schedule.
- The minimum face amount decrease we
permit is $10,000.
- You may not decrease the face amount
or Target Death Benefit Schedule to
below $50,000.
- If the decrease occurs while a
surrender charge is applicable, we
will deduct a proportional amount of
the surrender charge from the Policy
Value on the effective date of the
decrease.
- A different surrender charge rate may
apply to a decrease of the initial
face amount and each subsequent face
amount increase.
- The surrender charge will be based on
the amount of the decrease of the
Base Policy's face amount. You may
choose the Subaccount(s) from which
this charge will be deducted. If you
do not make an election, we will
allocate the charges pro-rata. There
is
22
no surrender charge for a decrease in
the term portion of an Adjustable
Term Insurance Rider benefit amount.
- If the Adjustable Term Insurance
Rider is in effect, a decrease in the
face amount of the Base Policy will
also apply to all future years of the
Target Death Benefit Schedule.
The decrease will take effect on or following the first monthly processing date
after we receive your written request.
A decrease in face amount will be accompanied by: (i) a new cost of insurance
charge, (ii) a new guideline premium, if applicable, (iii) a new monthly minimum
payment, if the decrease is within the first 48 Policy Months, and (iv) a new
guaranteed death benefit minimum payment, if applicable.
A decrease in the Target Death Benefit Schedule will be accompanied by a new
cost of insurance charge and a new Target Death Benefit Schedule.
PAYMENT OPTIONS FOR THE DEATH BENEFIT AND ON SURRENDER
There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy other than in a lump sum. If you make no
election, the beneficiary may elect a payment option when the proceeds become
payable. None of these options vary with the investment performance of the
Variable Account. For more information, call the Variable Life Service Center
for a free copy of the Statement of Additional Information.
ADJUSTABLE TERM INSURANCE RIDER
Under the Adjustable Term Insurance Rider, you may supplement your base death
benefit with adjustable term insurance so that the death benefit payable under
the Policy will equal the Target Death Benefit shown in the Target Death Benefit
Schedule you select (that is, the sum of the base death benefit under the
Policy, plus the death benefit under the Adjustable Term Insurance Rider). The
amount of term insurance provided by the rider is recalculated daily and equals
the difference between the Target Death Benefit and the base death benefit. In
the event that the base death benefit equals or exceeds the Target Death
Benefit, the term insurance benefit will not be less than zero. You may add this
rider at any time.
After the first Policy Year, you may request an increase or decrease in the
Target Death Benefit Schedule once per Policy Year. A request for an increase
must be made before the insured reaches age 86. If we approve an increase in the
Target Death Benefit Schedule, we will automatically increase the face amount of
the Base Policy (and the amount of your minimum monthly payment if the increase
is in the first 48 Policy Months) unless you specifically request that the
increase apply only to the term rider.
The Adjustable Term Insurance Rider terminates on the earlier of:
- the monthly processing date on, or next following, our receipt of your
signed written request to cancel this rider;
- the date the Policy lapses, is surrendered, or otherwise is no longer in
force; or
- the final payment date.
We do not assess a surrender charge upon termination of this rider.
If this rider is terminated or canceled, you may reinstate the rider at anytime
before the final payment date of the Policy and according to the reinstatement
provisions of the Policy.
There is a charge for this rider that is assessed as part of the monthly
deduction and is based on the benefit amount of the rider and the cost of
insurance rate for the rider. The cost of insurance rate for this rider is based
on the insured's age, gender, underwriting class. The rates for this rider will
generally increase each year with the age of the insured.
ACCELERATED DEATH BENEFIT RIDER
Under the Accelerated Death Benefit Rider, we provide the insured with a portion
of the present value of the death benefit in a stream of payments under either
the terminal illness option or the nursing home option. To receive this benefit
while the Policy is in force, you must: (a) provide written consent from any
collateral assignee, irrevocable beneficiary and the insured (if the Policyowner
is not the insured); and (b) provide satisfactory proof to us that the insured
qualifies for either the terminal illness option or the nursing home option. If
the insured dies before all of the accelerated death benefit has been paid, we
will pay the beneficiary in one lump sum the present value of the remaining
payments due under the rider reduced by the interest rate we use to determine
those payments. You may elect this rider at any time. The tax consequences
associated with requesting a payment under this rider are unclear. See "Federal
Tax Considerations."
23
Exercising the Accelerated Death Benefit Rider will have the following effect on
your Policy:
- We will reduce the death benefit by any rider benefit as of the monthly
processing date following the date of the written request.
- We will reduce your Policy Value the same proportion as the reduction in
the death benefit.
- We will also decrease or eliminate the face amount by any rider benefit in
the following order: (a) first, the most recent increase; (b) second, the
next most recent increases successively; and (c) last, the initial face
amount.
- We will waive any surrender charge due to the exercise of this rider
equaling: (a) the surrender charge applicable to any increased face amount,
which is eliminated in the order set forth above; plus (b) a pro-rata share
of the surrender charge applicable to a partial reduction in an increase or
in the initial Face Amount.
EXTENDED COVERAGE OPTION
If you elect the Extended Coverage Option (this option is available only at the
time of application), and the Option is in effect on the final payment date, we
will pay a minimum base death benefit on the death of the insured after the
final payment date. Under the Extended Coverage Option, the death benefit will
equal the greater of:
- the Base Policy's face amount as of the final payment date; or
- the Policy Value as of the insured's date of death.
(minus any unpaid charges or outstanding loan balance on the insured's date of
death)
You may revoke this option at any time prior to the final payment date by
providing written notice to us. We must receive written notice of the revocation
before the final payment date. The effective date of this change will be the
date we receive your written notice. Once revoked, this option may not be
re-elected. There is no charge for this option.
If the Extended Coverage is in effect on the final payment date, the following
will occur:
- we will transfer all of the Policy Value invested in any Subaccounts to the
Fixed Account;
- no further investment in, or transfers to, a Subaccount will be permitted;
- we will no longer assess the monthly deduction (you will continue to be
charged interest on any outstanding loan balance and assessed any
applicable partial withdrawal charges);
- if Death Benefit Option 2 is in effect, the Policy will be converted to
Death Benefit Option 1; and
- you will no longer be permitted to change your death benefit option.
GUARANTEED DEATH BENEFIT RIDER
If you elect the Guaranteed Death Benefit Rider and meet the conditions of the
rider, we guarantee:
- that your Policy will not lapse, regardless of the investment performance
of the Subaccounts; and
- that you will receive a minimum death benefit if the insured dies after the
final payment date.
We will deduct from your Policy Value a one-time administrative charge of $25
when you elect the rider.
If the rider is in effect after the final payment date, the death benefit will
be the greater of: (a) the face amount in effect on the final payment date minus
any outstanding loan balance on the insured's date of death minus any mortality
and expense risk charges due and unpaid through the month that the insured dies;
or (b) the Policy Value on the insured's date of death minus any outstanding
loan balance on the insured's date of death minus any mortality and expense risk
charges due and unpaid through the month that the insured dies.
This rider does not protect against lapse if the outstanding loan balance
exceeds your Policy Value.
GUARANTEED DEATH BENEFIT MINIMUM PAYMENT TEST. On each Policy Anniversary, your
Policy must meet the Guaranteed Death Benefit Minimum Payment Test or the rider
will terminate. The Guaranteed Death Benefit Minimum Payment Test is met if the
Minimum Payment Period requirement for your base Policy is met and if (a) is
greater than (b) where:
(a) is your total payments, less any partial withdrawals, partial withdrawal
charges (excluding the transaction fee) and less any outstanding loan
balance which is classified as a preferred loan; and
(b) is the sum of the minimum Guaranteed Death Benefit Minimum Payments in
effect from the Policy Date to that Policy Anniversary. The Guaranteed
Death Benefit Minimum Payment amount is shown on your latest Policy Details
pages.
The Guaranteed Death Benefit Rider will terminate if:
- The cash surrender value, due to the outstanding loan balance, is
insufficient to cover the monthly deduction due;
- You fail to meet the requirements of the Guaranteed Death Benefit Minimum
Payment Test;
24
- You make a Policy change that causes a negative guideline level premium;
- You change from Death Benefit Option 2 to Death Benefit Option 1 within 5
years of the final payment date; or
- You request a partial withdrawal or preferred loan after the final payment
date.
You may cancel the rider at any time. You may not reinstate this rider once it
is terminated or canceled.
LOANS
At any time while the insured is living and your Policy is in force, you may, by
written request, borrow money secured by your Policy Value. You must sign the
written loan agreement, and you must make a satisfactory assignment of the
Policy to us.
The maximum amount you may borrow including any outstanding loan balance is the
loan value. The loan value is 95% of the (Policy Value MINUS any surrender
charge) minus any outstanding loan balance as of the date of the loan. The
minimum loan amount you may borrow is $200. We normally pay the amount of any
loan request within 7 days after we receive your written request. At any time,
the amount of the outstanding loan balance under a Policy equals the sum of all
loans (including due and unpaid charged interest added to the loan balance)
minus any loan repayments. We may postpone payment of loans under certain
conditions.
TYPES OF LOANS
While the Policy is in force, you may submit a request to borrow money from us
using two types of loans:
- A standard loan option is always available to you. We will charge interest
on the amount of the loan at a current annual rate of 3.8%. This current
rate of interest may change, but is guaranteed not to exceed 5.0%. However,
we also will credit interest on the Policy Value securing the loan. The
annual interest rate credited to the Policy Value securing a standard loan
is 3.0%.
- A preferred loan option is automatically available to you. You may revoke
this option at any time. The preferred loan option is available on that
part of the outstanding loan balance that is attributable to earnings. We
will charge interest on that amount of the loan at a current annual rate of
3.0%. This current rate of interest may change, but is guaranteed not to
exceed 3.5 %. The annual interest rate credited to the earnings securing a
preferred loan is 3.0%. A request for a preferred loan after the final
payment date will terminate the Guaranteed Death Benefit Rider. THERE IS
SOME UNCERTAINTY AS TO THE TAX TREATMENT OF PREFERRED LOANS. YOU SHOULD
CONSULT A QUALIFIED TAX ADVISER.
LOAN COLLATERAL
To secure the loan, we transfer an amount as collateral to the Fixed Account.
This amount is equal to the amount of the loan adjusted by the earned interest
rate and the charged interest rates. We will transfer the loan amount and any
unpaid loan interest accrued by the Policy Anniversary from the Subaccounts
according to your instructions. We will transfer the outstanding loan balance to
the Fixed Accounts. If you do not provide allocation instructions, we will make
a pro-rata allocation of Policy Value from the Subaccounts to the Fixed Account.
We will not count this transfer as a transfer subject to a transfer charge.
COST OF THE LOAN
We charge interest on the outstanding loan. Interest is charged in arrears from
the date of the loan, and is due at the end of each Policy Year during which a
loan is made and compounded annually thereafter until the loan is repaid. Unpaid
interest becomes part of the outstanding loan balance and accrues interest at
the same rate as the loan. If the Policyowner does not pay such loan interest
when due, the amount of the interest is added to the outstanding loan balance
(on which interest is assessed in the ensuing year). Unpaid interest is
transferred based on your written instructions. If there are no such
instructions or the Policy Value in the specified Subaccounts is insufficient to
allow the collateral for the unpaid interest to be transferred, the interest is
transferred based on the proportion that the sum of the value in the Fixed
Account and the value in the Subaccounts bear to the total unloaned Policy
Value.
INTEREST EARNED ON THE LOAN COLLATERAL
We credit the portion of the Policy Value securing the outstanding loan balance
with interest at an effective annual rate, currently 3.0% for both standard and
preferred loans. On each Policy Anniversary, you may request that interest
earned on the outstanding loan since the preceding Policy Anniversary be
transferred to the Subaccounts and to the Fixed Account. Unless you specify
otherwise, we will allocate such transfers on a pro rata basis.
25
REPAYMENT OF THE OUTSTANDING LOAN BALANCE
You may repay any of the outstanding loan balance while the insured is still
living and the Policy is in force, provided the Paid-Up Life Insurance Rider has
not been exercised. When you repay any of the outstanding loan balance, we will
transfer all or part of the outstanding loan balance in an amount equal to the
repayment to the Subaccounts and Fixed Account. We will make this transfer
according to your allocation instructions. If you do not tell us how to allocate
loan repayments, we will allocate them according to your most recent payment
allocation instructions. You must identify any loan repayment made to us as a
loan repayment; otherwise, we will treat such payment as an additional payment.
EFFECT OF A POLICY LOAN ON THE POLICY
A loan, whether or not repaid, affects the Policy Value, the cash surrender
value, and the death benefit. We will deduct any outstanding loan balance from
the proceeds payable on a surrender or on the death of the insured. Repaying a
loan causes the death benefit and cash surrender value to increase by the amount
of the repayment.
If you request a preferred loan after the final payment date or allow the Policy
to lapse, the Guaranteed Death Benefit Rider will terminate.
RISK OF POLICY LAPSE. There are risks involved in taking a loan, including the
potential for the Policy to lapse if projected earnings, taking into account
outstanding loan balances, are not achieved. See "Policy Lapse and
Reinstatement."
EFFECTS OF A LOAN ON INVESTMENT PERFORMANCE. As long as a loan is outstanding,
we hold an amount as collateral for the loan in the Fixed Account. This amount
is not affected by the investment performance of the Subaccounts and may not be
credited with the excess interest rates accruing on the Fixed Account. Amounts
transferred from the Subaccounts to the Fixed Account to secure the loan will
affect the Policy Value, even if the loan is repaid, because we credit these
amounts with an interest rate we declare rather than with a rate of return that
reflects the investment performance of the Subaccounts.
The effect of a Policy loan on the Policy Value and death benefit could be
favorable or unfavorable, depending on whether the investment performance of the
Subaccounts and the interest credited to the Fixed Account is less than or
greater than the interest being credited on the outstanding loan balance in the
Fixed Account. Compared to a Policy under which no loan is made, values under a
Policy with an outstanding loan balance will be lower when the earned interest
rate is less than the investment performance of assets held in the Subaccounts
and interest credited to Policy Value in the Fixed Account (other than
outstanding loan amount). The longer a loan is outstanding, the greater the
effect of a Policy loan is likely to be on the Policy Value.
TAX RISKS. There are tax risks involved in taking a loan. A loan may also
produce significant adverse Federal income tax consequences if a Policy lapses
or is surrendered with loans outstanding. Any amount of outstanding indebtedness
will be added to the amount distributed and will be taxed accordingly. If your
Policy has a large amount of indebtedness when it lapses or is surrendered, you
might owe taxes that are greater than the cash surrender value. If the Policy is
a MEC, then a loan will be treated as a partial withdrawal for Federal income
tax purposes. See "Policy Lapse and Reinstatement" and "Federal Tax
Considerations." THE TAX TREATMENT OF PREFERRED LOANS FROM A POLICY THAT IS NOT
A MEC IS UNCERTAIN.
In addition, if a loan is taken from a Policy that is part of a plan subject to
the Employee Retirement Income Security Act of 1974 ("ERISA"), the loan will be
treated as a "prohibited transaction" subject to certain penalties unless
additional ERISA requirements are satisfied. The owner of such a Policy should
seek tax advice before requesting a Policy loan.
PAID-UP LIFE INSURANCE RIDER
Under this rider, once the insured has reached age 75 and the Policy has been in
force for 15 years, the Policy will automatically become paid-up life insurance,
provided certain conditions are met. Once the rider is automatically exercised,
the Policy will never lapse and the beneficiary will receive a minimum death
benefit on the death of the insured. On the exercise date, the paid-up life
insurance amount will be the value of (a) times (b) where:
(a) equals the Policy Value as of the exercise date minus the 3% rider charge
(4% if you have selected Death Benefit Option 3), and
(b) equals the minimum death benefit factor for the insured's age as of the
exercise date shown in your Policy Details Pages.
WHEN ALL OF THE FOLLOWING OCCUR, - The insured is at least age 75
THE PAID-UP LIFE INSURANCE
RIDER WILL BE EXERCISED - The outstanding loan balance is at
AUTOMATICALLY ON OR THE NEXT least 95% of the Policy Value
FOLLOWING MONTHLY PROCESSING
DATE: - The outstanding loan balance equals
or exceeds the face amount of the
Policy
- The Policy has been in force for a
least 15 Policy Years; and
- The total amount of partial
withdrawals equals or exceeds the
total payments made.
26
WHEN THE RIDER IS EXERCISED, THE - Any Policy Value invested in a
FOLLOWING WILL OCCUR: Subaccount will be transferred to the
Fixed Account
- You will no longer be allowed to
invest in, or transfer amounts, to
the Subaccounts;
- If Death Benefit Option 2 is in
effect, we will convert your Policy
to Death Benefit Option 1. You will
not be allowed to make any further
changes to the death benefit option.
- You will no longer be allowed to make
any loan payments.
- The outstanding loan balance remains
in effect and we will continue to
assess a loan interest charge on the
balance.
- You may not take any more loans.
- No further monthly deductions will be
made.
- You may not make any payments or
partial withdrawals.
- You may not make any Policy changes.
- All riders will be terminated.
- The death benefit will be the greater
of: the paid-up life insurance amount
(minus the outstanding loan balance);
or the Policy Value (minus the
outstanding loan balance) on the
insured's date of death multiplied by
the minimum death benefit factor for
the insured's age as of the insured's
date of death.
- The remaining outstanding loan
balance will be deducted from the
death benefit.
TAX RISKS. Anyone contemplating the purchase of the Policy with the Paid-Up Life
Insurance Rider should be aware that the tax consequences of the Paid-Up Life
Insurance Rider have not been ruled on by the IRS or the courts, and it is
possible that any outstanding loan balance could be treated as a taxable
distribution when the Paid-Up Life Insurance Rider takes effect. YOU SHOULD
CONSULT A TAX ADVISER AS TO THE TAX RISKS ASSOCIATED WITH THE PAID-UP LIFE
INSURANCE RIDER.
SURRENDERS AND PARTIAL WITHDRAWALS
SURRENDERS
You may surrender your Policy and receive its cash surrender value as calculated
as of the end of the valuation day when we receive your written request at the
Variable Life Service Center, subject to the following conditions:
- The insured must be alive and the Policy must be in force when we receive
the written request. We may require that you return the Policy.
- You will incur a surrender charge if you surrender your Policy on or before
the last day of the 9th Policy Year from the Policy Date or the effective
date of any increase in the face amount.
- Once you surrender your Policy, all coverage and other benefits under it
cease and cannot be reinstated.
- We generally will pay the cash surrender value to you in a lump sum or
other payment option that we offer at the time within 7 days after we
receive your written request at our Variable Life Service Center. We may
postpone payment of benefits under certain conditions.
The cash surrender value equals the Policy Value minus any outstanding loan
balance and surrender charges. A SURRENDER MAY HAVE TAX CONSEQUENCES. PLEASE
CONSULT YOUR TAX ADVISER BEFORE SURRENDERING YOUR POLICY.
PARTIAL WITHDRAWALS
After the first Policy Year, you may make a written request to withdraw part of
the cash surrender value of your Policy. We will process each partial withdrawal
at unit values next determined after we received your written request at the
Variable Life Service Center. We generally will pay a request for a partial
withdrawal within 7 days after we receive the request. We may postpone payment
of partial withdrawals under certain conditions.
PARTIAL WITHDRAWAL - The insured must be alive and the Policy must
PROVISIONS: be in force when you make your written
request.
- You must request at least $200. The maximum
partial withdrawal amount is your cash
surrender value minus the greater of $500 or
3 monthly deductions.
- You may allocate the amount withdrawn among
the Subaccounts and the Fixed Account. If you
do not provide allocation instructions, we
will deduct the amount requested for
withdrawal plus any fee from the Subaccounts
and the Fixed Account based on the
27
proportion that your value in each Subaccount
and value in the Fixed Account bears to
your unloaned Policy Value.
- A partial withdrawal will reduce the face
amount under Death Benefit Option 1 and Death
Benefit Option 3 by the dollar amount of the
withdrawal.
- You may not make a partial withdrawal if, or
to the extent that, the partial withdrawal
would reduce the face amount under either
Death Benefit Option 1 or Death Benefit
Option 3 below $40,000.
- If Death Benefit Option 1 or Death Benefit
Option 3 is in effect, we will assess a
surrender charge on each partial withdrawal,
unless all surrender charge periods have
expired. The surrender charge is assessed on
the reduction in the face amount caused by
the partial withdrawal, and is a charge per
$1000 of the amount of the face amount
reduction.
- No surrender charge will be assessed for the
reduction in face amount that is equal to the
amount of any preferred partial withdrawal. A
partial withdrawal is considered a preferred
partial withdrawal when the withdrawal amount
and the sum of the prior withdrawal amounts
in the same Policy Year do not exceed 10% of
the Policy Value as of the beginning of the
Policy Year.
- On a partial withdrawal, we will redeem the
number of units of a designated Subaccount
and the Fixed Account equal to the amount
withdrawn. The amount withdrawn is the amount
you request plus the partial withdrawal
charge (and surrender charge, if applicable).
For each partial withdrawal (including those
classified as a preferred partial
withdrawal), we deduct a partial withdrawal
charge equal to 2.00% of the amount
withdrawn, not to exceed $25.
EFFECTS OF PARTIAL WITHDRAWALS
If you make a partial withdrawal, the following could occur to your Policy:
- A partial withdrawal can affect the face amount, death benefit, and net
amount at risk (which is used to calculate the cost of insurance charge).
- Partial withdrawals will reduce the face amount under Death Benefit Option
1 and Death Benefit Option 3 by the amount of the withdrawal. The face
amount reductions will be made in the following order: (i) against the most
recent increase in the face amount; (ii) against the next most recent
increases in the face amount in succession; and (iii) against the initial
face amount.
- If you have elected the Adjustable Term Insurance Rider, partial
withdrawals will reduce the base face amount and therefore, the Target
Death Benefit Schedule for the current year and all future years, by the
amount of the withdrawal under Death Benefit Options 1, 2 and 3.
- Partial withdrawals taken after the final payment date will terminate the
Guaranteed Death Benefit Rider.
PARTIAL WITHDRAWALS MAY HAVE TAX CONSEQUENCES. PLEASE CONSULT YOUR TAX ADVISER
BEFORE WITHDRAWING ANY OF YOUR POLICY VALUE.
POSTPONEMENT OF PAYMENTS
We usually pay the amount of any surrender, partial withdrawal, death benefit,
or settlement option within seven days after receipt of all applicable written
requests and/or after we receive due proof of the insured's death. We may
postpone payment of any amount due from the Variable Account for a surrender,
partial withdrawal, transfer, Policy loan or on the death of the insured
whenever:
- trading on the New York Stock Exchange ("NYSE") is restricted as determined
by the SEC, or the NYSE is closed for days other than weekends and
holidays, or
- the SEC, by order, has permitted such postponement for the protection of
Policyowners, or
- the SEC has determined that an emergency exists that would make disposal of
portfolio securities or valuation of assets not reasonably practical.
We may delay any payment derived from amounts you made by check until the check
has cleared your bank.
We also may postpone any transfer from the Fixed Account or payment of any
portion of the amount payable on surrender, partial withdrawal or Policy loan
from the Fixed Account for not more than six months from the day we receive your
written request and, if required, your Policy.
28
If we postpone payment for 30 days or more, the amount of the postponed payment
will earn interest during that period of not less than 3.00% per year, or such
higher rate as required by law.
If mandated under applicable law, we may be required to reject a payment and/or
otherwise block access to your account, and thereby refuse to pay any request
for transfers, partial withdrawals, surrenders, or death benefits. We may also
be required to provide additional information about your account to governmental
regulators. Once blocked, Policy Value would be held in that account until
instructions are received from the appropriate regulator.
TRANSFERS
You may transfer amounts between the Fixed Account and the Subaccounts, or among
the Subaccounts, upon request. We determine the amount you have available for
transfers at the end of the valuation period when we receive your request. The
first 12 transfers in a Policy Year are free. Transfers under the Policy are
subject to the following conditions:
- We reserve the right to limit the minimum and maximum amounts that you may
transfer and the number of transfers you may make in a single Policy Year.
We reserve the right to set other reasonable rules controlling transfers.
- Transfers from the Fixed Account may not exceed the lesser of $100,000 or
25% of the Policy Value per transfer.
- You may make only one transfer from the Fixed Account each Policy Year.
This transfer must be made within the first 30 days following your Policy
Anniversary. This restriction does not apply to any transfer made as part
of any automated service program we may offer.
- If the Extended Coverage Option is in effect on the final payment date or
the Paid-up Life Insurance Rider has been exercised, no transfers from the
Fixed Account to the Subaccounts will be permitted.
- You may make 12 free transfers each Policy Year. We currently charge $10
for each transfer after the 12th in a single Policy Year. We reserve the
right to deduct up to $25 for each transfer after the 12th in a single
Policy Year. Transfers resulting from dollar cost averaging, account
rebalancing, or loans do not count as transfers for the purpose of
assessing the transfer charge.
- We consider each telephone, fax, or written request to be a single
transfer, regardless of the number of Subaccounts (or Fixed Account)
involved.
- We process transfers based on unit values determined at the end of the
valuation day when we receive your transfer request at the Variable Life
Service Center. The corresponding Portfolio of any Subaccount determines
its net asset value per each share once daily, as of the close of the
regular business session of the New York Stock Exchange (usually 4:00 p.m.,
Eastern Time), which coincides with the end of each valuation period.
Therefore, we will process any transfer request we receive after the close
of the regular business session of the New York Stock Exchange, using the
net asset value for the Subaccount next determined as of the close of the
next valuation period.
We cannot guarantee that a Subaccount or shares of an underlying Portfolio will
always be available. If you request that an amount in a Subaccount or in the
Fixed Account be transferred to a Subaccount at a time when the Subaccount or
the underlying Portfolio is unavailable, we will not process your transfer
request. This request will not be counted as a transfer for purposes of
determining the number of free transfers executed in a year.
Excessive trading (including short-term "market timing" trading) may adversely
affect the performance of the Subaccounts. If a pattern of excessive trading by
a Policyowner or the Policyowner's agent develops, we reserve the right not to
process the transfer request. If your transfer request is not processed, it will
not be counted as a transfer for purposes of determining the number of free
transfers executed. We may impose other restrictions on transfers, or even
prohibit them for any Policyowner who, in our view, has abused, or appears
likely to abuse, the transfer privilege.
If your transfer request is not processed for any reason, we will notify you in
a timely manner.
DOLLAR COST AVERAGING. You may elect to participate in a dollar cost averaging
("DCA") program in the application or by completing an election form that we
receive by the beginning of the month. DCA is an investment strategy designed to
reduce the investment risks associated with market fluctuations. For more
information, call the Variable Life Service Center for a free copy of the
Statement of Additional Information.
29
ACCOUNT REBALANCING. You may elect to participate in an account rebalancing
program in the application or by completing an election form. Under the account
rebalancing program, we will periodically transfer your Policy Value in the
Subaccounts to maintain a particular percentage allocation among the
Subaccounts. (Policy Value in the Fixed Account is not available for this
program.) For more information, call the Variable Life Service Center for a free
copy of the Statement of Additional Information.
TELEPHONE AND FACSIMILE REQUESTS
In addition to written requests, we may accept telephone and facsimile
instructions from you or an authorized third party regarding transfers, dollar
cost averaging, account rebalancing, exercise of the conversion privilege, and
partial withdrawals (facsimile only), subject to the following conditions:
- You must complete and sign our form authorizing telephone or facsimile
transactions and send it to us at our Variable Life Service Center. You
also may complete and sign this authorization in the application. The
authorization will remain effective until we receive written revocation or
we discontinue the privilege.
- We accept instructions provided to us via telephone at 1 (800) 905-1959. We
accept instructions provided to us via facsimile at 1 (888) 670-4836. Any
instructions sent to another number will not be considered received in our
Variable Life Service Center.
- We cannot accept or process transfer requests left on our voicemail system.
- You may designate in the request form a third party to act on your behalf
in making telephone or facsimile requests.
- We will employ reasonable procedures to confirm that instructions conveyed
by telephone and facsimile requests are genuine. These procedures may
include requiring forms of personal identification prior to acting upon
instructions, providing written confirmation of transactions to you, and/or
tape recording telephone instructions received from you.
- If we follow these procedures, we are not liable for any loss, damage,
cost, or expense from complying with instructions we reasonably believe to
be authentic. You bear the risk of any such loss. If we do not employ
reasonable confirmation procedures, we may be liable for losses due to
unauthorized or fraudulent instructions.
- We reserve the right to no longer accept or process telephone or facsimile
instructions at any time for any class of Policies for any reason.
If you are provided a personal identification number ("PIN") in order to execute
electronic transactions, you should protect your PIN because self-service
options will be available to your agent of record and to anyone who provides
your PIN. We will not be able to verify that the person providing instructions
using a PIN is authorized by you.
Telephone and facsimile service may not always be available. Any telephone,
facsimile or computer system, whether it is yours, your service provider's, your
agent's, or ours, can experience outages or slowdowns for a variety of reasons.
These outages or slowdowns may delay or prevent our processing of your request.
Although we have taken precautions to help our systems handle heavy use, we
cannot promise complete reliability under all circumstances. If you are
experiencing problems, you should make your request by writing to our Variable
Life Service Center.
POLICY LAPSE AND REINSTATEMENT
LAPSE
A 62-day grace period, during which this Policy will remain in force, will apply
to your Policy any time the Policy Value is insufficient to meet certain Policy
charges (described below). If your Policy enters a grace period (i.e., is in
default), we will mail a notice to you or the person you name to receive this
notice, and to any assignee of record. We will send such notice to your last
known address of record and to the address of record of anyone else designated
to receive this notice at least 31 days before the date on which your Policy
will lapse. The notice will indicate the amount of payment due and the final
date by which we must receive the specified payment to keep the Policy from
lapsing. After the final payment date, you may not make a payment to prevent the
Policy from lapsing, but you generally may make a loan repayment. If you have an
outstanding loan, you must label a payment as a loan repayment.
If we do not receive the specified payment by the end of the grace period, all
coverage under the Policy will terminate and you will receive no benefits. If
the insured dies during the grace period, we will pay the death benefit proceeds
after deducting any monthly deduction due and payable through the Policy Month
in which the insured dies, as well as any outstanding loan balance, and any
other overdue charges under the Policy.
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LAPSE DURING THE MINIMUM The Policy WILL ENTER INTO A 62-DAY GRACE PERIOD if both:
PAYMENT PERIOD - the Minimum Payment Period requirement is not met; and
- the cash surrender value is insufficient to cover the monthly deduction due on the
monthly processing date.
To prevent your Policy from lapsing, you must make sufficient payments before the end
of the grace period so that the Policy Value either:
- meets the Minimum Payment Period requirement; or
- covers the balance of the monthly deduction due plus an amount to keep this Policy
and any riders in force for a period of 3 months.
LAPSE AFTER THE MINIMUM The Policy WILL ENTER INTO A 62-DAY GRACE PERIOD when:
PAYMENT PERIOD - the cash surrender value is insufficient to cover the monthly deduction due on the
monthly processing date.
To prevent your Policy from lapsing before the final payment date, you must make
sufficient payments before the end of the grace period so that the Policy Value:
- covers the balance of the monthly deduction due plus an amount to keep this Policy
and any riders in force for a period of 3 months.
To prevent your Policy from lapsing after the final payment date, you may make loan
repayments.
PROTECTION FROM LAPSE Your Policy generally will NOT lapse:
- during the Minimum Payment Period if the Minimum Payment Period requirement is
met;
- if the cash surrender value is sufficient to cover the amount of the monthly
deduction due on the monthly processing date;
- after the Paid-Up Life Insurance Rider has been exercised;
- if you purchase a Guaranteed Death Benefit Rider and meet its conditions; or
- if before the end of the grace period, you make a payment, which, after payment
expense charge, will cover the lesser of the Minimum Payment Period requirement
or an amount to keep the Policy and any riders in force for 3 Policy Months.
REINSTATEMENT
If your Policy has lapsed and has not been surrendered, you may reinstate the
Policy within 3 years after the date of Policy lapse. We will reinstate the
Policy on the monthly processing date following the day we receive each of the
following at our Variable Life Service Center:
- a written application requesting reinstatement;
- evidence of insurability that is satisfactory to us;
- payment of amount sufficient to cover all monthly deductions due and unpaid
during the grace period; and
- sufficient payment to keep the Policy in force for at least 3 months.
If you request reinstatement during the Minimum Payment Period, you must pay the
lesser of 3 minimum monthly payments or 3 monthly deductions. If you request
reinstatement after the Minimum Payment Period, you must pay 3 monthly
deductions.
We will allocate your net reinstatement payment to a non-interest-bearing
account until we approve your application. Once we have approved your
application, we will transfer the reinstatement payment plus accrued interest
according to your latest allocation instructions.
The reinstated Policy will have the same Policy Date as it had before the lapse.
The Policy Value on the reinstatement date is:
- the net payment to reinstate the Policy; plus
- the Policy Value on the date of lapse; minus
- the monthly deduction due on the reinstatement date.
31
The amount of the surrender charge and the surrender charge period remaining on
the reinstatement date are those that were in effect on the date of lapse.
You may reinstate any outstanding loan existing on the date of lapse. The amount
of the loan balance to be repaid or reinstated will be equal to: (a) the loan
balance on the date of the lapse; plus (b) interest charged on such loan balance
at the Policy loan interest rate.
If the insured commits suicide within 2 years of the reinstatement date of the
Policy, we will only pay the beneficiary an amount equal to the sum of all
payments (without interest and minus any outstanding loan balance and partial
withdrawals). For more information, contact the Variable Life Service Center for
a free copy of the Statement of Additional Information.
THE COMPANY AND THE FIXED ACCOUNT
CANADA LIFE INSURANCE COMPANY OF AMERICA
We are a stock life insurance company subject to regulation and supervision by
the Michigan Insurance Bureau. Our Home Office is located at 6201 Powers Ferry
Road, NW, Atlanta, Georgia 30339. We are principally engaged in issuing annuity
and life insurance policies. We are obligated to pay all benefits under the
Policy.
PROPOSED MERGER. On May 5, 2003, Canada Life Financial Corporation ("CLFC"), the
ultimate corporate parent of Canada Life Insurance Company of America, will
submit to the registered holders of its Common Shares a proposal, which, if
adopted, will result in a change of control of CLFC. The CLFC Board of Directors
has unanimously endorsed approval of the proposed transactions by the CLFC
shareholders. Subject to all necessary approvals, including approval of various
regulatory authorities, this transaction is expected to occur on July 10, 2003.
For more information concerning this proposed transaction, see the Management
Proxy Circular at www.canadalife.com.
THE FIXED ACCOUNT
You may allocate some or all of your net payments and/or make transfers from the
Subaccounts to the Fixed Account. The Fixed Account is part of our general
account. We own the assets in the general account, and we use these assets to
support our insurance and annuity obligations other than those funded by our
separate accounts. These Fixed Account assets are subject to our general
liabilities from business operations. Subject to applicable law, we have sole
discretion over investment of the Fixed Account's assets. We bear the full
investment risk for all amounts allocated or transferred to the Fixed Account.
We guarantee that the amounts allocated to the Fixed Account will be credited
interest at a net effective annual interest rate of at least 3.00%. When we
declare current interest rates, we will guarantee those rates until the next
Policy Anniversary. The Fixed Account is not affected by the investment
performance of the Subaccounts. Policy Value in the Fixed Account will be
reduced by the Policy fees and charges we deduct and the effects of any Policy
transactions (loans, withdrawals, and transfers) on your Policy Value in the
Fixed Account.
We have not registered the Fixed Account with the SEC, and the staff of the SEC
has not reviewed the disclosure in this prospectus relating to the Fixed
Account. However, certain disclosures may be subject to generally applicable
provisions of the federal securities laws regarding the accuracy of statements
made in a registration statement.
THE VARIABLE ACCOUNT AND THE PORTFOLIOS
THE VARIABLE ACCOUNT
The Variable Account is a separate account of Canada Life Insurance Company of
America, established under Michigan law. We own the assets in the Variable
Account, and may use the Variable Account to support other variable life
insurance policies we issue. The Variable Account is registered with the SEC as
a unit investment trust under the Investment Company Act of 1940, as amended,
and qualifies as a "separate account" within the meaning of the Federal
securities laws. This registration does not involve supervision of the
management or investment practices or policies of the Variable Account by the
SEC.
We have divided the Variable Account into Subaccounts, each of which invests in
shares of one of the Portfolios. The Subaccounts buy and sell Portfolio shares
at net asset value. Any dividends and distributions from a Portfolio are
reinvested at net asset value in shares of that Portfolio.
Income, gains, and losses, whether or not realized, from assets allocated to the
Variable Account will be credited to or charged against the Variable Account
without regard to our other income, gains, or losses. Income, gains, and losses
credited to, or charged against, a Subaccount reflect the Subaccount's own
investment performance and not the investment
32
performance of our other assets. The Variable Account assets are held separate
from our other assets and are not part of our general account. We may not use
the Variable Account's assets to pay any of our liabilities other than those
arising from the Policies. If the Variable Account's assets exceed the required
reserves and other liabilities, we may transfer the excess to our general
account. The Variable Account may include other Subaccounts that are not
available under the Policies and are not discussed in this prospectus.
CHANGES TO THE VARIABLE ACCOUNT
Where permitted by applicable law, we reserve the right to make certain changes
to the structure and operation of the Variable Account, including, among others,
the right to:
- Remove, combine, or add Subaccounts and make the new Subaccounts available
to you at our discretion;
- Substitute shares of another registered open-end management company, which
may have different fees and expenses, for shares of a Subaccount at our
discretion;
- Close Subaccounts to allocations of new net payments by existing or new
Policyowners at any time in our discretion;
- Transfer assets supporting the Policies from one Subaccount to another or
from the Variable Account to another variable account;
- Combine the Variable Account with other variable accounts, and/or create
new variable accounts;
- Deregister the Variable Account under the 1940 Act, or operate the Variable
Account as a management investment company under the 1940 Act, or as any
other form permitted by law; and
- Modify the provisions of the Policy to comply with applicable law.
The Portfolios, which sell their shares to the Subaccounts pursuant to
participation agreements, also may terminate these agreements and discontinue
offering their shares to the Subaccounts. We will not make any such changes
without receiving any necessary approval of the SEC and applicable state
insurance departments. We will notify you of any changes.
We reserve the right to make other structural and operational changes affecting
the Variable Account. WE DO NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY
MONEY YOU PLACE IN THE SUBACCOUNTS. THE VALUE OF EACH SUBACCOUNT WILL INCREASE
OR DECREASE, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING
PORTFOLIO. YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
THE PORTFOLIOS
The Variable Account invests in shares of certain Portfolios. Each Portfolio is
part of a mutual fund that is registered with the SEC as an open-end management
investment company. This registration does not involve supervision of the
management or investment practices or policies of the Portfolios or mutual funds
by the SEC.
Each Portfolio's assets are held separate from the assets of the other
Portfolios, and each Portfolio has investment objectives and policies that are
different from those of the other Portfolios. Thus, each Portfolio operates as a
separate investment fund, and the income or losses of one Portfolio generally
have no effect on the investment performance of any other Portfolio.
The Portfolios offered for investment under the Policy are not available for
purchase directly by the general public, and are not the same as other mutual
fund portfolios with very similar or nearly identical names that are sold
directly to the public. The investment performance of the Portfolios available
under the Policy may be lower or higher than the investment performance of these
other (publicly available) portfolios. THERE CAN BE NO ASSURANCE, AND WE MAKE NO
REPRESENTATION, THAT THE INVESTMENT PERFORMANCE OF ANY OF THE PORTFOLIOS
AVAILABLE UNDER THE POLICY WILL BE COMPARABLE TO THE INVESTMENT PERFORMANCE OF
ANY OTHER PORTFOLIO, EVEN IF THE OTHER PORTFOLIO HAS THE SAME INVESTMENT ADVISER
OR MANAGER, THE SAME INVESTMENT OBJECTIVES AND POLICIES, AND A VERY SIMILAR
NAME.
The following table summarizes each Portfolio's investment objective(s) and
identifies its investment adviser (and subadviser, if applicable). THERE IS NO
ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS STATED OBJECTIVE(S). For
example, during extended periods of low interest rates, the yields of the Money
Market Subaccount may become extremely low and possibly negative. YOU CAN FIND
MORE DETAILED INFORMATION ABOUT THE PORTFOLIOS, INCLUDING A DESCRIPTION OF RISKS
AND EXPENSES, IN THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS
PROSPECTUS. You should read these prospectuses carefully and keep them for
future reference.
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PORTFOLIO INVESTMENT OBJECTIVE AND INVESTMENT ADVISER
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ALGER AMERICAN GROWTH PORTFOLIO Seeks long-term capital appreciation. The investment adviser is Fred Alger
(CLASS O SHARES) Management, Inc.
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ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO Seeks long-term capital appreciation. The investment adviser is Fred Alger
(CLASS O SHARES) Management, Inc.
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ALGER AMERICAN MIDCAP GROWTH PORTFOLIO Seeks long-term capital appreciation. The investment adviser is Fred Alger
(CLASS O SHARES) Management, Inc.
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ALGER AMERICAN SMALL CAPITALIZATION Seeks long-term capital appreciation. The investment adviser is Fred Alger
PORTFOLIO (CLASS O SHARES) Management, Inc.
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THE DREYFUS SOCIALLY RESPONSIBLE GROWTH Seeks to provide capital growth; current income is a secondary goal. The
FUND, INC. (INITIAL SHARES) investment adviser is The Dreyfus Corporation.
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DREYFUS VIF-APPRECIATION PORTFOLIO Seeks long-term capital growth consistent with the preservation of capital; current
(INITIAL SHARES) income is a secondary goal. The investment adviser is The Dreyfus Corporation.
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DREYFUS VIF-GROWTH AND INCOME PORTFOLIO, Seeks long-term capital growth, current income and growth of income, consistent
INC. (INITIAL SHARES) with reasonable investment risk. The investment adviser is The Dreyfus Corporation.
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FIDELITY VIP ASSET MANAGER(SM) PORTFOLIO Seeks high total return with reduced risk over the long-term by allocating its
(INITIAL CLASS) assets among stocks, bonds, and short-term instruments. The investment adviser
is Fidelity Management & Research Company, Boston, MA and the investment
sub-advisers are FMR Co., Inc., Fidelity Management & Research (U.K.) Inc.,
Fidelity Management & Research (Far East) Inc., Fidelity Investments Money
Management, Inc. and Fidelity Investments Japan Limited.
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FIDELITY VIP CONTRAFUND(R) PORTFOLIO Seeks long-term capital appreciation. The investment adviser is Fidelity
(INITIAL CLASS) Management & Research Company, Boston, MA and the investment sub-advisers are
FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management &
Research (Far East) Inc. and Fidelity Investments Japan Limited.
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FIDELITY VIP GROWTH OPPORTUNITIES Seeks to provide capital growth. The investment adviser is Fidelity Management
PORTFOLIO (INITIAL CLASS) & Research Company, Boston, MA and the investment sub-advisers are FMR Co.,
Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management & Research
(Far East) Inc. and Fidelity Investments Japan Limited.
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FIDELITY VIP GROWTH PORTFOLIO Seeks to achieve capital appreciation. The investment adviser is Fidelity
(INITIAL CLASS) Management & Research Company, Boston, MA and the investment sub-adviser is FMR
Co., Inc.
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FIDELITY VIP HIGH INCOME PORTFOLIO Seeks high level of current income while also considering growth of capital.
(INITIAL CLASS) The investment adviser is Fidelity Management & Research Company, Boston, MA and
the investment sub-advisers are FMR Co., Inc., Fidelity Management & Research
(U.K.) Inc., Fidelity Management & Research (Far East) Inc. and Fidelity
Investments Japan Limited.
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FIDELITY VIP INDEX 500 PORTFOLIO Seeks investment results that correspond to the total return of common stocks
(INITIAL CLASS) publicly traded in the United States, as represented by the Standard & Poor's
500 Index. The investment adviser is Fidelity Management & Research Company,
Boston, MA and the investment sub-adviser is FMR Co., Inc.
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FIDELITY VIP INVESTMENT GRADE BOND Seeks as high a level of current income as is consistent with the preservation
PORTFOLIO (INITIAL CLASS) of capital. The investment adviser is Fidelity Management & Research Company,
Boston, MA and the investment sub-advisers are FMR Co., Inc. and Fidelity
Investments Money Management, Inc.
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34
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FIDELITY VIP MONEY MARKET PORTFOLIO Seeks as high a level of current income as is consistent with preservation of
(INITIAL CLASS) capital and liquidity. The investment adviser is Fidelity Management & Research
Company, Boston, MA and the investment sub-advisers are FMR Co., Inc. and
Fidelity Investments Money Management, Inc.
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FIDELITY VIP OVERSEAS PORTFOLIO Seeks long-term growth of capital. The investment adviser is Fidelity
(INITIAL CLASS) Management & Research Company, Boston, MA and the investment sub-advisers are
FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Management &
Research (Far East) Inc., Fidelity International Investment Advisors, Fidelity
International Investment Advisors (U.K.) Limited and Fidelity Investments Japan
Limited.
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GOLDMAN SACHS VIT CAPITAL GROWTH FUND Seeks long-term growth of capital. The investment adviser Goldman Sachs Asset
Management, L.P.
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GOLDMAN SACHS VIT CORE(SM) U.S. EQUITY FUND Seeks long-term growth of capital and growth of income. The investment adviser
is Goldman Sachs Asset Management, L.P.
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GOLDMAN SACHS VIT GROWTH AND INCOME FUND Seeks long-term growth of capital and dividend income. The investment adviser is
Goldman Sachs Asset Management, L.P.
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JANUS FLEXIBLE INCOME PORTFOLIO (SERVICE Seeks to obtain maximum total return, consistent preservation of capital. The
SHARES) investment adviser is Janus Capital Management LLC.
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JANUS INTERNATIONAL GROWTH PORTFOLIO Seeks long-term growth of capital. The investment adviser is Janus Capital
(INSTITUTIONAL SHARES) Management LLC.
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MONTGOMERY VARIABLE SERIES: WORLDWIDE Seeks long-term capital appreciation. The investment adviser is Montgomery
EMERGING MARKETS FUND Asset Management, LLC.
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SELIGMAN COMMUNICATIONS AND INFORMATION Seeks to produce capital gain. The investment adviser is J. & W. Seligman & Co.
PORTFOLIO (CLASS 1) Incorporated.
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SELIGMAN FRONTIER PORTFOLIO (CLASS 1) Seeks growth of capital; income may be considered, but will be incidental to the
Portfolio's investment objective. The investment adviser is J. & W. Seligman &
Co. Incorporated.
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SELIGMAN GLOBAL TECHNOLOGY PORTFOLIO Seeks long-term capital appreciation. The investment adviser is J. & W.
(CLASS 2) Seligman & Co. Incorporated.
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SELIGMAN SMALL CAP VALUE PORTFOLIO Seeks long-term capital appreciation. The investment adviser is J. & W.
(CLASS 2) Seligman & Co. Incorporated.
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VAN ECK WORLDWIDE ABSOLUTE RETURN FUND Seeks to achieve consistent absolute (positive) returns in various market cycles. The
investment adviser is Van Eck Associates Corporation.
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VAN ECK WORLDWIDE EMERGING MARKETS FUND Seeks long-term capital appreciation by investing primarily in equity securities in
emerging markets around the world. The investment adviser is Van Eck Associates
Corporation.
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VAN ECK WORLDWIDE HARD ASSETS FUND Seeks long-term capital appreciation by investing primarily in "hard asset
securities." Income is a secondary consideration. The investment adviser is Van Eck
Associates Corporation.
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VAN ECK WORLDWIDE REAL ESTATE FUND Seeks to maximize return by investing in equity securities of domestic and foreign
companies that own significant real estate assets or that principally are engaged in
the real estate industry. The investment adviser is Van Eck Associates Corporation.
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We (and our affiliates) may receive compensation from certain investment
advisers, administrators, and/or distributors (and/or an affiliate thereof) of
the Portfolios in connection with administrative or other services and cost
savings experienced by the investment advisers, administrators or distributors.
Such compensation may range up to 0.35% and is based on the value of Portfolio
shares held for the Policy. We may also receive a portion of the 12b-1 fees and
service fees deducted from
35
Portfolio assets as reimbursement for administrative or other services we render
to the Portfolios. Some advisers, administrators, distributors, or Portfolios
may pay us more than others.
ADDITION, DELETION AND SUBSTITUTION OF PORTFOLIOS
We do not guarantee that each Portfolio will always be available for investment
through the Policy. We reserve the right, subject to compliance with applicable
law, to add new Portfolios or Portfolio classes, close existing Portfolios or
classes, or substitute Portfolio shares that are held by any Subaccount for
shares of a different portfolio. New and substituted funds or Portfolios may
have different fees and expenses and their availability may be limited. No
addition, deletion or substitution will be made without notice to you and
without obtaining any necessary approvals of the SEC. Furthermore, we may close
a Subaccount to allocations of new net payments at any time in our sole
discretion.
VOTING PORTFOLIO SHARES
Even though we are the legal owner of the Portfolio shares held in the
Subaccounts and have the right to vote on all matters submitted to shareholders
of the Portfolios, we will vote our shares only as our Policyowners instruct, so
long as such action is required by law.
Before a vote of a Portfolio's shareholders occurs, we will provide each person
with a voting interest in a Portfolio with proxy materials and voting
instructions. We will ask each such Policyowner to instruct us on how to vote
and to return the proxy to us in a timely manner. Each such Policyowner will
have the right to instruct us on the number of Portfolio shares that corresponds
to the amount of Policy Value that Policyowner has in the Portfolio (as of a
date set by the Portfolio).
We will vote shares for which no timely instructions are received in the same
proportion as the timely voting instructions we receive. Should Federal
securities laws, regulations, or interpretations change, we may elect to vote
Portfolio shares in our own right. We may, when required by state insurance
officials or when permitted under Federal regulation, disregard certain
Policyowner voting instructions. If we ever disregard voting instructions, we
will send you a summary of the reasons for that action in the next annual report
to Policyowners.
CHARGES AND DEDUCTIONS
We deduct certain charges under the Policy. These charges compensate us for: (i)
services and benefits we provide; (ii) costs and expenses we incur; and (iii)
risks we assume. The fees and charges we deduct under the Policy may result in a
profit to us.
SERVICES AND BENEFITS WE PROVIDE: - the death benefit
- a Policyowner's ability to make
transfers, partial withdrawals, and
surrenders under the Policy
- loan privileges under the Policy
- investment options, including payment
allocations
- administration of elective options
such as supplemental benefits and
riders under the Policy
- the distribution of reports to owners
COSTS AND EXPENSES WE INCUR: - costs associated with processing and
underwriting applications, and with
issuing and administering the Policy
(including any riders)
- overhead and other expenses for
providing services and benefits
- sales and marketing expenses
- other costs of doing business, such
as collecting payments, maintaining
records, processing claims, effecting
transactions, and paying Federal,
state, and local payment and other
taxes and fees
RISKS WE ASSUME: - that the cost of insurance charges we
may deduct are insufficient to meet
our actual claims because insureds
die sooner than we estimate
- that the costs of providing the
services and benefits under the
Policies exceed the charges we deduct
- investment risk associated with the
Fixed Account
36
Some or all of the charges we deduct are used to pay aggregate Policy costs and
expenses we incur in providing the services and benefits under the Policy and
assuming the risks associated under the Policy.
PAYMENT EXPENSE CHARGE
Before we allocate your payments, we deduct a payment expense charge of 6.00%
from each payment. This charge compensates us for sales and marketing expenses
and certain taxes we incur. We credit the net payment to your Policy Value
according to your allocation instructions. The payment expense charge consists
of:
A. FRONT-END SALES LOAD CHARGE. We deduct a 3.00% front-end sales load from
each payment to partially compensate us for Policy sales expenses. We may pay
some or all of this amount to Canada Life of America Financial Services, Inc.,
the principal underwriter for and general distributor of the Policy. The 3.00%
front-end sales load charge will not change, even if sales expenses change.
B. PREMIUM TAX CHARGE. We deduct a premium tax charge of 2.00% of each payment
to compensate us for state and local premium taxes. Premium taxes vary from
state to state, and range from 0% to 4.00%. We deduct a premium tax charge
regardless of the amount of any state or local premium tax or whether any state
or local premium tax applies. The premium tax charge may be more than less than
the actual premium tax charges assessed by your state.
C. DEFERRED ACQUISITION COST ("DAC TAX") CHARGE. This 1.00% deduction from
each payment approximately reimburses us for expenses incurred from Federal
taxes for deferred acquisition costs. We reserve the right to increase or
decrease the premium tax charge or the DAC Tax charge to reflect changes in our
expenses for premium taxes or DAC taxes.
MONTHLY DEDUCTION
Starting on the Policy Date and on each monthly processing date before the final
payment date, we will assess a monthly deduction from the Policy Value to
compensate us for administrative expenses and for the insurance coverage
provided under the Policy. After the final payment date, only the mortality and
expense risk charge will be deducted on each monthly processing date.
We deduct this charge from each Subaccount and the Fixed Account in accordance
with the payment allocation instructions you provide at the time of application,
or as later changed by written request. If you do not give us allocation
instructions, we will make deductions on a pro-rata basis (i.e., in the same
proportion that the value in each Subaccount and the Fixed Account bears to the
unloaned Policy Value on the monthly processing date for all monthly deductions
except the mortality and expense risk charge which is deducted pro-rata solely
from the Subaccounts). If the Subaccount(s) and/or the Fixed Account you choose
do not have sufficient Policy Value to cover the monthly deduction, we will
deduct the full and remaining value in such Subaccount and/or the Fixed Account
to pay the monthly deduction allocated to such account to the extent possible.
We will deduct the unpaid balance of the monthly deduction on a pro-rata basis
of the Subaccount(s) and/or the Fixed Account that have value remaining (except
that we will not deduct that portion of the monthly deduction that is the
mortality and expense risk charge from the Fixed Account).
We will deduct charges allocated to the Fixed Account on a last-in, first-out
basis. Because portions of the monthly deduction (such as the cost of insurance)
can vary from month to month, the monthly deduction also may vary from month to
month.
THE MONTHLY DEDUCTION HAS 1. the monthly cost of insurance charge;
5 COMPONENTS:
2. the monthly mortality and expense risk charge;
3. the monthly administration fee;
4. the monthly expense charge; and
5. charges for riders you choose.
1. THE MONTHLY COST OF INSURANCE CHARGE. We assess a monthly cost of insurance
charge to compensate us for underwriting the death benefit. The cost of
insurance rate (or rates) depends on a number of factors specific to each
individual insured (including age, sex and underwriting class), as well as the
Policy Value and the number of months since the Policy Date, that cause it to
vary from policy to policy and from month to month. The monthly cost of
insurance charge is guaranteed not to exceed the charge shown in your Policy
Details page.
The COST OF INSURANCE CHARGE is equal to:
- the cost of insurance rate that applies to the insured's attained age on
the specific monthly processing date; MULTIPLIED BY
- the net amount at risk.
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The NET AMOUNT AT RISK is equal to:
- the base death benefit on the monthly processing date, MINUS
- the Policy Value on the monthly processing date.
NET AMOUNT AT RISK. The net amount at risk is equal to the difference between
the base death benefit and the Policy Value. The net amount at risk will
increase and decrease, depending on the investment performance of the Portfolios
in which you invest, your payments, the fees and charges deducted under the
Policy, the death benefit option you chose, any Policy transactions (such as
partial withdrawals, loans, and changes in face amount), as well as the
application of any tax-based minimum death benefit factors. We calculate the net
amount at risk separately for the initial face amount and for any increase in
face amount.
COST OF INSURANCE RATES. Actual cost of insurance rates may vary each month, and
we will determine the actual monthly cost of insurance rates based on our
expectations as to future mortality experience. The actual cost of insurance
rates will never be greater than the guaranteed cost of insurance rates stated
in your Policy. These guaranteed rates are based on the Commissioners 1980
Standard Ordinary Sex/Smoker Distinct Mortality Tables. We currently use cost of
insurance rates that are lower than the annual guaranteed cost of insurance
rates.
BANDED COST OF INSURANCE RATES. The cost of insurance rates vary by the band of
face amount in which your Policy is placed. Cost of insurance rates are banded
into two segments. Cost of insurance rates for Policies with initial face
amounts at $150,000 and above (Band 2) will be priced an average of 9% lower
than Policies with initial face amounts below $150,000 (Band 1). Neither changes
in face amount nor partial withdrawals will cause a change in bands. We reserve
the right to change the bands.
Cost of insurance rates generally increase with the age of the insured.
The underwriting class of the insured also will affect the cost of insurance
rate. Cost of insurance rates may be increased if the insured has been assigned
extra ratings. Extra ratings are additional charges assessed on Policies
insuring individuals considered to have higher mortality risks based on our
underwriting standards and guidelines.
We calculate the cost of insurance charge separately for the initial face amount
and for any increase in face amount. If we approve an increase in face amount,
then a different underwriting class (and a different cost of insurance rate) may
apply to the increase, based on the insured's circumstances at the time of the
increase.
We deduct the cost of insurance charge on each monthly processing date starting
with the Policy Date of your Policy. We will not deduct cost of insurance
charges on or after the final payment date.
2. MONTHLY MORTALITY AND EXPENSE RISK CHARGE. On each monthly processing date
during the first 120 months following the Policy Date, we assess a monthly
charge equal to 1/12 of an annual rate of 0.35% of the daily net asset values of
your Policy Value in the Subaccounts. Thereafter, we will assess a monthly
charge equal to 1/12 of an annual rate of 0.10% of the daily net asset values of
your Policy Value in the Subaccounts. We reserve the right to increase this
charge, but guarantee that this charge will never exceed a monthly amount equal
to 1/12 of an annual rate of 0.60% of the daily net asset values of your Policy
Value in the Subaccounts during the first 120 months following the Policy Date
and, thereafter, 1/12 of an annual rate of 0.30% of the daily net asset values
of your Policy Value in the Subaccounts. We assess this charge on any Policy in
force unless the Extended Coverage Option or Paid-Up Life Insurance Rider is
effective.
We assess this charge to compensate us for the mortality and expense risks we
assume. The mortality risk we assume is that insureds may live for a shorter
period of time than anticipated. If this happens, we must pay more death
benefits than anticipated. The expense risk we assume is that the expenses
incurred in issuing and administering the Policies will exceed the
administrative charge limits we set in the Policies. If the charge for the
mortality and expense risks does not cover our actual mortality experience and
expenses, we will absorb the losses. If the charge exceeds actual mortality and
expense risk expenses, the difference will be a profit to us. If the charge
provides us with a profit, that profit will be available for our use to pay
sales, marketing and other expenses.
3. THE MONTHLY ADMINISTRATION FEE. We will deduct a $7.50 monthly
administration fee each month through the final payment date.
4. THE MONTHLY EXPENSE CHARGE. We will deduct a monthly expense charge for the
first 120 Policy Months after the Policy Date. The initial charge for each
$1,000 of face amount is based on the issue age, sex and underwriting class of
the insured on the Policy Date. This charge generally increases with the age of
the insured.
We will also deduct a new monthly expense charge for the first 120 Policy Months
following each increase in face amount. If you increase the face amount, we will
set a new monthly expense charge rate attributable to the increase, based on the
age, sex and underwriting class of the insured at the time of the increase.
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If you elect the Accounting Benefit Feature I or II, we assess a different
monthly expense charge schedule. The monthly expense charge for Policyowners who
elect Accounting Benefit Option I or II will be lower in the early Policy Years
than if you had a standard Policy. In the later Policy Years, however, the
monthly expense charge will be higher if you elected the Accounting Benefit
Feature than if you had a standard Policy. See Appendix C for a table of monthly
expense charges we assess under a standard Policy. For tables showing the
maximum monthly expense charges under the Accounting Benefit Feature, see
Appendix C of this prospectus and call the Variable Life Service Center for a
free copy of the Statement of Additional Information.
5. MONTHLY RIDER CHARGES. The monthly deduction includes charges for any
supplemental insurance benefits you add to your Policy by Rider. The rider
charges are summarized in the Fee Table in this prospectus. Any rider charges
applicable to your Policy will be indicated on the Policy Details page of your
rider. The following riders are available under the Policy:
- ADJUSTABLE TERM INSURANCE RIDER: There is a charge for this rider that
is assessed as part of the monthly deduction and is calculated based on
the rider's face amount of term insurance. The charge for this rider is
based on the insured's age, gender and underwriting class at the time
you elected the rider. The rates you are charged for this rider will
generally increase with the age of the insured. The cost of insurance
rates for the rider could be different from the cost of insurance rates
for the Policy.
- DISABILITY WAIVER OF MONTHLY DEDUCTION RIDER: There is a charge for
this rider that is assessed as part of the monthly deduction and is
calculated based upon the net amount at risk per month and the age of
the insured. The rider charges may increase each year with the age of
the insured.
- DISABILITY WAIVER OF MONTHLY PAYMENT RIDER: There is a charge for this
rider that is assessed as part of the monthly deduction and is
calculated based upon the net amount at risk per month and the age of
the insured. The rider charges may increase each year with the age of
the insured.
- ACCELERATED DEATH BENEFIT RIDER: We do not assess an administrative
charge for this rider; however, we do reduce the accelerated death
benefit by a discount factor (currently 6%) to compensate us for lost
income due to the early payment of the death benefit. We will set the
discount factor at our discretion at the time the rider is exercised.
You should ask the Variable Life Service Center to calculate the amount
of the deduction before you exercise the rider because the deduction
could be substantial.
- GUARANTEED DEATH BENEFIT RIDER: We deduct from your Policy Value a
one-time administrative charge of $25 when you elect the rider.
- PAID-UP LIFE INSURANCE RIDER: When the rider is exercised, we deduct a
charge equal to 3% of the Policy Value at the time of exercise (4% if
you have selected Death Benefit Option 3).
- OTHER INSURED TERM INSURANCE RIDER: There is a charge for this rider
that is assessed as part of the monthly deduction and is calculated
based on the rider's face amount of term insurance. The charge for this
rider is based on the other insured's age, gender and underwriting
class on the date the rider is exercised. The rates you are charged for
this rider will generally increase with the age of the other insured.
The cost of insurance rates for the rider could be different from the
cost of insurance rates for the Policy.
SURRENDER CHARGE
We generally will assess a surrender charge if, before the beginning of the 10th
Policy Year from the Policy Date (or the date of any increase in face amount)
you:
- surrender the Policy,
- decrease the face amount of the Policy, or
- make a partial withdrawal for more than the preferred partial withdrawal
amount, while Death Benefit Option 1 or 3 is in effect.
The surrender charge is equal to a specific dollar amount charge for each $1000
of face amount being surrendered or decreased. The specific dollar amount
charged is based on the age, gender, and underwriting class of the insured on
the Policy Date or date of increase in face amount.
If you elect the Accounting Benefit Feature I or II, we assess a different
surrender charge schedule. The surrender charge for Policyowners who elect
Accounting Benefit Option I or II will be lower than if you had elected a
standard Policy.
A different surrender charge period and rate per $1000 of face amount will apply
to each face amount increase, and will be based on the insured's age, gender and
underwriting class at the time of the increase. See Appendix D for a table of
the maximum surrender charges we assess, based on the insured's age, gender and
underwriting class. For more tables on the
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maximum surrender charges we assess, call the Variable Life Service Center for a
free copy of the Statement of Additional Information.
The amount of the surrender charge decreases annually, and grades to zero by the
beginning of the 10th Policy Year after the Policy Date or increase in face
amount.
The surrender charge will not apply to the amount of the partial withdrawal that
constitutes the preferred partial withdrawal. The preferred partial withdrawal
amount is the amount of withdrawals in the same Policy Year that does not exceed
10% of the Policy Value as of the beginning of the Policy Year.
SURRENDER CHARGES FOR POLICY YEARS 2 THROUGH 10
FOLLOWING THE POLICY DATE AND FACE AMOUNT INCREASES
To determine the surrender charge for the Policy Years 2 through 10 following
the Policy Date and any face amount increase, multiply the surrender charge
derived from Appendix D by the factor listed below.
POLICY YEAR AFTER POLICY YEAR AFTER POLICY YEAR AFTER
POLICY DATE OR POLICY DATE OR POLICY DATE OR
FACE AMOUNT INCREASE RATE FACE AMOUNT INCREASE RATE FACE AMOUNT INCREASE RATE
2 88.89% 5 55.56% 8 22.22%
3 77.78% 6 44.44% 9 11.11%
4 66.67% 7 33.33% 10 0.00%
If more than one surrender charge is in effect because of one or more increases
in face amount, we will apply surrender and partial withdrawal charges in the
following order:
- first, against the most recent increase;
- next, against the next most recent increase(s), successively; and
- finally, against the initial face amount.
We will deduct any applicable surrender charge on a decrease in the face amount
or a partial withdrawal that results in a decrease in face amount (see
"Surrenders and Partial Withdrawals"). Such a surrender charge is a fraction of
the charge that would apply to a full surrender--the fraction being the ratio of
the decrease in face amount caused by the transaction to the total face amount
immediately prior to the increase.
THE SURRENDER CHARGE MAY BE SIGNIFICANT. YOU SHOULD CALCULATE THESE CHARGES
CAREFULLY BEFORE REQUESTING A SURRENDER OR DECREASE IN FACE AMOUNT. Under
certain circumstances, the level of surrender charges may result in no cash
surrender value available under your Policy.
PARTIAL WITHDRAWAL CHARGE
After the first Policy Year, you may withdraw a portion of your cash surrender
value upon written request. For each partial withdrawal, we will deduct a
transaction fee of 2.00% of the amount withdrawn, not to exceed $25. If the
Policy has Death Benefit Option 1 or 3 in effect, we will also deduct a
proportional amount of the full surrender charge based on the decrease in face
amount resulting from the partial withdrawal.
We do not assess a proportional surrender charge against that portion of the
partial withdrawal that is the preferred partial withdrawal.
TRANSFER CHARGE
We allow you to make 12 transfers among the Subaccounts or the Fixed Account
each Policy Year at no charge.
- We currently deduct $10 from the account(s) where the transfer is made for
the 13th and each additional transfer made during a Policy Year to
compensate us for the costs of processing these transfers. We reserve the
right to deduct up to $25 for each additional transfer after the 12th per
Policy Year.
- For purposes of assessing the transfer charge, we consider each telephone,
facsimile, or written request to be one transfer, regardless of the number
of Subaccounts (or Fixed Account) affected by the transfer.
- We deduct the transfer charge pro-rata from the account(s) from which the
transfer is being made unless you have specified the account(s) from which
the charge should be deducted.
- Transfers resulting from dollar cost averaging, account rebalancing, loans,
and a conversion during the first 24 months from the Date of Issue or an
increase in face amount do not count as transfers for the purpose of
assessing this charge.
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PROCESSING CHARGE
A processing charge of up to $25 may be made for changing the payment allocation
to compensate us for costs of processing your request.
LOAN CHARGE
Loan interest is charged in arrears on the outstanding loan balance. Loan
interest that is unpaid when due will be added to the outstanding loan balance
on each Policy Anniversary and will bear interest at the same rate of the loan.
We currently charge an annual interest rate of 3.8% on standard loans, and 3.0%
on preferred loans. We guarantee that the annual loan interest charges will
never be more than 5.0% on standard loans and 3.5% on preferred loans.
After offsetting the 3.0% interest we guarantee we will credit to the portion of
the fixed account securing the loan, the maximum guaranteed net cost of loans is
2.0% annually for standard loans and 0.5% annually for preferred loans. However,
after offsetting the 3.0% interest we currently credit to the portion of the
fixed account securing the loan, the current cost of the loans will be 0.8% for
standard loans and 0% for preferred loans.
PORTFOLIO 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; some Portfolios also deduct 12b-1 fees from Portfolio assets. You pay
these fees and expenses indirectly. For further information, consult the
Portfolios' prospectuses and the Fee Table in this prospectus.
FEDERAL TAX CONSIDERATIONS
The following summarizes some of the basic Federal income tax considerations
associated with a Policy and does not purport to be complete or to cover all
situations. THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE. PLEASE CONSULT
COUNSEL OR OTHER QUALIFIED TAX ADVISERS FOR MORE COMPLETE INFORMATION. We base
this discussion on our understanding of the present Federal income tax laws as
they are currently interpreted by the Internal Revenue Service (IRS). Federal
income tax laws and the current interpretations by the IRS may change.
TAX STATUS OF THE POLICY. In order to qualify as a life insurance contract for
Federal income tax purposes and 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 the basis of a standard rate class should
satisfy the applicable requirements. There is less guidance, however, with
respect to a Policy issued on a substandard basis (i.e., an underwriting class
involving higher than standard mortality risk.) It is not clear whether such a
Policy will in all cases satisfy the applicable requirements, particularly if
you make the full amount of payments permitted under the Policy. If it is
subsequently determined that a Policy does not satisfy the applicable
requirements, we may take appropriate steps to bring the Policy into compliance
with these requirements and we reserve the right to restrict Policy transactions
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 policies due to their ability to exercise
investment control over those assets. Where this is the case, the policy owners
have been currently taxed on income and gains attributable to the Variable
Account assets. There is little guidance in this area, and some features of the
Policies, such as the flexibility to allocate net payments and Policy Values,
have not been explicitly addressed in published rulings. While we believe that
the Policy does not give you investment control over Variable Account assets, we
reserve the right to modify the Policy as necessary to prevent you from being
treated as the owner of the Variable Account assets supporting the Policy.
In addition, the Code requires that the investments of the Variable Account be
"adequately diversified" in order to treat the Policy as a life insurance
contract for Federal income tax purposes. We intend that the Variable Account,
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 beneficiary's gross income. Federal, state, and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on your circumstances and the beneficiary's circumstances. YOU SHOULD
CONSULT A TAX ADVISER ON THESE CONSEQUENCES.
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Generally, you will not be deemed to be in constructive receipt of the Policy
Value until there is a distribution. When distributions from a Policy occur, or
when loans are taken out from or secured by a Policy (e.g., by assignment), the
tax consequences depend on whether the Policy is classified as a MEC.
MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life
insurance contracts classified as "Modified Endowment Contracts" will have less
favorable tax treatment than other life insurance contracts. Due to the
flexibility of the Policies as to payments and benefits, the individual
circumstances of each Policy will determine whether it is classified as a MEC.
In general a Policy will be classified as a MEC if the amount of payments made
into the Policy causes the Policy to fail the "7-pay test." A Policy will fail
the 7-pay test if at any time in the first seven Policy years, the amount paid
into the Policy exceeds the sum of the level premiums that would have been paid
at that point under a Policy that provided for paid-up future benefits after the
payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during the first seven
years (for example, as a result of a partial surrender), the 7-pay test will
have to be reapplied as if the Policy had originally been issued at the reduced
face amount. If there is a "material change" in the Policy's benefits or other
terms, the Policy may have to be retested as if it were a newly issued Policy. A
material change may occur, for example, when there is an increase in the death
benefit which is due to the payment of an unnecessary payment. Unnecessary
payments are payments made into the Policy which are not needed in order to
provide a death benefit equal to the lowest death benefit that was payable in
the first seven Policy years. To prevent your Policy from becoming a MEC, it may
be necessary to limit payments or to limit reductions in benefits. A current or
prospective Policyowner should consult a tax advisor to determine whether a
Policy transaction will cause the Policy to be classified as a MEC. IF YOU DO
NOT WANT YOUR POLICY TO BE CLASSIFIED AS A MEC, YOU SHOULD CONSULT A TAX ADVISER
TO DETERMINE THE CIRCUMSTANCES, IF ANY, UNDER WHICH YOUR POLICY WOULD OR WOULD
NOT BE CLASSIFIED AS A MEC.
DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as MECs are
subject to the following tax rules:
- All distributions other than death benefits from a MEC, including
distributions upon surrender and partial withdrawals, will be treated as
ordinary income subject to tax up to an amount equal to the excess (if any)
of the Policy value immediately before the distribution plus prior
distributions over the owner's total investment in the Policy at that time.
They will be treated as tax-free recovery of the owner's investment in the
Policy only after all such excess has been distributed. "Total investment
in the Policy" means the aggregate amount of any payments or other
considerations paid for a Policy, plus any previously taxed distributions.
- Loans taken from such a Policy (or secured by such a Policy, e.g., by
assignment) are treated as distributions and taxed accordingly.
- A 10% additional income tax penalty is imposed on the amount included - in
income except where the distribution or loan is made when you have reached
age 59 1/2 or are disabled, or where the distribution is part of a series
of substantially equal periodic payments for your life (or life expectancy)
or the joint lives (or joint life expectancies) of you and the beneficiary.
If a Policy becomes a MEC, distributions that occur during the Policy Year will
be taxed as distributions from a MEC. In addition, distributions from a Policy
within 2 years before it becomes a MEC will be taxed in this manner. This means
that a distribution from a Policy that is not a MEC at the time when the
distribution is made could later become taxable as a distribution from a MEC.
DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS.
Distributions other than death benefits from a policy that is not a MEC are
generally treated first as a recovery of your investment in the policy, and as
taxable income after the recovery of all investment in the policy. 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.
Standard loans from or secured by a policy that is not a MEC are generally not
treated as distributions. HOWEVER, THE TAX CONSEQUENCES OF PREFERRED LOANS FROM
A POLICY THAT IS NOT A MEC ARE UNCERTAIN AND YOU SHOULD CONSULT A TAX ADVISER
CONCERNING THOSE CONSEQUENCES.
Finally, neither distributions from nor loans from (or secured by) a policy that
is not a MEC are subject to the 10% additional tax.
POLICY LOANS. If a loan is outstanding when the policy is cancelled or lapses,
the amount of the outstanding indebtedness will be added to the amount
distributed and will be taxed accordingly. In general, loan interest will not be
deductible. Before taking out a loan, you should consult a tax adviser as to the
tax consequences. IF YOUR POLICY HAS A LARGE AMOUNT OF INDEBTEDNESS WHEN IT
LAPSES OR IS SURRENDERED, YOU MIGHT OWE TAXES THAT ARE MUCH MORE THAN THE CASH
SURRENDER VALUE.
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This Policy may be purchased with the intention of accumulating cash value on a
tax-free basis for some period (such as, until retirement) and then periodically
borrowing from the Policy without allowing the Policy to lapse. The aim of this
strategy is to continue borrowing from the policy until the Policy Value is just
high enough to pay off the outstanding loan balance. Anyone contemplating taking
advantage of this strategy should be aware that it involves several risks.
First, this strategy will fail to achieve its goal if the Policy is a MEC or
becomes a MEC after the periodic borrowing begins. Second, this strategy has not
been ruled on by the IRS or the courts and it may be subject to challenge by the
IRS, since it is possible that the loans will be treated as taxable
distributions. Finally, there is a significant risk that poor investment
performance, together with ongoing deductions for insurance charges, will lead
to a substantial decline in the Policy Value that could result in the policy
lapsing. In that event, assuming loans have not already been subject to tax as
distributions, a significant tax liability could arise when the lapse occurs.
Anyone considering using the Policy as a source of tax-free income by taking out
policy loans should consult a competent tax adviser before purchasing the Policy
about the tax risks inherent in such a strategy.
MULTIPLE POLICIES. All MECs that we issue (and that our affiliates issue) to the
same owner during any calendar year are treated as one MEC for purposes of
determining the amount includible in the owner's income when a taxable
distribution occurs.
PAID-UP LIFE INSURANCE RIDER. Anyone contemplating the purchase of the Policy
with the Paid-Up Life Insurance Rider should be aware that the tax consequences
of the Paid-Up Life Insurance Rider have not been ruled on by the IRS or the
courts and it is possible that any outstanding loan balance could be treated as
a taxable distribution when the Paid-Up Life Insurance Rider takes effect. You
should consult a tax adviser as to the tax risks associated with the Paid-Up
Life Insurance Rider.
BUSINESS USES OF THE POLICY. The Policy may be used in various arrangements,
including nonqualified deferred compensation or salary continuance plans, split
dollar insurance plans, executive bonus plans, and retiree medical benefit
plans, and others. The tax consequences of these plans may vary depending on the
particular facts and circumstances of each individual arrangement. The IRS has
also recently issued new guidance on split dollar insurance plans. THEREFORE, IF
YOU ARE CONTEMPLATING USING THE POLICY IN ANY ARRANGEMENT THE VALUE OF WHICH
DEPENDS IN PART ON ITS TAX CONSEQUENCES, YOU SHOULD BE SURE TO CONSULT A TAX
ADVISER AS TO TAX ATTRIBUTES OF THE ARRANGEMENT. 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.
WITHHOLDING. To the extent that Policy distributions are taxable, they are
generally subject to withholding for the recipient's Federal income tax
liability. Recipients can generally elect, however, not to have tax withheld
from distributions.
CONTINUATION OF POLICY BEYOND AGE 100. The tax consequences of continuing the
Policy beyond the insured's 100th year are unclear. You should consult a tax
adviser if you intend to keep the Policy in force beyond the insured's 100th
year.
ACCELERATED DEATH BENEFIT RIDER. The tax consequences associated with electing
to receive benefits under the Accelerated Death Benefit Rider are unclear. A tax
adviser should be consulted about the tax consequences of requesting payment
under the rider.
OTHER POLICYOWNER TAX MATTERS. The transfer of the Policy or designation of a
beneficiary may have federal, state, and/or local transfer and inheritance tax
consequences, including the imposition of gift, estate, and generation-skipping
transfer taxes. For example, the transfer of the Policy to, or the designation
as a beneficiary of, or the payment of proceeds to, a person who is assigned to
a generation which is two or more generations below the generation assignment of
the owner may have generation-skipping transfer tax consequences under Federal
tax law. The individual situation of each owner or beneficiary will determine
the extent, if any, to which Federal, state, and local transfer and inheritance
taxes may be imposed and how ownership or receipt of the Policy proceeds will be
treated for purposes of Federal, state, and local estate, inheritance,
generation-skipping, and other taxes.
POSSIBLE TAX LAW CHANGES. While the likelihood of legislative or other changes
is uncertain, there is always a possibility that the tax treatment of the Policy
could change by legislation or otherwise. It is even possible that any
legislative change could be retroactive (effective prior to the date of the
change). YOU SHOULD CONSULT A TAX ADVISER WITH RESPECT TO LEGISLATIVE
DEVELOPMENTS AND THEIR EFFECT ON THE POLICY.
TAX SHELTER REGULATIONS. Owners that are corporations should consult a tax
adviser about the treatment of the Policy under the Treasury Regulations
applicable to tax shelters.
ALTERNATIVE MINIMUM TAX. There may also be an indirect tax upon the income in
the Policy or the proceeds of a Policy under the federal corporate alternative
minimum tax, if the owner is subject to that tax.
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SPECIAL RULES FOR PENSION AND PROFIT-SHARING PLANS. If a Policy is purchased by
a pension or profit-sharing plan, or similar deferred compensation arrangement,
the Federal, state and estate tax consequences could differ. A competent tax
adviser should be consulted in connection with such a purchase.
The amounts of life insurance that may be purchased on behalf of a participant
in a pension or profit-sharing plan are limited. The current cost of insurance
for the net amount at risk is treated as a "current fringe benefit" and must be
included annually in the plan participant's gross income. We report this cost
(generally referred to as the "P.S. 58" cost) to the participant annually. If
the plan participant dies while covered by the plan and the Policy proceeds are
paid to the participant's beneficiary, then the excess of the death benefit over
the Policy Value is not taxable. However, the cash value will generally be
taxable to the extent it exceeds the participant's cost basis in the Policy.
Policies owned under these types of plans may be subject to restrictions under
the Employee Retirement Income Security Act of 1974 ("ERISA"). You should
consult a qualified adviser regarding ERISA.
Department of Labor ("DOL") regulations impose requirements for participant
loans under retirement plans covered by ERISA. Plan loans must also satisfy tax
requirements to be treated as nontaxable. Plan loan requirements and provisions
may differ from Policy loan provisions. Failure of plan loans to comply with the
requirements and provisions of the DOL regulations and of tax law may result in
adverse tax consequences and/or adverse consequences under ERISA. Plan
fiduciaries and participants should consult a qualified adviser before
requesting a loan under a Policy held in connection with a retirement plan.
SPECIAL RULES FOR 403(b) ARRANGEMENTS. If a Policy is purchased in connection
with a Section 403(b) tax-sheltered annuity program, the "Special Rules for
Pension and Profit-Sharing Plans" discussed above may be applicable. In
addition, payments, distributions and other transactions with respect to the
Policy must be administered, in coordination with the Section 403(b) annuity, to
comply with the requirements of Section 403(b) of the Code. A COMPETENT TAX
ADVISER SHOULD BE CONSULTED.
SPLIT DOLLAR ARRANGEMENTS. You may enter into a split dollar arrangement with
another person(s) whereby the payments and the right to receive benefits under
the Policy are split between the parties. There are different ways of allocating
these rights. For example, an employer and employee might agree that under a
Policy on the life of an employee, the employer will make the payments and will
have the right to receive the cash surrender value. The employee may designate
the beneficiary to receive any settlement in excess of the cash surrender value.
If the employee dies while such an arrangement is in effect, the employer would
receive from the settlement the amount that he or she would have been entitled
to receive upon surrender of the Policy and the employee's beneficiary would
receive the balance of the settlement.
NEW GUIDANCE ON SPLIT DOLLAR ARRANGEMENTS. On July 30, 2002, President Bush
signed into law significant accounting and corporate governance reform
legislation, known as the Sarbanes-Oxley Act of 2002 (the "Act"). The Act
prohibits, with limited exceptions, publicly traded companies, including
non-U.S. companies that have securities listed on exchanges in the United
States, from extending, directly or through a subsidiary, many types of personal
loans to their directors or executive officers. It is possible that this
prohibition may be interpreted as applying to split-dollar life insurance
policies for directors and executive officers of such companies, since such
insurance arguably can be viewed as involving a loan from the employer for at
least some purposes.
Although the prohibition on loans is generally effective as of July 30, 2002,
there is an exception for loans outstanding as of the date of enactment, so long
as there is no material modification to the loan terms and the loan is not
renewed after July 30, 2002. ANY AFFECTED BUSINESS CONTEMPLATING MAKING A
PAYMENT ON AN EXISTING POLICY, OR THE PURCHASE OF A NEW POLICY, IN CONNECTION
WITH A SPLIT-DOLLAR LIFE INSURANCE ARRANGEMENT SHOULD CONSULT LEGAL COUNSEL.
In addition, the IRS and Treasury Department have recently issued guidance that
substantially affects the tax treatment of split-dollar arrangements. The
parties who elect to enter into a split dollar arrangement should consult their
own tax advisers regarding the tax consequences of such an arrangement, and
before entering into or paying additional payments with respect to such
arrangements.
FOREIGN TAX CREDITS. To the extent that any underlying eligible Portfolio makes
the appropriate election, certain foreign taxes paid by the Portfolio will be
treated as being paid by us, and we may deduct or claim a tax credit for such
taxes. The benefits of any such deduction or credit will not be passed through
to Policyowners.
SUPPLEMENTAL BENEFITS AND RIDERS. Contact our Variable Life Service Center for
further discussion of the tax consequences associated with particular
supplemental benefits and riders available under the Policy.
44
SUPPLEMENTAL BENEFITS AND RIDERS
The following riders offering supplemental benefits are available under the
Policy. Most of these riders are subject to age and underwriting requirements,
and may be added or cancelled at any time. We generally deduct any monthly
charges for these riders from Policy Value as part of the monthly deduction. The
charges associated with certain of the riders may be reset annually. Your agent
can help you determine whether certain of the riders are suitable for you.
Please contact us for further details. The SAI contains a full description of
each rider.
We currently offer the following riders and options under the Policy.
- Accelerated Death Benefit Rider
- Adjustable Term Insurance Rider
- Disability Waiver of Monthly Deduction Rider
- Disability Waiver of Monthly Payment Rider
- Guaranteed Death Benefit Rider
- Paid-Up Life Insurance Rider
- Other Insured Term Insurance Rider
ILLUSTRATIONS
We have prepared the following illustrations to help show how the Policy Value,
cash surrender value, and death benefit under a hypothetical Policy with
different hypothetical rates of investment performance will vary over an
extended period of time. Illustrated values are shown for each Policy Year until
the insured reaches age 110. The numbers shown in the illustrated tables are
based on the following:
- an assumed, uniform, gross, after-tax, annual rate of return for each
Portfolio of 0%, 6%, and 12% for each Policy Year; and
- the deduction of all Portfolio, separate account, and Policy fees and
charges that apply to a hypothetical Policyowner who purchased a Policy
with a specific face amount and made an annual payment on the first day of
each Policy Year.
VALUES UNDER THE ILLUSTRATIONS. Zero values in the illustrations indicate the
Policy would lapse unless the requirements of either the Minimum Payment Period
or the Guaranteed Death Benefit Rider have been fulfilled, or additional
payments have been made. The death benefits illustrated in the illustrations may
reflect the minimum required death benefit increase in certain Policy Years,
reflecting current Code requirements.
HYPOTHETICAL POLICYOWNER. The illustrations are based on the assumption that the
hypothetical Policy belongs to a representative Policyowner with the sex, age,
and underwriting classification as shown in the fee table, that is, a male age
45 at issue in the preferred non-tobacco underwriting class. The payment amount
used in the table represents the typical payment amount that we expect a
Policyowner to make. We expect that the hypothetical Policyowner will buy a
Policy with a face amount of $250,000 and make annual payments of $3,750 on the
first day of each Policy Year.
PORTFOLIO CHARGES AND EXPENSES. The Policy Values, cash surrender values and
death benefits shown in the tables reflect the deduction of Portfolio charges
and expenses for each Subaccount. We have assumed that the values are allocated
across all Subaccounts equally. Thus, the hypothetical Policy would be subject
to Portfolio charges of 1.04% of the Portfolios' average daily net assets, which
equals the arithmetic average of each Portfolio's gross total average annual
expenses for the last fiscal year. Voluntary waivers and reimbursements of
Portfolio expenses are not reflected in the illustrated tables. For more
information on Portfolio expenses, see the Portfolio expense table in the Fee
Table section.
VARIABLE ACCOUNT AND POLICY FEES AND EXPENSES. The Policy Values, cash surrender
values and death benefits shown in the tables also reflect the deduction of
Variable Account and Policy fees and expenses assessed under the Policy and the
timing of those charges. The tables show the charges at both their current rate
and at their guaranteed maximum rate for the hypothetical Policyowner. The
illustrations take into account the payment expense charge, the cost of
insurance charge, the monthly administrative fee, the monthly expense charge,
and the mortality and expense risk charge. Additionally, the tables illustrating
the cash surrender value take surrender charges into account. Since certain of
these charges vary by factors such as issue age, sex and underwriting class and
other characteristics of the insured, the charges for your Policy are likely to
differ significantly from the charges reflected in these illustrations. The
illustrations assume that the Policyowner has taken no loans, transfers, partial
withdrawals, or changed the allocation of payments. The illustrations assume no
charges for supplemental riders. The illustrations also do not take into account
whether the Policyowner has selected the Accounting Benefit Feature.
45
NET ANNUAL HYPOTHETICAL RATES OF RETURN. Taking into consideration the assumed
annual average Portfolio expenses of 1.04% and the annual Separate Account and
Policy fees and expenses, the gross annual hypothetical rates of return of 0%,
6% and 12% correspond to approximate net annual hypothetical rates of return of
-1.04%, 4.96% and 10.96%.
The tables illustrating Policy Values are based on the assumptions that the
Policyowner makes the payments indicated, does not change the principal sum, and
does not make any withdrawals or take any Policy loans. The values under an
actual Policy may be significantly different from those shown even if the
Portfolio returns average 0%, 6% or 12% but fluctuate over and under those
averages throughout the years shown.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE PROVIDED ONLY TO ILLUSTRATE THE
MECHANICS OF A HYPOTHETICAL POLICY AND DO NOT REPRESENT 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. The actual
return on your Policy Value will depend on factors such as the amounts you
allocate to particular Portfolios, the amounts deducted for the Policy's monthly
charges, the Portfolios' expense ratios, and your loan and withdrawal history in
addition to the actual investment experience of the Portfolios.
Depending on the timing and degree of fluctuation in actual investment returns,
the actual Policy Values could be substantially less than those shown, and may,
under certain circumstances, result in the lapse of the Policy unless you make
more than the stated payment.
PERSONALIZED ILLUSTRATIONS. Since the cost of insurance and other charges differ
significantly based on issue age, sex, underwriting class and other factors, the
values under your Policy are likely to differ significantly from the values in
the hypothetical illustrations shown in the tables below. Upon request to your
agent or the Variable Life Service Center, we will furnish comparable
illustrations based upon the proposed insured's individual circumstances. Such
illustrations may assume different hypothetical rates of return than those
reflected in the following illustrations.
HYPOTHETICAL VALUES BASED ON CURRENT INSURANCE CHARGES
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE AT ISSUE AGE 45 IN THE PREFERRED NON-TOBACCO UNDERWRITING CLASS
$250,000 INITIAL FACE AMOUNT
DEATH BENEFIT OPTION 1
-------------------------------------------------------------------------------------------------------------------------------
0% HYPOTHETICAL GROSS RATE OF 6% HYPOTHETICAL GROSS RATE OF 12% HYPOTHETICAL GROSS RATE OF
INVESTMENT RETURN (NET -1.04%) INVESTMENT RETURN (NET 4.96%) INVESTMENT RETURN (NET 10.96%)
END ------------------------------ --------------------------------- ------------------------------------
OF ANNUAL CASH CASH CASH
POLICY PLANNED SURRENDER POLICY DEATH SURRENDER POLICY DEATH SURRENDER POLICY DEATH
YEAR AGE PAYMENT VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ --- ------- --------- ------ --------- --------- --------- --------- ---------- ---------- ----------
1 46 3,750 0 2,420 250,000 0 2,596 250,000 0 2,773 250,000
2 47 3,750 0 4,758 250,000 0 5,263 250,000 0 5,790 250,000
3 48 3,750 1,241 7,014 250,000 2,227 8,001 250,000 3,299 9,072 250,000
4 49 3,750 4,254 9,203 250,000 5,878 10,827 250,000 7,716 12,665 250,000
5 50 3,750 7,206 11,330 250,000 9,628 13,752 250,000 12,482 16,606 250,000
6 51 3,750 10,101 13,400 250,000 13,486 16,785 250,000 17,640 20,939 250,000
7 52 3,750 12,942 15,416 250,000 17,459 19,933 250,000 23,233 25,707 250,000
8 53 3,750 15,727 17,376 250,000 21,549 23,199 250,000 29,306 30,955 250,000
9 54 3,750 18,452 19,277 250,000 25,759 26,584 250,000 35,907 36,732 250,000
10 55 3,750 21,109 21,109 250,000 30,086 30,086 250,000 43,086 43,086 250,000
15 60 3,750 33,407 33,407 250,000 54,653 54,653 250,000 92,397 92,397 250,000
20 65 3,750 42,463 42,463 250,000 83,550 83,550 250,000 174,044 174,044 250,000
25 70 3,750 47,628 47,628 250,000 118,165 118,165 250,000 312,091 312,091 362,025
30 75 3,750 47,000 47,000 250,000 160,488 160,488 250,000 541,752 541,752 579,675
35 80 3,750 37,073 37,073 250,000 215,088 215,088 250,000 924,869 924,869 971,113
40 85 3,750 10,640 10,640 250,000 289,094 289,094 303,548 1,556,898 1,556,898 1,634,743
45 90 3,750 0 0 0 380,831 380,831 399,872 2,591,679 2,591,679 2,721,263
50 95 3,750 0 0 0 496,612 496,612 501,578 4,308,770 4,308,770 4,351,787
55 100 3,750 0 0 0 649,312 649,312 649,312 7,234,863 7,234,863 7,234,863
60 105 0 0 0 0 827,128 827,128 827,128 12,169,215 12,169,215 12,169,215
65 110 0 0 0 0 1,053,639 1,053,639 1,053,639 20,468,914 20,468,914 20,468,914
-------------------------------------------------------------------------------------------------------------------------------
46
HYPOTHETICAL VALUES BASED ON GUARANTEED MAXIMUM CHARGES
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE AT ISSUE AGE 45 IN THE PREFERRED NON-TOBACCO UNDERWRITING CLASS
$250,000 INITIAL FACE AMOUNT
DEATH BENEFIT OPTION 1
----------------------------------------------------------------------------------------------------------------
0% HYPOTHETICAL GROSS RATE 6% HYPOTHETICAL GROSS RATE 12% HYPOTHETICAL GROSS RATE
OF INVESTMENT RETURN OF INVESTMENT RETURN OF INVESTMENT RETURN
(NET-1.04%) (NET 4.96%) (NET 10.96%)
END -------------------------- -------------------------- ---------------------------
OF ANNUAL CASH CASH CASH
POLICY PLANNED SURRENDER DEATH SURRENDER DEATH SURRENDER DEATH
YEAR AGE PAYMENT VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
------ --- ------- --------- ------- --------- ------- ---------- ----------
1 46 3,750 0 250,000 0 250,000 0 250,000
2 47 3,750 0 250,000 0 250,000 0 250,000
3 48 3,750 1,241 250,000 2,227 250,000 3,299 250,000
4 49 3,750 4,254 250,000 5,878 250,000 7,716 250,000
5 50 3,750 7,206 250,000 9,628 250,000 12,482 250,000
6 51 3,750 9,244 250,000 12,612 250,000 16,752 250,000
7 52 3,750 11,167 250,000 15,600 250,000 21,298 250,000
8 53 3,750 12,960 250,000 18,578 250,000 26,137 250,000
9 54 3,750 14,612 250,000 21,534 250,000 31,293 250,000
10 55 3,750 16,104 250,000 24,449 250,000 36,789 250,000
15 60 3,750 21,087 250,000 39,206 250,000 73,175 250,000
20 65 3,750 19,057 250,000 51,709 250,000 131,046 250,000
25 70 3,750 4,266 250,000 56,846 250,000 230,357 267,214
30 75 3,750 0 0 43,289 250,000 399,930 427,925
35 80 3,750 0 0 0 0 680,283 714,297
40 85 3,750 0 0 0 0 1,127,665 1,184,048
45 90 3,750 0 0 0 0 1,819,598 1,910,578
50 95 3,750 0 0 0 0 2,942,376 2,971,800
55 100 3,750 0 0 0 0 4,948,136 4,948,136
60 105 0 0 0 0 0 8,322,884 8,322,884
65 110 0 0 0 0 0 13,999,292 13,999,292
---------------------------------------------------------------------------------------------------------------
SALE OF THE POLICIES
Canada Life of America Financial Services, Inc. ("CLAFS") acts as the principal
underwriter for and general distributor of the Policies. CLAFS was organized
under the laws of Georgia on January 18, 1988, and is a wholly-owned subsidiary
of Canada Life Insurance Company of America and an affiliate of the Company.
CLAFS, located at 6201 Powers Ferry Road, NW, Atlanta, Georgia, is registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934, and
is a member of the National Association of Securities Dealers, Inc. ("NASD").
More information about CLAFS and its registered representatives is available at
http://www.nasdr.com or by calling (800) 289-9999. You also can obtain an
investor brochure from NASD Regulation that includes information describing its
Public Disclosure Program.
The Policy will be sold by individuals who are licensed as our life insurance
agents and appointed by us and who are also registered representatives of CLAFS,
by registered representatives of a broker-dealer having a selling agreement with
CLAFS, or by registered representatives of a broker-dealer having a selling
agreement with these broker-dealers. Such registered representatives will be
licensed insurance agents appointed with our Company and authorized by
applicable law to sell variable life insurance policies. CLAFS will pay
distribution compensation to selling broker-dealers in varying amounts that,
under normal circumstances, is not expected to exceed 90% of the target premium
under the Policies and 4.0% of payment in excess of the target premium in the
first year. The commission is not expected to exceed 4.0% of target premium and
excess payment in years two through ten, and 3.0% after year two. In certain
circumstances, we will pay a selling broker-dealer an additional marketing
allowance of 20% of the target premium under the Policies.
Under our distribution agreement with CLAFS, we may pay the following sales
expenses: general agent and agency manager's compensation; agents' training
allowances; deferred compensation and insurance benefits of agents, general
agents, and agency managers; advertising expenses; and all other expenses of
distributing the Policies. We also pay for CLAFS' operating and other expenses.
We pay sales commissions to broker-dealers having a selling agreement with
CLAFS, and/or to broker-dealers having a selling agreement with these
broker-dealers, for the sale of the Policies by their registered
47
persons. We pay commissions to such broker-dealers on behalf of their registered
representatives; these broker-dealers may retain a portion of the commissions.
We may pay additional compensation to these broker-dealers pursuant to
promotional contracts and/or reimburse them for portions of Policy sales
expenses. Their registered representatives may receive a portion of the expense
reimbursement allowance paid to these broker-dealers.
Because registered representatives who sell the Policies are also our life
insurance agents, they may be eligible for various cash benefits, such as
bonuses, insurance benefits and financing arrangements, and non-cash
compensation programs that we offer, such as conferences, trips, prizes, and
awards, subject to applicable regulatory requirements. Other payments may be
made for other services that do not directly involve the sale of the Policies.
These services may include the recruitment and training of personnel, production
of promotional literature, and similar services. In some circumstances and to
the extent permitted by applicable regulatory requirements, CLAFS may also
reimburse certain sales and marketing expenses, pay promotional agent fees for
providing marketing support for the distribution of the Policies, or pay other
forms of special compensation to selling broker-dealers.
The Policies will be offered to the public on a continuous basis, and we do not
anticipate discontinuing the offering of the Policies. However, we reserve the
right to discontinue this offering at any time.
LEGAL PROCEEDINGS
Canada Life Insurance Company of America and its subsidiaries, like other life
insurance companies, are involved in lawsuits, including class action lawsuits.
In some class action and other lawsuits involving insurers, substantial damages
have been sought and/or material settlement payments have been made. Although
the outcome of any litigation cannot be predicted with certainty, we believe
that, as of the date of this prospectus, there are no pending or threatened
lawsuits that will have a materially adverse impact on the Variable Account, the
principal underwriter, CLAFS, or the Company.
FINANCIAL STATEMENTS
Our financial statements and the financial statements of the Variable Account
are contained in the Statement of Additional Information. Our financial
statements should be distinguished from the financial statements of the Variable
Account, and you should consider our financial statements as bearing only upon
our ability to meet our obligations under the Policies. For a free copy of these
financial statements contained in the Statement of Additional Information,
please call or write to us at our Variable Life Service Center.
48
GLOSSARY
APPLICATION
The application you must complete to purchase a Policy plus all forms required
by us or applicable law.
ACCEPTANCE
The Date of Issue if the application is approved with no changes requiring your
consent; otherwise, the date we receive your written consent to any changes and
sufficient payment at our Variable Life Service Center.
AGE
How old the insured is on the birthday nearest to the most recent Policy
Anniversary.
ASSIGNEE
The person to whom you have transferred your ownership of this Policy.
BASE DEATH BENEFIT
The amount payable under the base policy upon the death of the insured, before
deductions for any outstanding loan balance and any unpaid monthly deductions or
addition of rider benefits. The base death benefit depends on the death benefit
option you select.
BASE POLICY
The Base Policy is the Policy without any attached supplemental benefit riders.
BENEFICIARY
The person you name to receive the death benefit when the insured dies. The
owner may designate primary, contingent and irrevocable beneficiaries.
CASH SURRENDER VALUE
The amount payable on a full surrender of the Policy. It is the Policy Value
less any outstanding loan balance and surrender charges.
CODE
The Internal Revenue Code of 1986, as amended.
COMPANY (WE, US, OUR)
Canada Life Insurance Company of America.
DATE OF ISSUE
The date we produce the Policy.
DEATH BENEFIT
The amount we pay to the beneficiary if the insured dies while this Policy is in
force. "Death Benefit" has the same meaning as the term "Net Death Benefit" in
your Policy.
DUE PROOF OF DEATH
Proof of death that is satisfactory to us. Such proof may consist of: (i) a
certified copy of the death certificate; or (ii) a certified copy of the decree
of a court of competent jurisdiction as to the finding of death.
EARNINGS
The amount by which the Policy Value exceeds the sum of the payments made, minus
all withdrawals and withdrawal charges. Earnings are calculated at least once
each month.
EVIDENCE OF INSURABILITY
Information, including medical information, that we use to determine the
insured's underwriting class.
FACE AMOUNT
The amount of insurance coverage in effect under the Base Policy, including any
additional increases or decreases. The initial face amount is shown on the
Policy Details pages.
FINAL PAYMENT DATE
The Policy Anniversary nearest the insured's 100th birthday. After this date,
which is shown on the Policy Details pages, no further payments may be made, not
including full or partial loan repayments. There will be no further monthly
deductions taken on or after the final payment date except for the monthly
mortality and expense risk charges.
FIXED ACCOUNT
Part of our general account that provides a fixed interest rate. This account is
not part of and does not depend on the investment performance of the Variable
Account.
FUNDS
Investment companies that are registered with the SEC.
GENERAL ACCOUNT
All our assets other than those held in a variable account.
GRACE PERIOD
A 62-day period after which a Policy will lapse if you do not make a sufficient
payment.
HOME OFFICE
Our office located at 6201 Powers Ferry Road, N.W., Atlanta, GA 30339.
INDEBTEDNESS
The total amount of all outstanding Policy loans, including both principal and
interest due.
INITIAL FACE AMOUNT
The face amount on the Policy Date.
ISSUE AGE
The insured's age on the insured's birthday nearest the Policy Date.
LAPSE
What happens if your Policy terminates without value after a grace period. You
may reinstate a lapsed Policy, subject to certain conditions.
LOAN VALUE
The maximum amount you may borrow under the Policy.
49
MINIMUM PAYMENT PERIOD
A guarantee that the Policy will not lapse during the first 48 Policy Months
after the Policy Date if the requirements are met. The Minimum Payment Period
requirement is met if, on each monthly processing date, the sum of all payments
you have made, less any outstanding loan balance, partial withdrawals, and
partial withdrawal charges (excluding the transaction fee) equals or exceeds the
cumulative total of the minimum monthly payments in effect from the Policy Date
to the monthly processing date.
MINIMUM INITIAL PAYMENT
An amount equal to the minimum annual payment (as set forth in your Policy)
divided by the following factor (reflecting the frequency of your planned
payments): annual 1.0; semi-annual 2.0; quarterly 4.0; monthly 12.0.
MONTHLY DEDUCTION
Consists of the charges taken on each monthly processing date up to the final
payment date, including the cost of insurance charge, monthly expense charge,
monthly administration fee, and any monthly rider charges. This charge also
includes the monthly mortality and expense risk charge that will continue to be
assessed after the final payment date.
MONTHLY PROCESSING DATE
The date on which the monthly deduction is taken each month. This date is shown
on the Policy Details pages. This is the same day as the Policy Date in each
successive month. If there is no day in a calendar month that coincides with the
Policy Date, or if that day falls on a day that is not a valuation day, then the
monthly processing day is the next valuation day. On each monthly processing
day, we determine Policy charges and deduct them from the Policy Value.
NET AMOUNT AT RISK
The net amount at risk on the monthly processing date is the base death benefit
minus the Policy Value prior to the monthly deduction. On any other day the net
amount at risk is the base death benefit minus the Policy Value. The net amount
at risk can be determined on the monthly processing date or any other day.
NET PAYMENT
Your payment minus the payment expense charge shown on the Policy Details pages.
OUTSTANDING LOAN BALANCE
All Policy loans taken plus interest due or accrued, minus any loan repayments
made and interest earned.
PERIODIC PLANNED PAYMENT
The payment selected by the Policyowner at issue as the intended periodic
payment to be made to this Policy.
POLICY ANNIVERSARY
The same date in each Policy Year as the Policy Date.
POLICY CHANGE
Any change in the face amount or the Target Death Benefit Schedule, or the
addition or deletion of a rider, underwriting classification, or change from
Death Benefit Option 1 to Death Benefit Option 2, and vice versa.
POLICY DATE
We measure the monthly processing date, Policy Months, Policy Years and Policy
Anniversaries from this date. Insurance coverage begins on this date.
POLICY DETAILS
Information specific to your Policy, located on the pages following the table of
contents in your Policy.
POLICYOWNER (YOU OR YOUR)
The person who may exercise all rights under the Policy, with the consent of any
irrevocable beneficiary.
POLICY VALUE
The sum of the Variable Account Value and the Fixed Account Value.
POLICY YEAR
A year that starts on the Policy Date or on a Policy Anniversary.
PORTFOLIOS
The investment portfolios of the Funds in which the Subaccounts invest.
PREFERRED PARTIAL WITHDRAWAL
A partial withdrawal when the withdrawal amount and the sum of the prior
withdrawal amounts in the same Policy Year do not exceed 10% of the Policy Value
as of the beginning of the Policy Year.
PRO-RATA ALLOCATION
An allocation among the Fixed Account and the Subaccounts in the same proportion
that, on the date of allocation, the unloaned Policy Value in the Fixed Account
and in each Subaccount bear to the total unloaned Policy Value.
RIDER
A supplementary insurance contract that provides an optional benefit, which may
be added to your Policy for an additional charge.
RIGHT TO EXAMINE PERIOD
The period described on the cover page of your Policy during which the
Policyowner may cancel the Policy for a refund by returning it to the Company.
SUBACCOUNT
A subdivision of the Variable Account investing exclusively in the shares of a
single Portfolio.
TARGET DEATH BENEFIT
If this Policy is issued with an Adjustable Term Insurance Benefit Rider, a
Target Death Benefit Schedule is attached to your Policy. If you elect the
Adjustable Term Insurance Rider, your base death benefit will be supplemented by
an amount of term insurance provided by the rider to equal the Target Death
Benefit. The insurance provided by the adjustable term insurance rider is
recalculated daily to equal
50
the difference between the amount shown on the Target Death Benefit Schedule and
the base death benefit.
UNDERWRITING CLASS
The insurance risk classification that we assign to the insured based on the
information in the application and any other evidence of insurability that we
consider. The insured's underwriting class affects the monthly deduction and the
payment required to keep the Policy in force. It is shown on the Policy Details
pages.
UNIT
A measurement used in the determination of the Policy's Variable Account value.
VALUATION DAY
A valuation day is each day that each Subaccount is valued. A valuation day is
each day that the New York Stock Exchange ("NYSE") is open for regular trading.
A valuation day ends when regular trading on the NYSE closes (usually 4:00 p.m.
Eastern Time).
VALUATION PERIOD
The period beginning at the close of business on one valuation day and
continuing to the close of business on the next valuation day. The close of
business is the close of regular trading on the New York Stock Exchange (usually
4:00 p.m. Eastern Time).
VARIABLE ACCOUNT
Canada Life of America Variable Life Account 1.
VARIABLE LIFE SERVICE CENTER
Our Variable Life Service Center as shown on the cover page of the Policy is
located at P.O. Box 105662, Atlanta, Georgia, 30348-5662 telephone: (800)
905-1959. You may reach us between the hours of 8 a.m. and 7 p.m. Eastern Time,
Monday through Friday.
WRITTEN NOTICE OR WRITTEN REQUEST
The written notice or request you must complete, sign, and send to us at our
Variable Life Service Center to request or exercise your rights as Policyowner.
To be complete, each written notice or written request must: (i) be in a form we
accept; (ii) contain the information and documentation that we determine in our
sole discretion is necessary for us to take the action you request or for you to
exercise the right under the Policy you specify; and (iii) be received at our
Variable Life Service Center.
51
APPENDIX A
DEATH BENEFIT OPTIONS 1 AND 2--GUIDELINE PREMIUM TEST
MINIMUM DEATH BENEFIT FACTORS
--------------------------------------------------------------------------------------------------------------------
AGE PERCENTAGE AGE PERCENTAGE
--------------------------------------------------------------------------------------------------------------------
0-40 250% 60 130%
--------------------------------------------------------------------------------------------------------------------
41 243% 61 128%
--------------------------------------------------------------------------------------------------------------------
42 236% 62 126%
--------------------------------------------------------------------------------------------------------------------
43 229% 63 124%
--------------------------------------------------------------------------------------------------------------------
44 222% 64 122%
--------------------------------------------------------------------------------------------------------------------
45 215% 65 120%
--------------------------------------------------------------------------------------------------------------------
46 209% 66 119%
--------------------------------------------------------------------------------------------------------------------
47 203% 67 118%
--------------------------------------------------------------------------------------------------------------------
48 197% 68 117%
--------------------------------------------------------------------------------------------------------------------
49 191% 69 116%
--------------------------------------------------------------------------------------------------------------------
50 185% 70 115%
--------------------------------------------------------------------------------------------------------------------
51 178% 71 113%
--------------------------------------------------------------------------------------------------------------------
52 171% 72 111%
--------------------------------------------------------------------------------------------------------------------
53 164% 73 109%
--------------------------------------------------------------------------------------------------------------------
54 157% 74 107%
--------------------------------------------------------------------------------------------------------------------
55 150% 75-90 105%
--------------------------------------------------------------------------------------------------------------------
56 146% 91 104%
--------------------------------------------------------------------------------------------------------------------
57 142% 92 103%
--------------------------------------------------------------------------------------------------------------------
58 138% 93 102%
--------------------------------------------------------------------------------------------------------------------
59 134% 94 101%
--------------------------------------------------------------------------------------------------------------------
95-100 100%
--------------------------------------------------------------------------------------------------------------------
A-1
APPENDIX B
DEATH BENEFIT OPTION 3--CASH VALUE ACCUMULATION TEST
MINIMUM DEATH BENEFIT FACTORS
FOR A REPRESENTATIVE POLICYOWNER AND INSURED
-----------------------------------------------------------------------------------------------------------------
AGE PERCENTAGE AGE PERCENTAGE
-----------------------------------------------------------------------------------------------------------------
45 319% 73 144%
-----------------------------------------------------------------------------------------------------------------
46 307% 74 141%
-----------------------------------------------------------------------------------------------------------------
47 295% 75 138%
-----------------------------------------------------------------------------------------------------------------
48 285% 76 136%
-----------------------------------------------------------------------------------------------------------------
49 274% 77 134%
-----------------------------------------------------------------------------------------------------------------
50 264% 78 132%
-----------------------------------------------------------------------------------------------------------------
51 256% 79 130%
-----------------------------------------------------------------------------------------------------------------
52 248% 80 128%
-----------------------------------------------------------------------------------------------------------------
53 241% 81 126%
-----------------------------------------------------------------------------------------------------------------
54 233% 82 124%
-----------------------------------------------------------------------------------------------------------------
55 226% 83 123%
-----------------------------------------------------------------------------------------------------------------
56 220% 84 121%
-----------------------------------------------------------------------------------------------------------------
57 213% 85 120%
-----------------------------------------------------------------------------------------------------------------
58 207% 86 119%
-----------------------------------------------------------------------------------------------------------------
59 202% 87 117%
-----------------------------------------------------------------------------------------------------------------
60 196% 88 116%
-----------------------------------------------------------------------------------------------------------------
61 191% 89 115%
-----------------------------------------------------------------------------------------------------------------
62 186% 90 114%
-----------------------------------------------------------------------------------------------------------------
63 181% 91 113%
-----------------------------------------------------------------------------------------------------------------
64 176% 92 112%
-----------------------------------------------------------------------------------------------------------------
65 172% 93 111%
-----------------------------------------------------------------------------------------------------------------
66 168% 94 110%
-----------------------------------------------------------------------------------------------------------------
67 164% 95 109%
-----------------------------------------------------------------------------------------------------------------
68 160% 96 108%
-----------------------------------------------------------------------------------------------------------------
69 156% 97 106%
-----------------------------------------------------------------------------------------------------------------
70 153% 98 105%
-----------------------------------------------------------------------------------------------------------------
71 150% 99 104%
-----------------------------------------------------------------------------------------------------------------
72 147%
-----------------------------------------------------------------------------------------------------------------
B-1
APPENDIX C
MAXIMUM MONTHLY EXPENSE CHARGES
We compute a Monthly Expense Charge on the Policy Date and on each increase in
face amount. The Monthly Expense Charge for a standard Policy is a level 10-year
charge that is set based on the age, gender and underwriting class on the Policy
Date (or on the date of any face amount increase). Table 1 below shows the
Monthly Expense Charge rates for a standard Policy per $1000 of face amount.
If you elect either Accounting Benefit Feature I or II, your Monthly Expense
Charge rates will be different than the rates for a standard Policy and will
increase each Policy year. Table 2 below shows the Monthly Expense Charge rates
for a male insured in the non-tobacco underwriting class who chose Accounting
Benefit Feature I. Table 3 below shows the Monthly Expense Charge rates for a
male insured in the tobacco underwriting class who chose Accounting Benefit
Feature I.
Tables showing all other Monthly Expense Charge rates assessed under the Policy
are contained in the Statement of Additional Information. For a free copy of the
Statement of Additional Information, please call or write to us at the Variable
Life Service Center.
TABLE 1: MAXIMUM MONTHLY EXPENSE CHARGES
PER $1,000 OF FACE AMOUNT FOR A STANDARD POLICY
---------------------------------------------------------------------------------------------------------------------------
MALE FEMALE UNISEX
STANDARD, STANDARD, STANDARD,
PREFERRED-PLUS PREFERRED-PLUS PREFERRED-PLUS
AND PREFERRED AND PREFERRED AND PREFERRED
ISSUE AGE NON-TOBACCO MALE TOBACCO NON-TOBACCO FEMALE TOBACCO NON-TOBACCO UNISEX TOBACCO
---------------------------------------------------------------------------------------------------------------------------
0 0.06 0.09 0.06 0.06 0.06 0.09
---------------------------------------------------------------------------------------------------------------------------
1 0.07 0.10 0.06 0.07 0.07 0.09
---------------------------------------------------------------------------------------------------------------------------
2 0.07 0.10 0.06 0.07 0.07 0.09
---------------------------------------------------------------------------------------------------------------------------
3 0.07 0.10 0.07 0.07 0.07 0.09
---------------------------------------------------------------------------------------------------------------------------
4 0.07 0.10 0.07 0.07 0.07 0.10
---------------------------------------------------------------------------------------------------------------------------
5 0.07 0.10 0.07 0.07 0.07 0.10
---------------------------------------------------------------------------------------------------------------------------
6 0.08 0.11 0.07 0.08 0.07 0.10
---------------------------------------------------------------------------------------------------------------------------
7 0.08 0.11 0.07 0.08 0.08 0.10
---------------------------------------------------------------------------------------------------------------------------
8 0.08 0.11 0.07 0.08 0.08 0.10
---------------------------------------------------------------------------------------------------------------------------
9 0.08 0.11 0.08 0.08 0.08 0.11
---------------------------------------------------------------------------------------------------------------------------
10 0.08 0.12 0.08 0.08 0.08 0.11
---------------------------------------------------------------------------------------------------------------------------
11 0.09 0.12 0.08 0.09 0.08 0.11
---------------------------------------------------------------------------------------------------------------------------
12 0.09 0.12 0.08 0.09 0.09 0.11
---------------------------------------------------------------------------------------------------------------------------
13 0.09 0.12 0.08 0.09 0.09 0.12
---------------------------------------------------------------------------------------------------------------------------
14 0.09 0.13 0.08 0.09 0.09 0.12
---------------------------------------------------------------------------------------------------------------------------
15 0.10 0.13 0.09 0.10 0.09 0.12
---------------------------------------------------------------------------------------------------------------------------
16 0.10 0.13 0.09 0.10 0.10 0.13
---------------------------------------------------------------------------------------------------------------------------
17 0.10 0.13 0.09 0.10 0.10 0.13
---------------------------------------------------------------------------------------------------------------------------
18 0.10 0.14 0.09 0.10 0.10 0.13
---------------------------------------------------------------------------------------------------------------------------
19 0.11 0.14 0.09 0.11 0.10 0.13
---------------------------------------------------------------------------------------------------------------------------
20 0.11 0.14 0.10 0.11 0.11 0.14
---------------------------------------------------------------------------------------------------------------------------
21 0.11 0.15 0.10 0.11 0.11 0.14
---------------------------------------------------------------------------------------------------------------------------
22 0.12 0.15 0.10 0.12 0.11 0.14
---------------------------------------------------------------------------------------------------------------------------
23 0.12 0.15 0.10 0.12 0.12 0.15
---------------------------------------------------------------------------------------------------------------------------
24 0.12 0.16 0.11 0.12 0.12 0.15
---------------------------------------------------------------------------------------------------------------------------
25 0.13 0.16 0.11 0.13 0.12 0.15
---------------------------------------------------------------------------------------------------------------------------
26 0.13 0.16 0.11 0.13 0.13 0.16
---------------------------------------------------------------------------------------------------------------------------
27 0.13 0.17 0.11 0.13 0.13 0.16
---------------------------------------------------------------------------------------------------------------------------
28 0.14 0.17 0.12 0.14 0.13 0.16
---------------------------------------------------------------------------------------------------------------------------
29 0.14 0.17 0.12 0.14 0.14 0.17
---------------------------------------------------------------------------------------------------------------------------
30 0.14 0.18 0.12 0.14 0.14 0.17
---------------------------------------------------------------------------------------------------------------------------
31 0.15 0.18 0.12 0.15 0.14 0.17
---------------------------------------------------------------------------------------------------------------------------
C-1
TABLE 1: MAXIMUM MONTHLY EXPENSE CHARGES
PER $1,000 OF FACE AMOUNT FOR A STANDARD POLICY
---------------------------------------------------------------------------------------------------------------------------
MALE FEMALE UNISEX
STANDARD, STANDARD, STANDARD,
PREFERRED-PLUS PREFERRED-PLUS PREFERRED-PLUS
AND PREFERRED AND PREFERRED AND PREFERRED
ISSUE AGE NON-TOBACCO MALE TOBACCO NON-TOBACCO FEMALE TOBACCO NON-TOBACCO UNISEX TOBACCO
---------------------------------------------------------------------------------------------------------------------------
32 0.15 0.18 0.13 0.15 0.14 0.18
---------------------------------------------------------------------------------------------------------------------------
33 0.15 0.19 0.13 0.15 0.15 0.18
---------------------------------------------------------------------------------------------------------------------------
34 0.16 0.19 0.13 0.16 0.15 0.18
---------------------------------------------------------------------------------------------------------------------------
35 0.16 0.19 0.13 0.16 0.15 0.19
---------------------------------------------------------------------------------------------------------------------------
36 0.17 0.21 0.15 0.17 0.17 0.20
---------------------------------------------------------------------------------------------------------------------------
37 0.18 0.23 0.16 0.18 0.18 0.22
---------------------------------------------------------------------------------------------------------------------------
38 0.20 0.24 0.17 0.20 0.19 0.23
---------------------------------------------------------------------------------------------------------------------------
39 0.21 0.26 0.18 0.21 0.20 0.25
---------------------------------------------------------------------------------------------------------------------------
40 0.22 0.27 0.19 0.22 0.22 0.26
---------------------------------------------------------------------------------------------------------------------------
41 0.24 0.29 0.20 0.24 0.23 0.28
---------------------------------------------------------------------------------------------------------------------------
42 0.25 0.30 0.21 0.25 0.24 0.29
---------------------------------------------------------------------------------------------------------------------------
43 0.26 0.32 0.22 0.26 0.25 0.31
---------------------------------------------------------------------------------------------------------------------------
44 0.27 0.34 0.23 0.27 0.26 0.32
---------------------------------------------------------------------------------------------------------------------------
45 0.29 0.35 0.24 0.29 0.28 0.34
---------------------------------------------------------------------------------------------------------------------------
46 0.30 0.37 0.26 0.30 0.29 0.36
---------------------------------------------------------------------------------------------------------------------------
47 0.32 0.39 0.27 0.31 0.31 0.37
---------------------------------------------------------------------------------------------------------------------------
48 0.33 0.40 0.28 0.33 0.32 0.39
---------------------------------------------------------------------------------------------------------------------------
49 0.35 0.42 0.29 0.34 0.33 0.40
---------------------------------------------------------------------------------------------------------------------------
50 0.36 0.44 0.30 0.35 0.35 0.42
---------------------------------------------------------------------------------------------------------------------------
51 0.37 0.45 0.31 0.36 0.36 0.43
---------------------------------------------------------------------------------------------------------------------------
52 0.38 0.47 0.32 0.38 0.37 0.45
---------------------------------------------------------------------------------------------------------------------------
53 0.40 0.48 0.33 0.39 0.38 0.46
---------------------------------------------------------------------------------------------------------------------------
54 0.41 0.50 0.34 0.40 0.40 0.48
---------------------------------------------------------------------------------------------------------------------------
55 0.42 0.51 0.35 0.41 0.41 0.49
---------------------------------------------------------------------------------------------------------------------------
56 0.45 0.54 0.37 0.44 0.43 0.52
---------------------------------------------------------------------------------------------------------------------------
57 0.47 0.58 0.40 0.46 0.46 0.55
---------------------------------------------------------------------------------------------------------------------------
58 0.50 0.61 0.42 0.49 0.48 0.58
---------------------------------------------------------------------------------------------------------------------------
59 0.53 0.64 0.44 0.51 0.51 0.61
---------------------------------------------------------------------------------------------------------------------------
60 0.55 0.67 0.46 0.54 0.54 0.65
---------------------------------------------------------------------------------------------------------------------------
61 0.59 0.69 0.49 0.57 0.57 0.66
---------------------------------------------------------------------------------------------------------------------------
62 0.62 0.70 0.51 0.59 0.60 0.68
---------------------------------------------------------------------------------------------------------------------------
63 0.66 0.71 0.54 0.62 0.63 0.69
---------------------------------------------------------------------------------------------------------------------------
64 0.69 0.73 0.56 0.65 0.66 0.71
---------------------------------------------------------------------------------------------------------------------------
65 0.72 0.74 0.59 0.68 0.70 0.73
---------------------------------------------------------------------------------------------------------------------------
66 0.72 0.74 0.58 0.68 0.69 0.72
---------------------------------------------------------------------------------------------------------------------------
67 0.72 0.73 0.58 0.67 0.69 0.72
---------------------------------------------------------------------------------------------------------------------------
68 0.72 0.73 0.58 0.67 0.69 0.72
---------------------------------------------------------------------------------------------------------------------------
69 0.72 0.73 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
70 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
71 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
72 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
73 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
74 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
75 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
76 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
77 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
78 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
79 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
C-2
TABLE 1: MAXIMUM MONTHLY EXPENSE CHARGES
PER $1,000 OF FACE AMOUNT FOR A STANDARD POLICY
---------------------------------------------------------------------------------------------------------------------------
MALE FEMALE UNISEX
STANDARD, STANDARD, STANDARD,
PREFERRED-PLUS PREFERRED-PLUS PREFERRED-PLUS
AND PREFERRED AND PREFERRED AND PREFERRED
ISSUE AGE NON-TOBACCO MALE TOBACCO NON-TOBACCO FEMALE TOBACCO NON-TOBACCO UNISEX TOBACCO
---------------------------------------------------------------------------------------------------------------------------
80 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
81 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
82 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
83 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
84 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
85 0.71 0.72 0.57 0.66 0.69 0.71
---------------------------------------------------------------------------------------------------------------------------
TABLE 2: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE NON-TOBACCO
UNDERWRITING CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
-------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
-------------------------------------------------------------------------------------------------------------------
0 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
1 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
2 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
3 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
4 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
5 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
-------------------------------------------------------------------------------------------------------------------
6 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
7 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
8 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
9 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
10 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
11 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
12 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
13 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
14 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
-------------------------------------------------------------------------------------------------------------------
15 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
16 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
17 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
18 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
19 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
20 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
21 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
-------------------------------------------------------------------------------------------------------------------
22 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
23 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
24 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
25 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
26 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
27 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
-------------------------------------------------------------------------------------------------------------------
28 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
29 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
30 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
31 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
32 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
33 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
-------------------------------------------------------------------------------------------------------------------
C-3
TABLE 2: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE NON-TOBACCO
UNDERWRITING CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
-------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
-------------------------------------------------------------------------------------------------------------------
34 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
-------------------------------------------------------------------------------------------------------------------
35 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
-------------------------------------------------------------------------------------------------------------------
36 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
-------------------------------------------------------------------------------------------------------------------
37 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
-------------------------------------------------------------------------------------------------------------------
38 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
-------------------------------------------------------------------------------------------------------------------
39 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
-------------------------------------------------------------------------------------------------------------------
40 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
-------------------------------------------------------------------------------------------------------------------
41 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
-------------------------------------------------------------------------------------------------------------------
42 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
-------------------------------------------------------------------------------------------------------------------
43 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
-------------------------------------------------------------------------------------------------------------------
44 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
-------------------------------------------------------------------------------------------------------------------
45 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
-------------------------------------------------------------------------------------------------------------------
46 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
-------------------------------------------------------------------------------------------------------------------
47 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
-------------------------------------------------------------------------------------------------------------------
48 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
-------------------------------------------------------------------------------------------------------------------
49 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
-------------------------------------------------------------------------------------------------------------------
50 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
-------------------------------------------------------------------------------------------------------------------
51 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
-------------------------------------------------------------------------------------------------------------------
52 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
-------------------------------------------------------------------------------------------------------------------
53 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
-------------------------------------------------------------------------------------------------------------------
54 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
-------------------------------------------------------------------------------------------------------------------
55 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
-------------------------------------------------------------------------------------------------------------------
56 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
-------------------------------------------------------------------------------------------------------------------
57 0.23 0.30 0.37 0.44 0.51 0.58 0.65 0.71 0.78 0.85
-------------------------------------------------------------------------------------------------------------------
58 0.24 0.31 0.38 0.46 0.53 0.60 0.67 0.75 0.82 0.89
-------------------------------------------------------------------------------------------------------------------
59 0.26 0.34 0.42 0.50 0.57 0.65 0.73 0.81 0.89 0.96
-------------------------------------------------------------------------------------------------------------------
60 0.27 0.35 0.43 0.51 0.59 0.68 0.76 0.84 0.92 1.00
-------------------------------------------------------------------------------------------------------------------
61 0.29 0.38 0.46 0.55 0.64 0.73 0.81 0.90 0.99 1.08
-------------------------------------------------------------------------------------------------------------------
62 0.30 0.39 0.48 0.57 0.66 0.75 0.84 0.93 1.02 1.11
-------------------------------------------------------------------------------------------------------------------
63 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
-------------------------------------------------------------------------------------------------------------------
64 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
-------------------------------------------------------------------------------------------------------------------
65 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
66 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
67 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
68 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
69 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
70 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
71 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
72 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
73 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
74 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
75 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
76 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
77 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
78 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
79 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
80 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
81 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
C-4
TABLE 2: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE NON-TOBACCO
UNDERWRITING CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
-------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
-------------------------------------------------------------------------------------------------------------------
82 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
83 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
84 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
85 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
-------------------------------------------------------------------------------------------------------------------
TABLE 3: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE TOBACCO UNDERWRITING
CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ----------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
------------------------------------------------------------------------------------------------------------------
0 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
------------------------------------------------------------------------------------------------------------------
1 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
2 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
3 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
4 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
5 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
6 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
7 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
8 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
9 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
------------------------------------------------------------------------------------------------------------------
10 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
11 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
12 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
13 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
14 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
15 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
16 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
17 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
------------------------------------------------------------------------------------------------------------------
18 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
19 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
20 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
21 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
22 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
23 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
------------------------------------------------------------------------------------------------------------------
24 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
25 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
26 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
27 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
28 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
29 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
------------------------------------------------------------------------------------------------------------------
30 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
31 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
32 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
33 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
34 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
35 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
------------------------------------------------------------------------------------------------------------------
C-5
TABLE 3: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE TOBACCO UNDERWRITING
CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ----------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
------------------------------------------------------------------------------------------------------------------
36 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
------------------------------------------------------------------------------------------------------------------
37 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
------------------------------------------------------------------------------------------------------------------
38 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
------------------------------------------------------------------------------------------------------------------
39 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
------------------------------------------------------------------------------------------------------------------
40 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
------------------------------------------------------------------------------------------------------------------
41 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
------------------------------------------------------------------------------------------------------------------
42 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
------------------------------------------------------------------------------------------------------------------
43 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
------------------------------------------------------------------------------------------------------------------
44 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
------------------------------------------------------------------------------------------------------------------
45 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
------------------------------------------------------------------------------------------------------------------
46 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
------------------------------------------------------------------------------------------------------------------
47 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
------------------------------------------------------------------------------------------------------------------
48 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
------------------------------------------------------------------------------------------------------------------
49 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
------------------------------------------------------------------------------------------------------------------
50 0.21 0.27 0.34 0.40 0.46 0.53 0.59 0.65 0.72 0.78
------------------------------------------------------------------------------------------------------------------
51 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
------------------------------------------------------------------------------------------------------------------
52 0.23 0.30 0.37 0.44 0.51 0.58 0.65 0.71 0.78 0.85
------------------------------------------------------------------------------------------------------------------
53 0.23 0.30 0.37 0.44 0.51 0.58 0.65 0.71 0.78 0.85
------------------------------------------------------------------------------------------------------------------
54 0.24 0.31 0.38 0.46 0.53 0.60 0.67 0.75 0.82 0.89
------------------------------------------------------------------------------------------------------------------
55 0.25 0.33 0.40 0.48 0.55 0.63 0.70 0.78 0.85 0.93
------------------------------------------------------------------------------------------------------------------
56 0.26 0.34 0.42 0.50 0.57 0.65 0.73 0.81 0.89 0.96
------------------------------------------------------------------------------------------------------------------
57 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
------------------------------------------------------------------------------------------------------------------
58 0.30 0.39 0.48 0.57 0.66 0.75 0.84 0.93 1.02 1.11
------------------------------------------------------------------------------------------------------------------
59 0.31 0.40 0.50 0.59 0.68 0.78 0.87 0.96 1.06 1.15
------------------------------------------------------------------------------------------------------------------
60 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
------------------------------------------------------------------------------------------------------------------
61 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
------------------------------------------------------------------------------------------------------------------
62 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
------------------------------------------------------------------------------------------------------------------
63 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
64 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
65 0.36 0.47 0.58 0.69 0.79 0.90 1.01 1.12 1.23 1.33
------------------------------------------------------------------------------------------------------------------
66 0.36 0.47 0.58 0.69 0.79 0.90 1.01 1.12 1.23 1.33
------------------------------------------------------------------------------------------------------------------
67 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
68 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
69 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
70 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
71 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
72 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
73 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
74 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
75 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
76 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
77 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
78 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
79 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
80 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
81 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
C-6
TABLE 3: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE
AMOUNT FOR A MALE INSURED IN THE TOBACCO UNDERWRITING
CLASS WHO SELECTED ACCOUNTING BENEFIT FEATURE I
------------------------------------------------------------------------------------------------------------------
POLICY YEAR
ISSUE ----------------------------------------------------------------------------------------------------------
AGE 1 2 3 4 5 6 7 8 9 10
------------------------------------------------------------------------------------------------------------------
82 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
83 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
84 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
85 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
------------------------------------------------------------------------------------------------------------------
C-7
APPENDIX D
CALCULATION OF MAXIMUM SURRENDER CHARGES
We compute a separate surrender charge on the Policy Date and at the time of
each increase in face amount. The maximum surrender charges are based on the age
(on the Policy Date and on the date of any increase in face amount), sex and
underwriting class of the insured, as indicated in the table below.
MAXIMUM SURRENDER CHARGE PER $1,000 OF FACE AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
MALE MALE MALE FEMALE FEMALE FEMALE UNISEX UNISEX UNISEX
REFERRED- PREFERRED STANDARD- PREFERRED PREFERRED STANDARD- PREFERRED- PREFERRED STANDARD-
PLUS NON- NON- NON- MALE PLUS NON- NON- NON- FEMALE PLUS NON- NON- NON- UNISEX
ISSUE AGE TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO
------------------------------------------------------------------------------------------------------------------------------------
0 13.45 13.46 13.49 14.26 12.90 12.91 12.92 13.39 13.35 13.36 13.38 14.10
------------------------------------------------------------------------------------------------------------------------------------
1 13.54 13.55 13.56 14.35 12.99 12.99 13.00 13.47 13.44 13.44 13.46 14.19
------------------------------------------------------------------------------------------------------------------------------------
2 13.65 13.66 13.67 14.50 13.09 13.10 13.10 13.58 13.55 13.55 13.56 14.33
------------------------------------------------------------------------------------------------------------------------------------
3 13.78 13.79 13.80 14.66 13.20 13.20 13.21 13.71 13.67 13.68 13.69 14.49
------------------------------------------------------------------------------------------------------------------------------------
4 13.92 13.92 13.93 14.84 13.31 13.32 13.32 13.84 13.80 13.81 13.82 14.66
------------------------------------------------------------------------------------------------------------------------------------
5 14.06 14.07 14.07 15.03 13.43 13.44 13.44 13.98 13.94 13.95 13.96 14.84
------------------------------------------------------------------------------------------------------------------------------------
6 14.22 14.22 14.23 15.24 13.56 13.56 13.57 14.13 14.09 14.10 14.10 15.04
------------------------------------------------------------------------------------------------------------------------------------
7 14.37 14.38 14.39 15.46 13.69 13.70 13.70 14.29 14.25 14.25 14.26 15.24
------------------------------------------------------------------------------------------------------------------------------------
8 14.54 14.54 14.55 15.68 13.83 13.84 13.84 14.45 14.41 14.41 14.42 15.46
------------------------------------------------------------------------------------------------------------------------------------
9 14.71 14.71 14.72 15.91 13.98 13.98 13.99 14.63 14.57 14.57 14.58 15.68
------------------------------------------------------------------------------------------------------------------------------------
10 14.88 14.88 14.89 16.16 14.13 14.13 14.14 14.81 14.74 14.74 14.75 15.91
------------------------------------------------------------------------------------------------------------------------------------
11 15.05 15.06 15.07 16.40 14.28 14.29 14.30 15.00 14.91 14.91 14.93 16.15
------------------------------------------------------------------------------------------------------------------------------------
12 15.23 15.24 15.26 16.65 14.45 14.45 14.46 15.19 15.09 15.09 15.11 16.39
------------------------------------------------------------------------------------------------------------------------------------
13 15.42 15.43 15.46 16.92 14.61 14.62 14.63 15.40 15.27 15.28 15.30 16.64
------------------------------------------------------------------------------------------------------------------------------------
14 15.61 15.63 15.66 17.19 14.79 14.79 14.81 15.60 15.46 15.47 15.50 16.90
------------------------------------------------------------------------------------------------------------------------------------
15 15.81 15.83 15.86 17.48 14.97 14.98 14.99 15.82 15.66 15.67 15.70 17.18
------------------------------------------------------------------------------------------------------------------------------------
16 16.02 16.04 16.08 17.77 15.16 15.16 15.18 16.04 15.86 15.88 15.91 17.45
------------------------------------------------------------------------------------------------------------------------------------
17 16.23 16.25 16.30 18.05 15.36 15.36 15.38 16.27 16.07 16.09 16.12 17.73
------------------------------------------------------------------------------------------------------------------------------------
18 16.45 16.47 16.51 18.33 15.56 15.57 15.58 16.51 16.29 16.30 16.34 18.00
------------------------------------------------------------------------------------------------------------------------------------
19 16.68 16.70 16.74 18.62 15.78 15.78 15.80 16.76 16.51 16.53 16.56 18.28
------------------------------------------------------------------------------------------------------------------------------------
20 16.92 16.94 16.97 18.92 16.00 16.01 16.02 17.03 16.75 16.76 16.80 18.58
------------------------------------------------------------------------------------------------------------------------------------
21 17.17 17.19 17.22 19.24 16.24 16.25 16.26 17.30 17.00 17.01 17.04 18.89
------------------------------------------------------------------------------------------------------------------------------------
22 17.44 17.46 17.48 19.58 16.49 16.49 16.51 17.59 17.27 17.28 17.30 19.22
------------------------------------------------------------------------------------------------------------------------------------
23 17.74 17.75 17.78 19.97 16.75 16.75 16.77 17.90 17.55 17.57 17.59 19.60
------------------------------------------------------------------------------------------------------------------------------------
24 18.05 18.06 18.09 20.37 17.02 17.03 17.04 18.22 17.86 17.87 17.89 19.99
------------------------------------------------------------------------------------------------------------------------------------
25 18.37 18.39 18.41 20.81 17.31 17.31 17.33 18.55 18.18 18.19 18.21 20.40
------------------------------------------------------------------------------------------------------------------------------------
26 18.72 18.73 18.76 21.26 17.61 17.61 17.63 18.90 18.52 18.53 18.55 20.84
------------------------------------------------------------------------------------------------------------------------------------
27 19.08 19.10 19.12 21.75 17.92 17.93 17.95 19.28 18.87 18.88 18.91 21.30
------------------------------------------------------------------------------------------------------------------------------------
28 19.47 19.48 19.51 22.26 18.26 18.26 18.28 19.67 19.25 19.26 19.28 21.79
------------------------------------------------------------------------------------------------------------------------------------
29 19.88 19.89 19.92 22.80 18.61 18.61 18.63 20.08 19.65 19.66 19.68 22.31
------------------------------------------------------------------------------------------------------------------------------------
30 20.31 20.32 20.35 23.37 18.97 18.98 19.00 20.51 20.06 20.07 20.10 22.86
------------------------------------------------------------------------------------------------------------------------------------
31 20.76 20.77 20.80 23.98 19.36 19.37 19.39 20.97 20.50 20.52 20.54 23.44
------------------------------------------------------------------------------------------------------------------------------------
32 21.24 21.25 21.28 24.61 19.77 19.78 19.80 21.45 20.97 20.98 21.01 24.04
------------------------------------------------------------------------------------------------------------------------------------
33 21.74 21.75 21.78 25.28 20.19 20.20 20.22 21.95 21.45 21.47 21.50 24.68
------------------------------------------------------------------------------------------------------------------------------------
34 22.26 22.28 22.31 25.98 20.63 20.64 20.67 22.46 21.96 21.98 22.01 25.34
------------------------------------------------------------------------------------------------------------------------------------
35 22.82 22.83 22.87 26.71 21.09 21.11 21.13 23.00 22.50 22.52 22.55 26.04
------------------------------------------------------------------------------------------------------------------------------------
D-1
MAXIMUM SURRENDER CHARGE PER $1,000 OF FACE AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
MALE MALE MALE FEMALE FEMALE FEMALE UNISEX UNISEX UNISEX
REFERRED- PREFERRED STANDARD- PREFERRED PREFERRED STANDARD- PREFERRED- PREFERRED STANDARD-
PLUS NON- NON- NON- MALE PLUS NON- NON- NON- FEMALE PLUS NON- NON- NON- UNISEX
ISSUE AGE TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO
------------------------------------------------------------------------------------------------------------------------------------
36 23.34 23.36 23.40 27.40 21.53 21.54 21.57 23.51 23.01 23.02 23.06 26.70
------------------------------------------------------------------------------------------------------------------------------------
37 23.90 23.92 23.96 28.14 21.98 21.99 22.02 24.04 23.54 23.56 23.60 27.40
------------------------------------------------------------------------------------------------------------------------------------
38 24.48 24.50 24.55 28.90 22.46 22.47 22.51 24.60 24.11 24.13 24.17 28.12
------------------------------------------------------------------------------------------------------------------------------------
39 25.10 25.12 25.17 29.71 22.96 22.98 23.01 25.18 24.71 24.73 24.77 28.89
------------------------------------------------------------------------------------------------------------------------------------
40 25.76 25.78 25.84 30.56 23.49 23.51 23.55 25.79 25.34 25.36 25.41 29.70
------------------------------------------------------------------------------------------------------------------------------------
41 26.45 26.48 26.54 31.46 24.05 24.07 24.11 26.43 26.01 26.03 26.09 30.54
------------------------------------------------------------------------------------------------------------------------------------
42 27.19 27.22 27.28 32.40 24.64 24.66 24.71 27.10 26.71 26.74 26.80 31.44
------------------------------------------------------------------------------------------------------------------------------------
43 27.96 27.99 28.07 33.40 25.26 25.28 25.33 27.80 27.46 27.49 27.56 32.38
------------------------------------------------------------------------------------------------------------------------------------
44 28.78 28.82 28.90 34.45 25.91 25.93 25.99 28.53 28.25 28.28 28.36 33.37
------------------------------------------------------------------------------------------------------------------------------------
45 29.65 29.69 29.78 35.55 26.59 26.62 26.68 29.29 29.08 29.12 29.20 34.41
------------------------------------------------------------------------------------------------------------------------------------
46 30.55 30.60 30.70 36.71 27.31 27.34 27.40 30.09 29.95 29.99 30.08 35.49
------------------------------------------------------------------------------------------------------------------------------------
47 31.51 31.56 31.67 37.92 28.07 28.10 28.17 30.92 30.87 30.91 31.01 36.64
------------------------------------------------------------------------------------------------------------------------------------
48 32.51 32.56 32.68 39.16 28.86 28.89 28.97 31.79 31.83 31.88 31.98 37.81
------------------------------------------------------------------------------------------------------------------------------------
49 33.56 33.62 33.74 40.46 29.70 29.73 29.81 32.71 32.84 32.89 33.01 39.03
------------------------------------------------------------------------------------------------------------------------------------
50 34.67 34.73 34.86 41.80 30.58 30.62 30.70 33.66 33.90 33.96 34.08 40.30
------------------------------------------------------------------------------------------------------------------------------------
51 35.86 35.92 36.06 43.20 31.52 31.56 31.65 34.68 35.04 35.10 35.23 41.63
------------------------------------------------------------------------------------------------------------------------------------
52 37.11 37.17 37.32 44.66 32.52 32.56 32.65 35.74 36.24 36.30 36.44 43.01
------------------------------------------------------------------------------------------------------------------------------------
53 38.44 38.51 38.67 46.24 33.57 33.62 33.72 36.88 37.52 37.59 37.74 44.50
------------------------------------------------------------------------------------------------------------------------------------
54 39.84 39.93 40.10 47.89 34.69 34.74 34.85 38.08 38.87 38.94 39.11 46.07
------------------------------------------------------------------------------------------------------------------------------------
55 41.33 41.42 41.61 49.63 35.88 35.93 36.05 39.36 40.29 40.38 40.56 47.72
------------------------------------------------------------------------------------------------------------------------------------
56 42.79 42.89 43.11 51.35 37.07 37.13 37.26 40.64 41.71 41.80 42.00 49.35
------------------------------------------------------------------------------------------------------------------------------------
57 44.34 44.45 44.70 53.15 38.34 38.40 38.54 41.99 43.20 43.30 43.53 51.07
------------------------------------------------------------------------------------------------------------------------------------
58 45.97 46.09 46.36 53.98 39.69 39.76 39.91 43.44 44.78 44.89 45.13 52.86
------------------------------------------------------------------------------------------------------------------------------------
59 47.68 47.82 48.11 53.68 41.12 41.19 41.36 44.97 46.43 46.56 46.82 53.95
------------------------------------------------------------------------------------------------------------------------------------
60 49.47 49.62 49.95 53.39 42.62 42.71 42.89 46.57 48.17 48.30 48.60 53.66
------------------------------------------------------------------------------------------------------------------------------------
61 51.30 51.47 51.82 53.20 44.19 44.28 44.48 48.22 49.95 50.10 50.42 53.46
------------------------------------------------------------------------------------------------------------------------------------
62 53.23 53.41 53.80 53.01 45.84 45.94 46.16 49.96 51.82 51.98 52.34 53.26
------------------------------------------------------------------------------------------------------------------------------------
63 53.57 53.57 53.58 52.83 47.58 47.69 47.92 51.76 53.79 53.79 53.80 53.06
------------------------------------------------------------------------------------------------------------------------------------
64 53.26 53.26 53.27 52.64 49.43 49.55 49.79 53.68 53.49 53.49 53.50 52.85
------------------------------------------------------------------------------------------------------------------------------------
65 52.94 52.94 52.95 52.44 51.41 51.53 51.79 53.47 53.18 53.18 53.20 52.64
------------------------------------------------------------------------------------------------------------------------------------
66 52.83 52.83 52.84 52.34 53.69 53.82 54.09 53.39 53.07 53.08 53.09 52.55
------------------------------------------------------------------------------------------------------------------------------------
67 52.71 52.72 52.73 52.24 53.98 53.99 54.00 53.30 52.96 52.97 52.98 52.45
------------------------------------------------------------------------------------------------------------------------------------
68 52.59 52.60 52.61 52.13 53.88 53.89 53.90 53.21 52.85 52.85 52.86 52.34
------------------------------------------------------------------------------------------------------------------------------------
69 52.47 52.47 52.49 52.03 53.77 53.78 53.79 53.12 52.73 52.73 52.74 52.24
------------------------------------------------------------------------------------------------------------------------------------
70 52.34 52.35 52.36 51.92 53.66 53.66 53.67 53.02 52.60 52.61 52.62 52.13
------------------------------------------------------------------------------------------------------------------------------------
71 52.20 52.21 52.22 51.79 53.51 53.52 53.53 52.88 52.46 52.47 52.48 52.01
------------------------------------------------------------------------------------------------------------------------------------
72 52.06 52.07 52.08 51.66 53.37 53.37 53.39 52.74 52.32 52.32 52.34 51.87
------------------------------------------------------------------------------------------------------------------------------------
73 51.91 51.92 51.93 51.53 53.22 53.22 53.24 52.60 52.17 52.18 52.19 51.74
------------------------------------------------------------------------------------------------------------------------------------
74 51.76 51.77 51.78 51.40 53.06 53.06 53.08 52.45 52.02 52.03 52.04 51.61
------------------------------------------------------------------------------------------------------------------------------------
75 51.61 51.61 51.63 51.27 52.89 52.90 52.92 52.30 51.86 51.87 51.88 51.47
------------------------------------------------------------------------------------------------------------------------------------
76 51.45 51.45 51.47 51.13 52.72 52.73 52.75 52.14 51.70 51.71 51.72 51.33
------------------------------------------------------------------------------------------------------------------------------------
77 51.28 51.29 51.31 50.99 52.54 52.55 52.57 51.98 51.53 51.54 51.56 51.18
------------------------------------------------------------------------------------------------------------------------------------
D-2
MAXIMUM SURRENDER CHARGE PER $1,000 OF FACE AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
MALE MALE MALE FEMALE FEMALE FEMALE UNISEX UNISEX UNISEX
REFERRED- PREFERRED STANDARD- PREFERRED PREFERRED STANDARD- PREFERRED- PREFERRED STANDARD-
PLUS NON- NON- NON- MALE PLUS NON- NON- NON- FEMALE PLUS NON- NON- NON- UNISEX
ISSUE AGE TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO TOBACCO
------------------------------------------------------------------------------------------------------------------------------------
78 51.12 51.13 51.14 50.85 52.36 52.37 52.39 51.81 51.36 51.37 51.39 51.04
------------------------------------------------------------------------------------------------------------------------------------
79 50.95 50.96 50.97 50.71 52.17 52.18 52.21 51.64 51.20 51.20 51.22 50.90
------------------------------------------------------------------------------------------------------------------------------------
80 50.79 50.80 50.81 50.58 51.99 52.00 52.02 51.47 51.03 51.04 51.05 50.76
------------------------------------------------------------------------------------------------------------------------------------
81 50.62 50.63 50.68 50.49 51.81 51.82 51.80 51.26 50.85 50.86 50.91 50.64
------------------------------------------------------------------------------------------------------------------------------------
82 50.46 50.46 50.56 50.40 51.63 51.64 51.61 51.09 50.69 50.70 50.77 50.54
------------------------------------------------------------------------------------------------------------------------------------
83 50.30 50.30 50.45 50.31 51.44 51.46 51.42 50.92 50.52 50.53 50.64 50.44
------------------------------------------------------------------------------------------------------------------------------------
84 50.14 50.14 50.33 50.22 51.25 51.28 51.22 50.74 50.36 50.37 50.51 50.33
------------------------------------------------------------------------------------------------------------------------------------
85 49.97 49.97 50.17 50.08 51.06 51.09 50.98 50.47 50.19 50.20 50.34 50.17
------------------------------------------------------------------------------------------------------------------------------------
D-3
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
THE POLICY...................................................................... 1
The Policy................................................................... 1
Non-Participation............................................................ 1
Our Right to Contest the Policy.............................................. 1
Misstatement of Age or Sex................................................... 1
Suicide Exclusion............................................................ 1
Policyowner.................................................................. 1
Beneficiary.................................................................. 1
Assignment................................................................... 2
Notification of Death........................................................ 2
Policy Termination........................................................... 2
Reports to Owners............................................................ 2
DEATH BENEFIT................................................................... 3
Minimum Death Benefit........................................................ 3
Changing Death Benefit Options............................................... 3
Payment Options for the Death Benefit and on Surrender....................... 3
LAPSE AND REINSTATEMENT......................................................... 4
Risk of Policy Lapse......................................................... 4
TRANSFERS....................................................................... 4
Dollar Cost Averaging........................................................ 4
Account Rebalancing.......................................................... 5
THE VARIABLE ACCOUNT AND THE PORTFOLIOS......................................... 5
Change in Subaccount Investment Policy....................................... 5
Potential Conflicts of Interest.............................................. 5
CHARGES AND DEDUCTIONS.......................................................... 6
Cost of Insurance Rates...................................................... 6
Charge Discounts for Sales to Groups and Affiliates.......................... 6
SUPPLEMENTAL BENEFITS AND RIDERS................................................ 6
Adjustable Term Insurance Rider.............................................. 6
Accelerated Death Benefit Rider.............................................. 7
Disability Waiver of Monthly Deduction Rider................................. 8
Disability Waiver of Monthly Payment Rider................................... 9
Guaranteed Death Benefit Rider............................................... 11
Other Insured Term Insurance Rider........................................... 11
Paid-Up Life Insurance Rider................................................. 12
PERFORMANCE DATA................................................................ 13
Hypothetical Illustrations................................................... 13
Yields and Total Returns..................................................... 13
Money Market Subaccount Yields............................................... 14
Total Returns................................................................ 14
THE COMPANY AND THE FIXED ACCOUNT............................................... 15
Information about the Company................................................ 15
Information about the Variable Account....................................... 15
Safekeeping of Account Assets................................................ 15
Experts...................................................................... 15
Other Information............................................................ 16
Financial Statements......................................................... 16
ADDITIONAL INFORMATION.......................................................... 16
IMSA......................................................................... 16
Policies Issued in Conjunction with Employee Benefit Plans................... 16
Records...................................................................... 16
Services and Third Party Administration Agreements........................... 16
Principal Underwriter........................................................ 16
Legal Matters................................................................ 17
APPENDIX A - MAXIMUM MONTHLY EXPENSE CHARGES.................................... A-1
APPENDIX B - MAXIMUM SURRENDER CHARGES.......................................... B-1
INDEX TO FINANCIAL STATEMENTS................................................... F-1
S-1
[OUTSIDE BACK COVER PAGE]
To learn more about the Policy, you should read the Statement of Additional
Information (SAI). The table of contents for the SAI appears on the last page of
this prospectus. For a free copy of the SAI, please call us toll-free at
1-800-905-1959 between the hours of 8 a.m. and 7 p.m. Eastern Time Monday
through Friday, or write to us at our Variable Life Service Center at P.O. Box
105662, Atlanta, GA 30348-5662. We will send you a copy of the SAI within 3 days
of receipt of your request.
You may also call us toll-free or write to us at the Variable Life Service
Center if you wish to receive a copy of personalized illustrations of your
Policy's death benefits, cash surrender values, and Policy Values, to request
additional information about the Policy, and to ask questions about your Policy.
The SAI has been filed with the SEC and is incorporated by reference into this
prospectus. The SEC maintains an Internet e-mail (http://www.sec.gov) that
contains the SAI and other information about us and the Policy. Information
about us and the Policy (including the SAI) may also be reviewed and copied at
the SEC's Public Reference Room in Washington, DC., or may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, 450 Fifth Street, NW, Washington, DC 20549-0102. Additional information on
the operation of the Public Reference Room may be obtained by calling the SEC at
(202) 942-8090.
ACCUMULATOR
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
(REGISTRANT)
OF
CANADA LIFE INSURANCE COMPANY OF AMERICA
(DEPOSITOR)
HOME OFFICE
6201 POWERS FERRY ROAD, N.W.
ATLANTA, GA 30339
VARIABLE LIFE SERVICE CENTER
P.O. BOX 105662
ATLANTA, GEORGIA 30348-5662
PHONE: 1 (800) 905-1959 (TOLL-FREE)
FAX: 1 (888) 670-4836 (TOLL-FREE)
STATEMENT OF ADDITIONAL INFORMATION
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This Statement of Additional Information ("SAI") contains additional information
regarding the individual flexible premium variable universal life insurance
policy (the "Policy") offered by Canada Life Insurance Company of America (we,
our, us, or the Company). This SAI is not a prospectus. It should be read
together with the prospectus for the Policy dated May 19, 2003, and the
prospectuses from the 30 Portfolios in which you may invest in the Policy.
You may obtain a free copy of the prospectus by writing or calling us at our
address or toll-free phone number shown above. Terms in this SAI have the same
meanings as in the prospectus for the Policy.
The date of this Statement of Additional Information is May 19, 2003.
TABLE OF CONTENTS
THE POLICY............................................................................. 1
The Policy.......................................................................... 1
Non-Participation................................................................... 1
Our Right to Contest the Policy..................................................... 1
Misstatement of Age or Sex.......................................................... 1
Suicide Exclusion................................................................... 1
Policyowner......................................................................... 1
Beneficiary......................................................................... 1
Assignment.......................................................................... 2
Notification of Death............................................................... 2
Policy Termination.................................................................. 2
Reports to Owners................................................................... 2
DEATH BENEFIT.......................................................................... 3
Minimum Death Benefit............................................................... 3
Changing Death Benefit Options...................................................... 3
Payment Options for the Death Benefit and on Surrender.............................. 3
LAPSE AND REINSTATEMENT................................................................ 4
Risk of Policy Lapse................................................................ 4
TRANSFERS.............................................................................. 4
Dollar Cost Averaging............................................................... 4
Account Rebalancing................................................................. 5
THE VARIABLE ACCOUNT AND THE PORTFOLIOS................................................ 5
Change in Subaccount Investment Policy.............................................. 5
Potential Conflicts of Interest..................................................... 5
CHARGES AND DEDUCTIONS................................................................. 6
Cost of Insurance Rates............................................................. 6
Charge Discounts for Sales to Groups and Affiliates................................. 6
SUPPLEMENTAL BENEFITS AND RIDERS....................................................... 6
Adjustable Term Insurance Rider..................................................... 6
Accelerated Death Benefit Rider..................................................... 7
Disability Waiver of Monthly Deduction Rider........................................ 8
Disability Waiver of Monthly Payment Rider.......................................... 9
Guaranteed Death Benefit Rider...................................................... 11
Other Insured Term Insurance Rider.................................................. 11
Paid-Up Life Insurance Rider........................................................ 12
PERFORMANCE DATA....................................................................... 13
Hypothetical Illustrations.......................................................... 13
Yields and Total Returns............................................................ 13
Money Market Subaccount Yields...................................................... 14
Total Returns....................................................................... 14
THE COMPANY AND THE FIXED ACCOUNT...................................................... 15
Information about the Company....................................................... 15
Information about the Variable Account.............................................. 15
Safekeeping of Account Assets....................................................... 15
Experts............................................................................. 15
Other Information................................................................... 16
Financial Statements................................................................ 16
ADDITIONAL INFORMATION................................................................. 16
IMSA................................................................................ 16
Policies Issued in Conjunction with Employee Benefit Plans.......................... 16
Records............................................................................. 16
Services and Third Party Administration Agreements.................................. 16
Principal Underwriter............................................................... 16
Legal Matters....................................................................... 17
APPENDIX A- MAXIMUM MONTHLY EXPENSE CHARGES............................................ A-1
APPENDIX B- MAXIMUM SURRENDER CHARGES.................................................. B-1
INDEX TO FINANCIAL STATEMENTS.......................................................... F-1
THE POLICY
THE POLICY
The entire contract is made up of the Policy, the application for the Policy,
the application(s) to increase the face amount, to increase the Target Death
Benefit Schedule, or to change the underwriting class, Policy Details page(s),
any application for reinstatement of the Policy, any supplemental pages issued,
and any riders or endorsements. We assume that the information you and the
insured provide in any application is accurate and complete to the best of your
knowledge. In the absence of fraud, all statements made in any application are
deemed representations and not warranties. No statement will be used to contest
this Policy or deny a claim unless it is contained in an application. Our
representatives are not permitted to change this Policy or extend the time for
making payments. Only an authorized officer of ours may change the provisions of
this Policy, and then only in writing.
NON-PARTICIPATION
The Policy is not eligible for dividends and will not participate in our
divisible surplus.
OUR RIGHT TO CONTEST THE POLICY
We will not contest this Policy after it has been in force during the insured's
lifetime for two years from the Date of Issue or, if reinstated, for two years
from the effective date of reinstatement. We will not contest any increase in
the face amount or any increase to the Target Death Benefit Schedule once the
increase has been in force during the insured's lifetime for two years following
the effective date of the increase. Any contest that we make after a
reinstatement or an increase in the face amount or Target Death Benefit Schedule
will be limited to material statements made in the application for such
reinstatement or increase.
MISSTATEMENT OF AGE OR SEX
If either the insured's date of birth or sex has been misstated, the proceeds
payable under the Policy will be the amount that the most recent cost of
insurance charge deducted would have purchased for the correct age and sex. We
will not reduce the base death benefit to less than the minimum death benefit
required by Federal law. No adjustment will be made if: (a) the insured dies
after the final payment date; or (b) the last monthly cost of insurance charge
was sufficient, using the correct age and sex, to purchase the net amount at
risk in effect at the time such charge was taken.
SUICIDE EXCLUSION
If the insured commits suicide, while sane or insane, within two years of the
Date of Issue, we will pay the beneficiary an amount equal to the sum of all
payments, without interest, less any outstanding loan balance and partial
withdrawals. Insurance coverage under this Policy and all riders will then
terminate. If this Policy is reinstated, a new two-year exclusion period will
begin on the effective date of the reinstatement unless prohibited by applicable
state law.
If the insured commits suicide, while sane or insane, within two years of the
effective date of an increase in the face amount or an increase to the Target
Death Benefit Schedule, we will not recognize the increase. We will pay the
beneficiary any death benefit amount not subject to a suicide exclusion period,
plus an amount equal to the monthly expense charges and the cost of insurance
charges associated with the increase. Insurance coverage under this Policy and
all riders will then terminate.
POLICYOWNER
The insured is the Policyowner unless another person or entity (which could
include a trust, corporation, partnership, etc.) is named as Policyowner in the
application. You can exercise all rights under this Policy subject to the rights
of any assignee and any irrevocable beneficiary. You may change the ownership of
this Policy by sending a written request to us. When we receive the request the
effective date of the change will be the date you sign the request. The change
will not affect any payment made or action taken by us before we receive your
request.
BENEFICIARY
The beneficiary is the person or persons to whom the death benefit is payable on
the insured's death. Unless otherwise stated in the Policy, the beneficiary has
no rights in the Policy before the insured dies. The beneficiary's interest will
be affected by any assignment you make. If you assign this Policy as collateral,
all or a portion of the
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death benefit will first be paid to the assignee; any money left over from the
amount due the assignee will go to those otherwise entitled to it.
Your choice of beneficiary, as stated in the application, may be revocable or
irrevocable. You may change a revocable beneficiary by written request; but an
irrevocable beneficiary must agree to any change in writing. You will also need
an irrevocable beneficiary's permission to exercise other rights and options
granted by this Policy. Unless you have asked otherwise, this Policy's
beneficiary will be revocable.
Any change of the beneficiary must be requested before the date of death of the
insured and while the Policy is in force. When we receive your request the
change will take place on the date the request is signed. Any rights created by
the change will be subject to any payments made, or actions taken, before we
receive the written request.
If more than one beneficiary is alive when the insured dies, we will pay each
beneficiary in equal shares, unless you have designated otherwise.
If a beneficiary dies before the insured, his or her interest in this Policy
will pass to any surviving beneficiaries in proportion to their share in the
death benefit, unless you have designated otherwise. If all beneficiaries die
before the insured, the death benefit will pass to you or your estate.
ASSIGNMENT
You may change the ownership of this Policy by sending a written request to us
at the Variable Life Service Center at any time while the insured is living and
the Policy is in force. An absolute assignment will transfer ownership of the
Policy from you to another person called the assignee. You may also assign this
Policy as collateral to an assignee. The limitations on your ownership rights
while a collateral assignment is in effect are specified in the assignment.
We are not bound by an assignment or release thereof, unless it is in writing
and recorded at the Variable Life Service Center. When recorded, the assignment
will take effect on the date the written request was signed. Any rights the
assignment creates will be subject to any payments we made or actions we took
before the assignment is recorded. We are not responsible for determining the
validity of any assignment or release. AN ASSIGNMENT MAY HAVE TAX CONSEQUENCES.
NOTIFICATION OF DEATH
The death of the insured and/or the Policyowner(s) must be filed with us
immediately, and we will require due proof of death satisfactory to us. We will
compute the death benefit as of the date of death of the insured.
POLICY TERMINATION
Your Policy will terminate on the earliest of:
- the end of a 62-day grace period without a sufficient payment;
- the date the insured dies; or
- the date you surrender your Policy.
REPORTS TO OWNERS
We will mail a report to you at your last known address at least once a year
without charge. This report will provide the following information.
- the period covered by the report;
- your current death benefit;
- your current net payment allocations;
- your Policy Values in each Subaccount and in the Fixed Account;
- your Policy Value if you surrender the Policy;
- any payments and withdrawals made by you and the monthly deductions by us
since the last report;
- any outstanding loan balance amount;
- your cash surrender value; and
- any other information required by law.
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We will also send you confirmation of each financial transaction including:
- payments;
- transfers;
- loans and loan repayments
- partial withdrawals;
- surrenders; and
- any other transactions requiring confirmation under applicable law.
We will send you a semi-annual report containing the financial statements of
each Portfolio in which you are invested.
DEATH BENEFIT
MINIMUM DEATH BENEFIT
To qualify as "life insurance" under the Federal tax laws, this Policy must
provide a minimum death benefit. The minimum death benefit will be determined as
of the date of death of the insured. Under current Federal tax law, either the
"Guideline Premium/Cash Value Corridor" test or the "Cash Value Accumulation"
test may be used to determine whether the Policy qualifies as "life insurance"
under the Code.
The "Guideline Premium/Cash Value Corridor" test limits the dollar amount of
payments you may make under a policy; no such limits apply under the "Cash Value
Accumulation" test. The factors used to determine the minimum death benefit
applicable to a given Policy Value are different under the two tests.
You must elect one of the tax tests at the time of application for the Policy.
You may not change tests. If you select the "Guideline Premium/Cash Value
Corridor" test, you may elect either Death Benefit Option 1 or Death Benefit
Option 2. If you elect the "Cash Value Accumulation" test, Death Benefit Option
3 must apply. YOU SHOULD CONSULT A QUALIFIED TAX ADVISER IN CHOOSING BETWEEN THE
"GUIDELINE PREMIUM/CASH VALUE CORRIDOR" AND THE "CASH VALUE ACCUMULATION" TESTS
AND IN CHOOSING A DEATH BENEFIT OPTION.
If Death Benefit Option 1 or Death Benefit Option 2 is in effect, the minimum
death benefit is computed by multiplying the Policy Value as of the date of the
insured's death by a percentage factor for the insured's age, as set forth in
Appendix A of the prospectus. (The factors set forth in Appendix A of the
prospectus reflect the requirements of the "Guideline Premium/Cash Value
Corridor Death Benefit" test set forth in the Federal tax laws.) If Death
Benefit Option 3 is in effect, the minimum death benefit is computed by
multiplying the Policy Value as of the date of the insured's death by a
percentage for the insured's age, sex and underwriting class, as set forth in
Appendix B of the prospectus. (The factors set forth in Appendix B of the
prospectus reflect the requirements of the "Cash Value Accumulation" test set
forth in Federal tax laws.) The minimum death benefit factors will be adjusted
to conform to any changes in Federal tax laws.
CHANGING DEATH BENEFIT OPTIONS
Changing the death benefit option may result in a change in face amount. If you
change from Death Benefit Option 1 to Death Benefit Option 2, the face amount
following the change will be equal to the face amount immediately prior to the
change minus the Policy Value as of the date of the change. If you change from
Death Benefit Option 2 to Death Benefit Option 1, the face amount following the
change will be equal to the face amount immediately prior to the change plus the
Policy Value as of the date of the change. You may not change your death benefit
option if the change would reduce the face amount to less than $50,000.
Changing the death benefit option also may have tax consequences and may affect
the net amount at risk over time (which would affect the monthly cost of
insurance charge). We will not permit any change that would result in your
Policy being disqualified as a life insurance contract under Section 7702 of the
Code. YOU SHOULD CONSULT A TAX ADVISER BEFORE CHANGING DEATH BENEFIT OPTIONS.
PAYMENT OPTIONS FOR THE DEATH BENEFIT AND ON SURRENDER
There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy other than in a lump sum. If you make no
election, the beneficiary may elect a payment option when the proceeds become
payable. None of these options vary with the investment performance of the
Variable Account.
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Even if the death benefit under the Policy is excludible from income, proceeds
received under the payment options may not be excludible in full. This is
because earnings on the death benefit after the insured's death are taxable and
proceeds under the payment options generally include such earnings. YOU SHOULD
CONSULT A TAX ADVISER AS TO THE TAX TREATMENT OF PAYMENTS UNDER THE PAYMENT
OPTIONS.
The amount paid under any one option for any one payee must be at least $5000,
or the proceeds will be paid in one lump sum. The periodic proceeds for one
payee must be at least $50.
OPTION 1: LIFE - Proceeds will be paid in equal amounts each month,
INCOME in advance, during the payee's lifetime. The amount
of each payment will be determined from the Table of
Payments (located in your Policy) on the basis of
$1000 net proceeds, using the payee's age on the
nearest birthday at the due date of the first
payment.
OPTION 2: MUTUAL - Proceeds will be paid according to terms agreed to
AGREEMENT by the beneficiary and us.
You must notify us in writing of an election of an option and any revocation or
change of that option at our Variable Life Service Center. You may change the
payment option at any time before the death benefit becomes payable. For more
detailed information concerning these payment options, please call our Variable
Life Service Center.
LAPSE AND REINSTATEMENT
RISK OF POLICY LAPSE
During the Minimum Payment Period, if both your Minimum Payment Period
requirement is not met and if your Policy Value, less any surrender charge and
any outstanding loan balance, on a monthly processing day is less than the
monthly deduction due, your Policy will enter a 62-day grace period.
After the Minimum Monthly Period, if your Policy Value, less any surrender
charge and any outstanding loan balance, on a monthly processing day is less
than the monthly deduction due, your Policy will enter a 62-day grace period. We
will mail a notice of termination to the last known address of you and any
assignee. If you do not make sufficient payment within the 62-day grace period
after this notice is mailed, the Policy will terminate with no value. After the
final payment date, you may not make a payment to prevent lapse. To prevent
lapse, you may only submit a loan repayment. You may reinstate the Policy,
provided certain conditions are met.
TRANSFERS
DOLLAR COST AVERAGING
You may elect to participate in a dollar cost averaging ("DCA") program at no
charge. DCA is an investment strategy designed to reduce the investment risks
associated with market fluctuations. The strategy spreads the allocation of your
net payments into the Subaccounts over a period of time by systematically and
automatically transferring, on a monthly or other periodic basis, specified
dollar amounts of at least $100 from any selected Subaccount or the Fixed
Account (either, a "source account") to any other Subaccount(s) or the Fixed
Account. This allows you to potentially reduce the risk of investing most of
your net payments into the Subaccounts at a time when prices are high.
We do not assure the success of this strategy, and we cannot guarantee that DCA
will result in a profit to you or will protect you against loss.
To initiate DCA, we must receive your written request either in the application
or on a form required by us. Once you have elected DCA, we will process
transfers until one of the following occurs:
- the balance of the source account is less than the specified DCA amount;
- we receive your written revocation of DCA; or
- we discontinue the service.
This option is not available on the 29th, 30th or 31st of each month.
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We may modify, suspend, or discontinue the DCA program at any time upon 30 days'
written notice to you. You can obtain more detailed information concerning our
DCA program from our Variable Life Service Center.
ACCOUNT REBALANCING
You may elect to participate in the account rebalancing program in the
application or by later completing a form required by us. Under the account
rebalancing program, we will periodically transfer your Policy Value in the
Subaccounts to maintain a particular percentage allocation among the
Subaccounts. (Policy Value in the Fixed Account is not available for this
program.) Policy Value allocated to each Subaccount will grow or decline in
value at different rates. The account rebalancing program automatically
reallocates the Policy Value in the Subaccounts at the end of each (monthly,
quarterly, semi-annual, or annual) period to match your Policy's currently
effective payment allocation schedule.
The account rebalancing program will transfer Policy Value from those
Subaccounts that have increased in value to those Subaccounts that have declined
in value (or not increased as much). Over time, this method of investing may
help you buy low and sell high. The account rebalancing program does not
guarantee gains, nor does it assure that you will not have losses or that you
will meet your financial goals.
You may cancel account rebalancing upon written request. We may modify, suspend,
or discontinue the account rebalancing program at any time and for any reason,
upon 30 days written notice to you. You can obtain more detailed information
concerning our account rebalancing program from our Variable Life Service
Center.
There is no charge for this feature.
THE VARIABLE ACCOUNT AND THE PORTFOLIOS
CHANGE IN SUBACCOUNT INVESTMENT POLICY
If the investment policy of a Subaccount is materially changed, you may transfer
the portion of the Policy Value in that Subaccount to another Subaccount or to
the Fixed Account without a transfer charge and without having the transfer
count toward the 12 transfers permitted without charge during a Policy Year.
POTENTIAL CONFLICTS OF INTEREST
In addition to the Variable Account, the Portfolios may sell shares to other
separate investment accounts established by other insurance companies to support
variable annuity contracts and variable life insurance policies or qualified
retirement plans. It is possible that, in the future, it may become
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the Portfolios simultaneously. Although
neither we nor the Portfolios currently foresee any such disadvantages, either
to variable life insurance policy owners or to variable annuity contract owners,
each Portfolio's Board of Directors (Trustees) will monitor events in order to
identify any material conflicts between the interests of these variable life
insurance policy owners and variable annuity contract owners, and will determine
what action, if any, it should take. This action could include the sale of
Portfolio shares by one or more of the separate accounts, which could have
adverse consequences. Material conflicts could result from, for example: (1)
changes in state insurance laws; (2) changes in Federal income tax laws; or (3)
differences in voting instructions between those given by variable life
insurance policy owners and those given by variable annuity contract owners.
If a Portfolio's Board of Directors (Trustees) were to conclude that separate
portfolios should be established for variable life insurance and variable
annuity separate accounts, we will bear the attendant expenses, but variable
life insurance policy owners and variable annuity contract owners would no
longer have the economies of scale resulting from a larger combined Portfolio.
The Portfolios may also sell shares directly to certain pension and retirement
plans qualifying under Section 401 of the Code. As a result, there is a
possibility that a material conflict may arise between the interests of owners
of this Policy or other policies or contracts (including policies issued by
other companies), and such retirement plans or participants in such retirement
plans. In the event of any such material conflicts, we will consider what action
may be appropriate, including removing the Portfolio as an investment option
under the Policies or replacing the Portfolio with another portfolio.
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CHARGES AND DEDUCTIONS
COST OF INSURANCE RATES
The underwriting class of the insured will affect the cost of insurance rate. We
place insureds into one of the following underwriting classes: youth, preferred
plus non-tobacco, preferred non-tobacco, standard non-tobacco, and tobacco.
Insureds in the youth underwriting class have the lowest cost of insurance rate,
followed by insureds in the preferred plus non-tobacco underwriting class,
preferred non-tobacco underwriting class, standard non-tobacco class, and
tobacco underwriting class. In addition, the cost of insurance rates for the
standard non-tobacco and the tobacco underwriting classes may be increased if
the insured has been assigned extra ratings.
Extra ratings are additional charges that we assess on Policies insuring
individuals considered to have higher mortality risks based on our underwriting
standards and guidelines. We may assess a flat extra premium for each $1000 of
the base Policy face amount and the rider face amount if the insured has a
hazardous occupation or avocation, or certain physical impairments of a
temporary nature. We may assess a substandard table extra if the insured is
physically impaired.
CHARGE DISCOUNTS FOR SALES TO GROUPS AND AFFILIATES
The amount of surrender charges may be reduced or waived when the Policies are
to be sold to an individual or a group of individuals in such a manner that
results in savings of sales and/or administrative expenses. Such charge also may
be waived when a Policy is issued to an officer, director, employee, registered
representative or relative thereof of: the Company; the Canada Life Assurance
Company; any selling broker-dealer; or any of their affiliates.
Generally, we reduce or waive charges based on a number of factors, including:
- the number of insureds;
- the size of the group of purchasers;
- the total payments expected to be paid;
- the total assets under management for the Policyowner;
- the nature of the relationship among individual insureds;
- the purpose for which the Policies are being purchased;
- the expected persistency of individual Policies; and
- any other circumstances rationally related to the expected reduction in
expenses.
In no event will we permit a reduction or waiver of the surrender charge if such
reduction or waiver will be discriminatory to any person.
SUPPLEMENTAL BENEFITS AND RIDERS
ADJUSTABLE TERM INSURANCE RIDER
Under the Adjustable Term Insurance Rider, you may supplement your base death
benefit with adjustable term insurance so that the death benefit payable under
the Policy will equal the Target Death Benefit shown in the Target Death Benefit
Schedule you select (that is, the sum of the base death benefit amount under the
Policy, plus the death benefit under the Adjustable Term Insurance Rider). The
amount of term insurance provided by the rider is recalculated daily and equals
the difference between the Target Death Benefit and the base death benefit. In
the event that the base death benefit equals or exceeds the Target Death
Benefit, the term insurance benefit will not be less than zero. You may add this
rider at any time.
The rider has its own cost of insurance rate and is deducted from the Policy
Value as part of the monthly deduction. The rider charge is calculated by
multiplying (a) times (b) where
(a) equals the term rider death benefit on each monthly processing date, divided
by 1,000; and
(b) equals the monthly cost of insurance rate for the rider.
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FEATURES OF THE ADJUSTABLE TERM - The insured and beneficiary under this
INSURANCE RIDER rider are the same insured and beneficiary
named under the Policy.
- We do not assess a surrender charge on
this Policy.
- This rider has no cash or loan value
CONDITIONS FOR CHANGING THE - After the first Policy Year, you may
TARGET DEATH BENEFIT SCHEDULE request an increase or decrease in the
Target Death Benefit once per Policy Year.
- The insured must be alive and the Policy
must be in force
- Your request must be made in writing and
is subject to our general underwriting rules
and limits at the time of the change
- A request for an increase must be made
before the insured reaches age 86.
- A request requires satisfactory evidence
of insurability
- If we approve an increase in the Target
Death Benefit Schedule, we will
automatically increase the face amount of
the Base Policy (and the amount of your
minimum monthly payment if the increase is
in the first 48 Policy Months) unless you
specifically request that the increase apply
only to the term rider
- Any application for the increase will be
made a part of the Policy
- Any increase or decrease will become
effective as of the monthly processing date
on or next following the date we approve the
request.
- We will provide you will a new Target
Death Benefit Schedule reflecting the
change.
EFFECT OF A CHANGE IN FACE - If you decrease the face amount of the
AMOUNT ON THE TARGET DEATH Policy, we will decrease the scheduled
BENEFIT SCHEDULE: Target Death Benefit amount in the year of
the decrease and for all years thereafter by
the same amount
- The term amount will be the same,
immediately before and after the decrease in
the Policy's face amount.
- If you increase the face amount of the
Policy, we will automatically increase the
scheduled Target Death Benefit amount in the
year of the increase and for all years after
by the same amount unless you request
otherwise
- If you request that the Target Death
Benefit amount not be increased, we will
decrease the benefit amount by the amount of
the increase in the face amount of the
Policy.
- We will provide you with a new Target
Death Benefit schedule reflecting any
change.
The Adjustable Term Insurance Rider terminates on the earlier of:
- the monthly processing date on, or next following, our receipt of your
signed written request to cancel this rider;
- the date the Policy lapses, is surrendered, or otherwise is no longer in
force; or
- the final payment date.
If this rider is terminated or canceled, you may reinstate the rider at anytime
before the final payment date of the Policy and according to the reinstatement
provisions of the Policy.
ACCELERATED DEATH BENEFIT RIDER
Under the Accelerated Death Benefit Rider, we provide the insured with a portion
of the present value of the death benefit in a stream of payments under either
the terminal illness option or the nursing home option. To receive this benefit
while the Policy is in force, you must: (a) provide written consent from any
collateral assignee, irrevocable beneficiary and the insured (if the Policyowner
is not the insured); and (b) provide satisfactory proof to us that the insured
qualifies for either the terminal illness option or the nursing home option
(described below). If the insured dies before all of the accelerated death
benefit has been paid, we will pay the beneficiary in one lump sum the
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present value of the remaining payments due under the rider reduced by the
interest rate we use to determine those payments. You may elect this rider at
any time. The tax consequences associated with requesting a payment under this
rider are unclear. See "Federal Tax Considerations" in the prospectus.
If you elect to receive an accelerated death benefit under the terminal illness
option:
- You must provide proof of claim satisfactory to us that the insured's life
expectancy is 12 months or less;
- You may elect to receive equal monthly payments for 12 months (you may also
choose to receive an amount equal to the accelerated death benefit in a
lump sum); and
- We guarantee that each payment (under the 12 month payment plan) will be at
least $85.21 for each $1,000 of accelerated death benefit provided
(assuming an annual interest rate of 5%).
If you elect to receive an accelerated death benefit under the nursing home
option:
- You must provide proof satisfactory to us that (1) the insured is confined
to an eligible nursing home and has been confined there continuously for
the preceding six months; and (2) the insured is expected to remain in the
nursing home until death.
- You may elect level monthly payments for a specified number of years shown
in the rider (or another longer period acceptable to us).
- For each $1,000 of accelerated death benefit, each payment will be at least
the minimum amount shown in the rider, which assumes an annual interest
rate of 5%.
- If you elect a longer payment period, we will reduce monthly payments so
that the present value of the monthly payments for the longer payment
period is equal to the present value of the payments for the period shown
in the table, calculated at an interest rate of at least 5%.
Exercising the Accelerated Death Benefit Rider will have the following effect on
your Policy:
- We will reduce the death benefit by any rider benefit as of the monthly
processing date following the date of the written request.
- We will reduce your Policy Value the same proportion as the reduction in
the death benefit.
- We will also decrease or eliminate the face amount by any rider benefit in
the following order: (a) first, the
- most recent increase; (b) second, the next most recent increases
successively; and (c) last, the initial face amount.
- We will waive any surrender charge due to the exercise of this rider
equaling: (a) the surrender charge applicable to any increased face amount,
which is eliminated in the order set forth above; plus (b) a pro-rata share
of the surrender charge applicable to a partial reduction in an increase or
in the initial face amount.
DISABILITY WAIVER OF MONTHLY DEDUCTION RIDER
Under the Disability Waiver of Monthly Deduction Rider, we will waive the
monthly deduction due under the Policy during periods of total disability if
certain conditions are met. To exercise the rider, you must provide written
notice of claim of the insured's total disability and evidence that the total
disability:
- began while this rider was in force,
- began before the Policy Anniversary nearest the insured's age 65, and
- that the disability has continued for at least four months.
The rider will not be exercised if the total disability results, indirectly or
directly, from:
- (a) an act of war, whether such war is declared or undeclared, and the
insured is a member of the armed forces of a country or combination of
countries; or
- (b) any bodily injury occurring or disease first manifesting itself prior
to the effective date of this rider.
However, we will not deny a claim for total disability commencing after two
years from the effective date on the ground that the disease or impairment not
excluded from coverage by name or specific description existed prior to the
effective date of this rider.
WRITTEN NOTICE OF CLAIM. You must send any written notice of claim to our
Variable Life Service Center during the lifetime of the insured, while the
insured is totally disabled, and not later than 12 months after this rider
terminates. Proof of claim must be sent to the Variable Life Service Center no
later than 6 months after the written notice of
8
claim. If you fail to give notice and proof of claim within the required time
period, we will not void or reduce any claim if you can show that you gave
notice and proof as soon as reasonably possible.
TERMINATION. This rider also will terminate on the first of the following to
occur:
- the Policy lapses or terminates;
- the day before the Policy Anniversary nearest age 65, except as provided in
the benefit provision;
- you fail to provide proof of total disability at our request; or
- end of the Policy Month following a request for termination.
CHARGES. Charges for this rider are paid as a part of the monthly deduction
charges due under the Policy. The monthly charge is the waiver charge shown in
the cost of insurance charge table in the rider multiplied by the lesser of: (a)
the monthly deduction due under the Policy, including charges for any attached
riders; or (b) the maximum monthly deduction waiver amount shown on the maximum
monthly waiver of payment benefit table in the rider.
AN INSURED HAS A TOTAL - Occupation means either
DISABILITY IF THE INSURED IS
UNABLE TO ENGAGE IN AN - attendance at school if the insured is
OCCUPATION AS A RESULT OF not old enough to legally end his or her
DISEASE OR BODILY INJURY AS formal education; or
FOLLOWS:
- otherwise during the first 60 months of
disability, the occupation of the insured
when such disability began; and
thereafter, any occupation for which the
insured is or becomes reasonably fitted
by training, education
- Total loss of the following as a result of
disease or bodily injury shall be deemed
total disability:
- hearing in both ears;
- the sight of both eyes;
- the use of both hands;
- the use of both feet; or
- the use of one hand and one foot.
CONDITIONS FOR ACCEPTING THE - The benefit will begin with the Policy
BENEFIT Month following the date total disability
begins.
- We will not provide a benefit for any
period more than one year prior to the date
we receive written notice of claim.
- If the insured's total disability occurs
before the Policy Anniversary nearest age
60, the benefit will end when the total
disability ends.
- If the total disability occurs on or after
the Policy Anniversary nearest age 60, the
benefit will continue during total
disability, but will not continue beyond the
Policy Anniversary nearest age 65 or two
years, whichever is longer.
- The benefit will cease on the next monthly
processing date following the end of a
period of total disability.
- The monthly deduction amount waived may
not exceed the amount shown in the maximum
monthly deduction benefit table shown in the
rider.
DISABILITY WAIVER OF MONTHLY PAYMENT RIDER
This rider provides that, during periods of total disability, we will credit to
the Policy Value on each monthly processing date the monthly waiver of payment
benefit amount shown in the Policy Details pages. To exercise the rider, you
must provide written notice of claim of the insured's total disability and
evidence that the total disability:
- began while this rider was in force,
- began before the Policy Anniversary nearest the insured's age 65, and
- that the disability has continued for at least four months.
The rider will not be exercised if the total disability results, indirectly or
directly, from:
- an act of war, whether such war is declared or undeclared, and the insured
is a member of the armed forces of a country or combination of countries;
or
- any bodily injury occurring or disease first manifesting itself prior to
the effective date of this rider.
9
However, we will not deny a claim for total disability commencing after two
years from the effective date on the ground that the disease or impairment not
excluded from coverage by name or specific description existed prior to the
effective date of this rider.
WRITTEN NOTICE OF CLAIM. You must send any written notice of claim to our
Variable Life Service Center during the lifetime of the insured, while the
insured is totally disabled, and not later than 12 months after this rider
terminates. Proof of claim must be sent to the Variable Life Service Center no
later than 6 months after the written notice of claim. If you fail to give
notice and proof of claim within the required time period, we will not void or
reduce any claim if you can show that you gave notice and proof as soon as
reasonably possible.
TERMINATION. This rider also will terminate on the first of the following to
occur:
- the Policy lapses or terminates;
- the day before the Policy Anniversary nearest age 65, except as provided in
the benefit provision;
- you fail to provide proof of total disability at our request; or
- end of the Policy Month following a request for termination.
CHARGES. Charges for this rider are paid as a part of the monthly deduction
charges due under the Policy. The monthly charge is the waiver charge shown in
the cost of insurance charge table multiplied by the lesser of: (a) one-half of
the waiver of payment benefit shown on the rider details pages; or (b) the
maximum waiver of payment benefit amount shown on the maximum monthly waiver of
payment benefit table.
AN INSURED HAS A TOTAL - Occupation means either
DISABILITY IF THE INSURED IS
UNABLE TO ENGAGE IN AN - attendance at school if the insured is
OCCUPATION AS A RESULT OF not old enough to legally end his or her
DISEASE OR BODILY INJURY AS formal education; or
FOLLOWS:
- otherwise during the first 60 months of
disability, the occupation of the insured
when such disability began; and
thereafter, any occupation for which the
insured is or becomes reasonably fitted
by training, education
- Total loss of the following as a result of
disease or bodily injury shall be deemed
total disability:
- hearing in both ears;
- the sight of both eyes;
- the use of both hands;
- the use of both feet; or
- the use of one hand and one foot.
CONDITIONS FOR ACCEPTING THE - The effective date of the rider or any
BENEFIT increase in benefit is the monthly
processing date that we approve the benefit
or increase in benefit The benefit will
cease on the next monthly processing date
following the end of a period of total
disability.
- If the insured's total disability occurs
before the Policy Anniversary nearest age
60, the benefit will end when the total
disability ends.
- If the total disability occurs on or after
the Policy Anniversary nearest age 60, the
benefit will continue during total
disability, but will not continue beyond the
Policy Anniversary nearest age 65 or two
years, whichever is longer.
- You may change the amount of the benefit
by written request if the insured is under
age 60.
- An increase in the benefit is subject to
evidence of insurability satisfactory to us,
payment of the amount needed to keep the
Policy in force if the cash surrender value
is less than the charges due under the
Policy, and the benefits limits set forth in
the maximum monthly waiver of payment
benefit table in the rider.
- Any benefits that exceed the limits set
forth in the table will be reduced.
10
GUARANTEED DEATH BENEFIT RIDER
If you elect the Guaranteed Death Benefit Rider and meet the conditions of the
rider, we guarantee:
- that your Policy will not lapse, regardless of the investment performance
of the Subaccounts; and
- that you will receive a minimum death benefit if the insured dies after the
final payment date.
We will deduct from your Policy Value a one-time administrative charge of $25
when you elect the rider.
If your Policy Value is less than your monthly deduction, we will apply your
entire Policy Value toward the monthly deduction.
This rider does not protect against lapse if the outstanding loan balance
exceeds your Policy Value.
If the rider is in effect after the final payment date, the death benefit will
be the greater of: (a) the face amount in effect on the final payment date minus
any outstanding loan balance on the insured's date of death; or (b) the Policy
Value on the insured's date of death minus any outstanding loan balance on the
insured's date of death.
GUARANTEED DEATH BENEFIT MINIMUM PAYMENT TEST. On each Policy Anniversary, your
Policy must meet the Guaranteed Death Benefit Minimum Payment Test or the rider
will terminate. The Guaranteed Death Benefit Minimum Payment Test is met if (a)
is greater than (b) where:
(a) is your total payments, less any withdrawals, partial withdrawal charges
(excluding the transaction fee) and less any outstanding loan balance which
is classified as a preferred loan; and
(b) is the sum of the minimum Guaranteed Death Benefit Minimum Payments in
effect from the Policy Date to that Policy Anniversary. The Guaranteed
Death Benefit Minimum Payment amount is shown on your latest Policy Details
pages.
THE GUARANTEED DEATH BENEFIT - The cash surrender value, due to the
RIDER WILL TERMINATE IF: outstanding loan balance, is insufficient to
cover the monthly deduction due
- You fail to meet the requirements of the
Guaranteed Death Minimum Payment Test
- You make a Policy change that causes a
negative guideline level premium
- You change from Death Benefit Option 2 to
Death Benefit Option 1 within 5 years of the
final payment date; and
- You request a partial withdrawal or
preferred loan after the final payment date.
Certain transactions, including taking any preferred loans, taking partial
withdrawals, underwriting reclassifications, changing the face amount or Target
Death Benefit Schedule, and changing the death benefit option, can result in the
termination of the rider.
You may cancel this rider at any time. If this rider is terminated, it cannot be
reinstated.
The amount of payments necessary to keep the rider in effect can be immense and
due over a long period of time. Termination or cancellation of the rider may put
the Policy at risk of lapse. It is possible that the cash surrender value will
not be sufficient to keep the Policy in force on the first monthly processing
date following the date the rider terminates. You may be required to pay
additional payment to keep the Policy in force. You will never have to pay more
than the surrender charge plus three monthly deductions to keep the Policy from
lapsing.
OTHER INSURED TERM INSURANCE RIDER
While the Other Insured Term Insurance Rider is in force, we will provide a term
insurance benefit for up to five other insureds if the insured dies before his
or her term insurance expiration date. You may add this rider at any time,
subject to the then current underwriting standards and issue age constraints.
This rider will terminate when the Policy lapses or you submit written notice
that you want to cancel the rider. Term insurance for each other insured will
terminate on that other insured's term expiration date or when insurance
coverage begins for an other insured under the conversion provisions of the
rider.
CHARGES. Charges for this rider are paid as part of the monthly cost of
insurance charges under the Policy. The rates for this fee vary by sex,
underwriting class, risk class, and rider amount. The maximum charges for each
other insured are shown in each other insured's policy details pages. We may
reset the fee for this rider annually.
11
INCREASE OR DECREASE OF TERM INSURANCE. You may increase or decrease the amount
of term insurance of the other insureds under age 81 by written request during
the lifetime of the other insured. You may not increase or decrease the amount
of term insurance for less than our minimum limit in effect on the date of the
request.
To increase the amount of term insurance, you and the other insured must provide
us with a completed application, a $50 transaction charge, and the amount needed
to keep the Policy in force, if necessary. The increased amount of term
insurance will become effective on the first monthly processing date on or
following the date all of the requirements are met.
To decrease the amount of term insurance, you must send in a written request.
The decrease will become effective on or following the monthly processing date
after we receive your written request. Term insurance will be decreased in the
following order: first, the most recent increase; second, the next most recent
increases successively; and last, the original amount of term insurance.
CONVERSION. You may convert the term insurance on the life of an other insured
under age 71 while the other insured is still alive and this rider is in force.
The new policy will be a flexible premium variable life insurance policy. The
new policy will be issued on the life of the other insured only, for the same
underwriting class that applies to the other insured under this rider, and at
the other insured's age and for the cost of insurance rates in use on the date
of issue of the new policy. Term insurance for the other insured ends when
coverage under the new policy begins.
If the insured dies while the Policy and the rider are in force, you may convert
any other insured within 90 days after the insured's death. Term insurance will
continue on the life of each covered other insured during the conversion period.
The term insurance will begin on the date of the insured's death and will end on
the first to occur of the expiration of the conversion period or the date of
issue of the conversion policy.
PAID-UP LIFE INSURANCE RIDER
If you elect this rider, once the insured has reached age 75 and the Policy has
been in force for at least 15 years, the Policy will become paid-up life
insurance provided certain conditions are met. Once the rider is automatically
exercised, the Policy will never lapse and the beneficiary will receive a
minimum death benefit. On the exercise date, the paid-up life insurance amount
will be the value of (a) times (b) where:
(a) equals the Policy Value as of the exercise date minus the 3% rider charge
(4% if you have selected Death Benefit Option 3), and
(b) equals the minimum death benefit factor for the insured's age as of the
exercise date shown in your Policy Details Pages.
WHEN ALL OF THE FOLLOWING - The insured is at least age 75
OCCUR, THE PAID-UP LIFE
INSURANCE RIDER WILL BE - The outstanding loan balance is at least
EXERCISED AUTOMATICALLY ON OR 95% of the Policy Value
THE NEXT FOLLOWING MONTHLY
PROCESSING DATE: - The outstanding loan balance equals or
exceeds the face amount of the Policy
- The Policy has been in force for a least
15 Policy Years; and
- The total amount of partial withdrawals
equals or exceeds the total payments paid.
WHEN THE RIDER IS EXERCISED, - Any Policy Value invested in a Subaccount
THE FOLLOWING WILL OCCUR: will be transferred to the Fixed Account
- You will not longer be allowed to invest
in, or transfer amounts, to the Subaccounts;
- If Death Benefit Option 2 is in effect, we
will convert your Policy to Death Benefit
Option 1. You will not be allowed to make
any further changes to the death benefit
option.
- You will no longer be allowed to make any
loan payments.
- The outstanding loan balance remains in
effect and we will continue to assess a loan
interest charge on the balance.
- You may not take any more loans.
- No further monthly deductions will be
made.
- You may not make any payments or partial
withdrawals.
12
- You may not make any Policy changes.
- All riders will be terminated.
- The death benefit will be the greater of:
the paid-up life insurance amount minus the
outstanding loan balance; or the Policy
Value on the date of death multiplied by the
minimum death benefit factor for the
insured's age as of the insured's date of
death.
- The remaining outstanding loan balance
will be deducted from the death benefit.
TERMINATION. This rider will terminate on the earlier of the final payment date
or the monthly processing date on or next following the date we receive your
written request to terminate the rider. Once you cancel or terminate this rider,
it may not be reinstated.
TAX RISKS. Anyone contemplating the purchase of the Policy with the Paid-Up Life
Insurance Rider should be aware that the tax consequences of the rider have not
been ruled on by the IRS or the courts and it is possible that any outstanding
loan balance could be treated as a taxable distribution when the rider takes
effect. YOU SHOULD CONSULT A TAX ADVISER AS TO THE TAX RISKS ASSOCIATED WITH THE
PAID-UP LIFE INSURANCE RIDER.
PERFORMANCE DATA
HYPOTHETICAL ILLUSTRATIONS
In order to demonstrate how the actual investment performance of the Portfolios
could have affected the death benefit, Policy Value, and cash surrender value of
the Policy, we may provide hypothetical illustrations using the actual
investment performance of each Portfolio since its inception. THESE HYPOTHETICAL
ILLUSTRATIONS ARE DESIGNED TO SHOW THE PERFORMANCE THAT COULD HAVE RESULTED IF
THE POLICY HAD BEEN IN EXISTENCE DURING THE PERIOD ILLUSTRATED AND ARE NOT
INDICATIVE OF FUTURE PERFORMANCE.
YIELDS AND TOTAL RETURNS
From time to time, we may advertise or include in sales literature historical
performance data, including yields, effective yields, and annual total returns
for the Subaccounts. These figures are based on historical earnings and do not
indicate or project future performance. Effective yields and total returns for a
Subaccount are based on the investment performance of the corresponding
Portfolio. A Portfolio's performance reflects the Portfolio's expenses. For more
information concerning a Portfolio's performance and expenses, see the
prospectuses for the Funds.
We may compare performance information in reports and promotional literature to
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"), the Dow Jones
Industrial Average ("DJIA"), the Shearson Lehman Aggregate Bond Index, other
unmanaged indices of unmanaged securities widely regarded by investors as
representative of the securities markets, other groups of variable life separate
accounts or other investment products tracked by Lipper Inc., other services,
companies, publications, or persons such as Morningstar, Inc., who rank the
investment products on performance or other criteria, and The Consumer Price
Index. Unmanaged indices may assume the reinvestment of dividends but generally
do not reflect deductions for insurance and administrative charges, separate
account charges and fund management costs and expenses. In advertising, sales
literature, publications or other materials, we may give information on various
topics of interest to Policyowners and prospective Policyowners. These topics
may include: the relationship between sectors of the economy and the economy as
a whole and its effect on various securities markets, investment strategies and
techniques (such as value investing, market timing, DCA, asset allocation and
account rebalancing), the advantages and disadvantages of investing in
tax-deferred and taxable investments, customer profiles and hypothetical payment
and investment scenarios, financial management and tax and retirement planning,
investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the Policies and the characteristics
of and market for the financial instruments.
At times, we may also show the ratings and other information assigned to it by
independent rating organizations such as A.M. Best Company ("A.M. Best"),
Moody's Investors Service ("Moody's"), and Standard & Poor's Insurance Rating
Services ("S&P"). A.M. Best's and Moody's ratings reflect their current opinion
of our relative financial strength and operating performance in comparison to
the norms of the life/heath insurance industry. S&P's and Duff & Phelps' ratings
measure the ability of an insurance company to meet its obligations under
insurance
13
policies it issues but do not measure the ability of such companies to meet
other non-policy obligations. The ratings also do not relate to the performance
of the Portfolios.
MONEY MARKET SUBACCOUNT YIELDS
The current yield of the Fidelity VIP Money Market Subaccount refers to the
annualized investment income generated by an investment in the Subaccount over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment; it is calculated
in a manner which does not take into consideration any realized or unrealized
gains or losses or income other than investment income on shares of the
underlying Portfolio or on its Portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation and exclusive of income other than investment
income) at the end of the seven-day period in the value of a hypothetical
account under a Policy having a balance of one accumulation unit in the Fidelity
VIP Money Market Subaccount at the beginning of the period, dividing the net
change in account value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient based on the number of days in a Policy Year. The net change in
account value reflects: (1) net investment income of the Portfolio attributable
to the hypothetical account; and (2) common charges and deductions (as explained
below) imposed under the Policy which are attributable to the hypothetical
account.
The effective yield of the Fidelity VIP Money Market Subaccount determined on a
compounded basis for the same seven-day period may also be quoted. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Subaccount is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. The Fidelity VIP Money Market Subaccount's yield is
affected by changes in interest rates on money market securities, the average
portfolio maturity of the underlying Portfolio, the types of quality of
portfolio securities held by the underlying Portfolio, and the underlying
Portfolio's operating expenses.
During extended periods of low interest rates, the yields of any Subaccount
investing in a money market portfolio may also become extremely low and possibly
negative. Yields on amounts held in the Fidelity VIP Money Market Subaccount may
also be presented for periods other than a seven-day period.
TOTAL RETURNS
We may show average annual total return performance information based on the
periods that the underlying Portfolios have been in existence, adjusted to
reflect certain Policy fees and charges. The total return of a Subaccount refers
to return quotations assuming an investment under a Policy has been held in the
Subaccount for various periods of time. The results for any period prior to the
Policies and interests in the Subaccounts being offered will be calculated as if
the Policies and interests in the Subaccounts had been offered during that
period of time, reflecting only those charges assumed to apply to all
Policyowners. However, charges such as cost of insurance charges, monthly
expense charges, and surrender charges, which are based on the insured's sex,
age, and underwriting class and which therefore vary with each Policy, are not
reflected in the rates of return. IF THESE CHARGES WERE DEDUCTED, PERFORMANCE
WOULD HAVE BEEN SIGNIFICANTLY LOWER. These rates of return are not estimates,
projections or guarantees of future performance. In the future, we may show
total return and average annual total return performance information based on
the periods that the Subaccounts have been in existence.
We may also show average annual total return performance information based on
the periods that the underlying Portfolios have been in existence, after
deducting total underlying Portfolio expenses and all common charges except the
payment expense charge. The payment expense charge equals 6.0% of each payment
made under the Policy, and is composed of a 2.0% premium tax charge, a 1.0%
deferred acquisition costs charge, and a 3.0% front-end sales load charge. The
returns would have been lower if the payment expense charge was reflected.
14
THE COMPANY AND THE FIXED ACCOUNT
INFORMATION ABOUT THE COMPANY
We are a stock life insurance company incorporated under Michigan law on April
12, 1988, and subject to regulation by the Michigan Insurance Bureau. We are
principally engaged in issuing and reinsuring annuity and life insurance
policies. Our Variable Life Service Center is located at P.O. Box 105662,
Atlanta. Georgia 30348-5662.
We are a wholly owned subsidiary of The Canada Life Assurance Company, a
Canadian life insurance company headquartered in Toronto, Ontario, Canada. The
Canada Life Assurance Company commenced insurance operations in 1847 and has
been actively operating in the United States since 1889. It is one of the
largest life insurance companies in North America with consolidated assets as of
December 31, 2002 of approximately $38 billion (U.S. dollars).
We submit annual statements on our operations and finances to insurance
officials in all states and jurisdictions in which we do business. We have filed
the Policy with insurance officials in those jurisdictions in which the Policy
is sold.
We intend to reinsure a portion of the risks assumed under the Policies.
PROPOSED MERGER. On May 5, 2003, Canada Life Financial Corporation ("CLFC"), the
ultimate corporate parent of Canada Life Insurance Company of America, will
submit to the registered holders of its Common Shares a proposal, which if
adopted, will result in a change of control of CLFC. The CLFC Board of Directors
has unanimously endorsed approval of the proposed transactions by the CLFC
shareholders. Subject to all necessary approvals, including approval of various
regulatory authorities, this transaction is expected to occur on July 10, 2003.
For more information concerning this proposed transaction, see the Management
Proxy Circular at www.canadalife.com.
INFORMATION ABOUT THE VARIABLE ACCOUNT
The Variable Account is a separate investment account established under Michigan
law on July 22, 1988. We own the assets in the Variable Account and we are
obligated to pay all benefits under the Policies. We may use the Variable
Account to support other variable life insurance policies we issue. The Variable
Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended, and qualifies as a "separate
account" within the meaning of the Federal securities laws. This registration
does not involve supervision of the management or investment practices or
policies of the Variable Account by the SEC.
SAFEKEEPING OF ACCOUNT ASSETS
We hold the title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our general account
assets and from the assets in any other separate account we have.
We or our affiliates maintain records of all purchases and redemptions of
Portfolio shares held by each of the Subaccounts.
Our officers and employees are covered by an insurance company blanket bond
issued by America Home Assurance Company to The Canada Life Assurance Company,
our parent Company, in the amount of $25 million. The bond insures against
dishonest and fraudulent acts of officers and employees.
EXPERTS
Our financial statements at December 31, 2002 and 2001 and for each of the two
years in the period ended December 31, 2002 for Canada Life Insurance Company of
America, appearing in this Statement of Additional Information and Registration
Statement as well as the financial statements of Canada Life of America Variable
Life Account 1 as of December 31, 2002 and for the periods indicated therein
appearing in this Statement of Additional Information and Registration Statement
have been audited by Ernst & Young LLP, independent auditors, of Atlanta,
Georgia, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such experts given on the authority of such firm
as experts in accounting and auditing.
Actuarial matters included in the prospectus and/or SAI have been examined by
Paul R. Myers, FSA, MAAA, Assistant Vice President, Individual Insurance
Products, as stated in his opinion filed as an exhibit to the Registration
Statement.
15
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the Policies. Not all the information set
forth in the registration statement, and the amendments and exhibits thereto,
has been included in the prospectus and this SAI. Statements contained in this
SAI concerning the content of the Policies and other legal instruments are
intended to be summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the SEC at 450
Fifth Street, N.W., Washington, DC 20549.
FINANCIAL STATEMENTS
This SAI contains the audited statements of assets and liabilities of the
Variable Account as of December 31, 2002 and the related statements of
operations and statements of changes in net assets for each of the three years
in the period then ended. Ernst & Young LLP, independent auditors, of 600
Peachtree Street NE, Suite 2800, Atlanta, GA 30308, serves as independent
auditors for the Variable Account.
Our statements of financial condition as of December 31, 2002 and 2001 and the
related statements of operations, equity, and cash flows for each of the two
years in the period ended December 31, 2002, which are included in this SAI,
should be considered only as bearing on our ability to meet our obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
ADDITIONAL INFORMATION
IMSA
We are a charter member of the Insurance Marketplace Standards Association
("IMSA"). IMSA members subscribe to a rigorous set of ethical standards
involving the sales and service of individually sold life insurance and
annuities. IMSA members have adopted policies and procedures that demonstrate a
commitment to honesty, fairness, and integrity in all customer contacts
involving sales and service of individual life insurance and annuity products.
As a member of IMSA, we may use the IMSA logo and language in advertisements.
POLICIES ISSUED IN CONJUNCTION WITH EMPLOYEE BENEFIT PLANS
Policies may be acquired in conjunction with employee benefit plans ("EBS
Policies"), including the funding of qualified pension plans meeting the
requirements of Section 401 of the Code. For EBS Policies, the maximum mortality
rates used to determine the monthly cost of insurance charge are based on the
Commissioners' 1980 Standard Ordinary Mortality Tables NB and SB. Under these
tables, mortality rates are the same for male and female insureds of a
particular attained age and underwriting class. Illustrations reflecting the
payments and charges for EBS Policies will be provided upon request to
purchasers of these Policies. There is no provision for misstatement of sex in
the EBS Policies. Also, the rates used to determine the amount payable under a
particular settlement option will be the same for male and female insureds.
RECORDS
We will maintain all records and accounts relating to the Variable Account at
our Home Office. As presently required by the Investment Company Act of 1940, as
amended, and regulations promulgated thereunder, reports containing such
information as may be required under the Act or by any other applicable law or
regulation will be sent to you semi-annually at your last address known to us.
SERVICES AND THIRD PARTY ADMINISTRATION AGREEMENTS
We have entered into a Master Remote Processing Agreement ("Services Agreement")
with McCamish Systems, L.L.C., an insurance administrator organized and existing
under the laws of Georgia. Under the Services Agreement, McCamish Systems,
L.L.C. provides, at the Administrative Center, on our behalf, computer hardware
and software on which the Policies are administered.
PRINCIPAL UNDERWRITER
Canada Life of America Financial Services, Inc. (CLAFS), a wholly owned
subsidiary of Canada Life Insurance Company of America and an affiliate of the
Company, is the principal underwriter of the Policies described herein. CLAFS is
located at 6201 Powers Ferry Road, N.W., Atlanta, Georgia 30339. The offering of
the Policies is
16
continuous, and we do not anticipate discontinuing the offering of the Policies.
However, we reserve the right to discontinue the offering of the Policies at any
time.
During the three-year period ending in 2002, CLAFS received payments from the
Variable Account totaling $947,292 in 2002, $857,025 in 2001, and $45,630 in
2000. CLAFS did not retain any payments in the last three fiscal years for its
underwriting services.
LEGAL MATTERS
All matters relating to applicable state law pertaining to the Policies,
including the validity of the Policies and our authority to issue the Policies,
have been passed upon by Craig Edwards, Esq. Sutherland Asbill & Brennan LLP of
Washington, DC has provided advice on certain matters relating to the Federal
securities laws applicable to the issue and sale of the Policy.
17
APPENDIX A-MAXIMUM MONTHLY EXPENSE CHARGES
TABLE 1: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
1 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
2 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
3 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
4 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
5 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
6 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
7 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
8 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
9 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
10 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
11 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
12 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
13 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
14 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
15 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
16 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
17 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
18 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
19 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
20 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
21 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
22 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
23 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
24 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
25 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
26 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
27 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
28 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
29 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
30 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
31 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
32 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
33 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
34 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
35 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
36 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
37 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
38 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
39 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
40 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
41 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
A-1
TABLE 1: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
42 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
43 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
44 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
45 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
46 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
47 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
48 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
49 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
50 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
51 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
52 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
53 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
54 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
55 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
56 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
57 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
58 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
59 0.21 0.27 0.34 0.40 0.46 0.53 0.59 0.65 0.72 0.78
60 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
61 0.24 0.31 0.38 0.46 0.53 0.60 0.67 0.75 0.82 0.89
62 0.25 0.33 0.40 0.48 0.55 0.63 0.70 0.78 0.85 0.93
63 0.26 0.34 0.42 0.50 0.57 0.65 0.73 0.81 0.89 0.96
64 0.27 0.35 0.43 0.51 0.59 0.68 0.76 0.84 0.92 1.00
65 0.29 0.38 0.46 0.55 0.64 0.73 0.81 0.90 0.99 1.08
66 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
67 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
68 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
69 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
70 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
71 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
72 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
73 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
74 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
75 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
76 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
77 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
78 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
79 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
80 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
81 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
82 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
83 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
84 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
85 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
A-2
TABLE 2: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
1 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
2 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
3 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
4 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
5 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
6 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
7 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
8 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
9 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
10 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
11 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
12 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
13 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
14 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
15 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
16 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
17 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
18 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
19 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
20 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
21 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
22 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
23 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
24 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
25 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
26 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
27 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
28 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
29 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
30 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
31 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
32 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
33 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
34 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
35 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
36 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
37 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
38 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
39 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
40 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
41 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
42 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
43 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
A-3
TABLE 2: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
44 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
45 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
46 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
47 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
48 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
49 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
50 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
51 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
52 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
53 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
54 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
55 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
56 0.21 0.27 0.34 0.40 0.46 0.53 0.59 0.65 0.72 0.78
57 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
58 0.24 0.31 0.38 0.46 0.53 0.60 0.67 0.75 0.82 0.89
59 0.25 0.33 0.40 0.48 0.55 0.63 0.70 0.78 0.85 0.93
60 0.26 0.34 0.42 0.50 0.57 0.65 0.73 0.81 0.89 0.96
61 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
62 0.29 0.38 0.46 0.55 0.64 0.73 0.81 0.90 0.99 1.08
63 0.30 0.39 0.48 0.57 0.66 0.75 0.84 0.93 1.02 1.11
64 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
65 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
66 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
67 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
68 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
69 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
70 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
71 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
72 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
73 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
74 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
75 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
76 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
77 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
78 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
79 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
80 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
81 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
82 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
83 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
84 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
85 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
A-4
TABLE 3: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
0 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
1 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
2 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
3 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
4 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
5 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
6 0.03 0.04 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11
7 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
8 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
9 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
10 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
11 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
12 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
13 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
14 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
15 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
16 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
17 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
18 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
19 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
20 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
21 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
22 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
23 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
24 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
25 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
26 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
27 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
28 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
29 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
30 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
31 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
32 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
33 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
34 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
35 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
36 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
37 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
38 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
39 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
40 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
41 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
42 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
43 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
A-5
TABLE 3: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
44 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
45 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
46 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
47 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
48 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
49 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
50 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
51 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
52 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
53 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
54 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
55 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
56 0.21 0.27 0.34 0.40 0.46 0.53 0.59 0.65 0.72 0.78
57 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
58 0.23 0.30 0.37 0.44 0.51 0.58 0.65 0.71 0.78 0.85
59 0.25 0.33 0.40 0.48 0.55 0.63 0.70 0.78 0.85 0.93
60 0.26 0.34 0.42 0.50 0.57 0.65 0.73 0.81 0.89 0.96
61 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
62 0.29 0.38 0.46 0.55 0.64 0.73 0.81 0.90 0.99 1.08
63 0.31 0.40 0.50 0.59 0.68 0.78 0.87 0.96 1.06 1.15
64 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
65 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
66 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
67 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
68 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
69 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
70 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
71 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
72 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
73 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
74 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
75 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
76 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
77 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
78 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
79 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
80 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
81 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
82 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
83 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
84 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
85 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
A-6
TABLE 4: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
0 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
1 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
2 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
3 0.04 0.05 0.06 0.08 0.09 0.10 0.11 0.12 0.14 0.15
4 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
5 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
6 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
7 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
8 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
9 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
10 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
11 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
12 0.05 0.07 0.08 0.10 0.11 0.13 0.14 0.16 0.17 0.19
13 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
14 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
15 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
16 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
17 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
18 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
19 0.06 0.08 0.10 0.11 0.13 0.15 0.17 0.19 0.20 0.22
20 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
21 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
22 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
23 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
24 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
25 0.07 0.09 0.11 0.13 0.15 0.18 0.20 0.22 0.24 0.26
26 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
27 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
28 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
29 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
30 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
31 0.08 0.10 0.13 0.15 0.18 0.20 0.22 0.25 0.27 0.30
32 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
33 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
34 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
35 0.09 0.12 0.14 0.17 0.20 0.23 0.25 0.28 0.31 0.33
36 0.10 0.13 0.16 0.19 0.22 0.25 0.28 0.31 0.34 0.37
37 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
38 0.11 0.14 0.18 0.21 0.24 0.28 0.31 0.34 0.37 0.41
39 0.12 0.16 0.19 0.23 0.26 0.30 0.34 0.37 0.41 0.44
40 0.13 0.17 0.21 0.25 0.29 0.33 0.36 0.40 0.44 0.48
41 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
42 0.14 0.18 0.22 0.27 0.31 0.35 0.39 0.43 0.48 0.52
43 0.15 0.20 0.24 0.29 0.33 0.38 0.42 0.47 0.51 0.56
A-7
TABLE 4: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION I
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
44 0.16 0.21 0.26 0.30 0.35 0.40 0.45 0.50 0.54 0.59
45 0.17 0.22 0.27 0.32 0.37 0.43 0.48 0.53 0.58 0.63
46 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
47 0.18 0.23 0.29 0.34 0.40 0.45 0.50 0.56 0.61 0.67
48 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
49 0.19 0.25 0.30 0.36 0.42 0.48 0.53 0.59 0.65 0.70
50 0.20 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.68 0.74
51 0.21 0.27 0.34 0.40 0.46 0.53 0.59 0.65 0.72 0.78
52 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
53 0.22 0.29 0.35 0.42 0.48 0.55 0.62 0.68 0.75 0.82
54 0.23 0.30 0.37 0.44 0.51 0.58 0.65 0.71 0.78 0.85
55 0.24 0.31 0.38 0.46 0.53 0.60 0.67 0.75 0.82 0.89
56 0.25 0.33 0.40 0.48 0.55 0.63 0.70 0.78 0.85 0.93
57 0.27 0.35 0.43 0.51 0.59 0.68 0.76 0.84 0.92 1.00
58 0.28 0.36 0.45 0.53 0.62 0.70 0.79 0.87 0.95 1.04
59 0.30 0.39 0.48 0.57 0.66 0.75 0.84 0.93 1.02 1.11
60 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
61 0.32 0.42 0.51 0.61 0.70 0.80 0.90 0.99 1.09 1.19
62 0.33 0.43 0.53 0.63 0.73 0.83 0.93 1.02 1.12 1.22
63 0.34 0.44 0.54 0.65 0.75 0.85 0.95 1.06 1.16 1.26
64 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
65 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
66 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
67 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
68 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
69 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
70 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
71 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
72 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
73 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
74 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
75 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
76 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
77 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
78 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
79 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
80 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
81 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
82 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
83 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
84 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
85 0.35 0.46 0.56 0.67 0.77 0.88 0.98 1.09 1.19 1.30
A-8
TABLE 5: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
MALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
0 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
1 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
2 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
3 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
4 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
5 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
6 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
7 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
8 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
9 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
10 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
11 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
12 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
13 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
14 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
15 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
16 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
17 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
18 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
19 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
20 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
21 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
22 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
23 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
24 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
25 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
26 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
27 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
28 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
29 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
30 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
31 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
32 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
33 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
34 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
35 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
36 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
37 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
38 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
39 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
40 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.28
41 0.20 0.21 0.22 0.24 0.25 0.26 0.27 0.28 0.29 0.31
42 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32
43 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
A-9
TABLE 5: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
MALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
44 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
45 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
46 0.25 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38
47 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
48 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
49 0.29 0.31 0.32 0.34 0.36 0.38 0.39 0.41 0.43 0.44
50 0.30 0.32 0.34 0.35 0.37 0.39 0.41 0.42 0.44 0.46
51 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
52 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
53 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
54 0.34 0.36 0.38 0.40 0.42 0.44 0.46 0.48 0.50 0.52
55 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.51 0.54
56 0.37 0.39 0.41 0.44 0.46 0.48 0.50 0.52 0.54 0.57
57 0.39 0.41 0.44 0.46 0.48 0.50 0.53 0.55 0.57 0.60
58 0.41 0.43 0.46 0.48 0.51 0.53 0.55 0.58 0.60 0.63
59 0.44 0.47 0.49 0.52 0.54 0.57 0.60 0.62 0.65 0.67
60 0.46 0.49 0.51 0.54 0.57 0.60 0.62 0.65 0.68 0.70
61 0.49 0.52 0.55 0.58 0.61 0.63 0.66 0.69 0.72 0.75
62 0.51 0.54 0.57 0.60 0.63 0.66 0.69 0.72 0.75 0.78
63 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
64 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
65 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
66 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
67 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
68 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
69 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
70 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
71 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
72 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
73 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
74 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
75 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
76 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
77 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
78 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
79 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
80 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
81 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
82 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
83 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
84 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
85 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
A-10
TABLE 6: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
MALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
0 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
1 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
2 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
3 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
4 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
5 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
6 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
7 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
8 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
9 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
10 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
11 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
12 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
13 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
14 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
15 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
16 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
17 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
18 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
19 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
20 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
21 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
22 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
23 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
24 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
25 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
26 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
27 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
28 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
29 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
30 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
31 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
32 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
33 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
34 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
35 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
36 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
37 0.19 0.20 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.29
38 0.20 0.21 0.22 0.24 0.25 0.26 0.27 0.28 0.29 0.31
39 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
40 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
41 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
42 0.25 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38
43 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
A-11
TABLE 6: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
MALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
44 0.28 0.30 0.31 0.33 0.35 0.36 0.38 0.40 0.41 0.43
45 0.29 0.31 0.32 0.34 0.36 0.38 0.39 0.41 0.43 0.44
46 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
47 0.32 0.34 0.36 0.38 0.40 0.41 0.43 0.45 0.47 0.49
48 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
49 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.51 0.54
50 0.36 0.38 0.40 0.42 0.44 0.47 0.49 0.51 0.53 0.55
51 0.37 0.39 0.41 0.44 0.46 0.48 0.50 0.52 0.54 0.57
52 0.39 0.41 0.44 0.46 0.48 0.50 0.53 0.55 0.57 0.60
53 0.40 0.42 0.45 0.47 0.49 0.52 0.54 0.56 0.59 0.61
54 0.41 0.43 0.46 0.48 0.51 0.53 0.55 0.58 0.60 0.63
55 0.42 0.44 0.47 0.49 0.52 0.54 0.57 0.59 0.62 0.64
56 0.45 0.48 0.50 0.53 0.56 0.58 0.61 0.64 0.66 0.69
57 0.48 0.51 0.54 0.56 0.59 0.62 0.65 0.68 0.71 0.73
58 0.51 0.54 0.57 0.60 0.63 0.66 0.69 0.72 0.75 0.78
59 0.53 0.56 0.59 0.62 0.65 0.69 0.72 0.75 0.78 0.81
60 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
61 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
62 0.58 0.61 0.65 0.68 0.72 0.75 0.78 0.82 0.85 0.89
63 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
64 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
65 0.61 0.65 0.68 0.72 0.75 0.79 0.83 0.86 0.90 0.93
66 0.61 0.65 0.68 0.72 0.75 0.79 0.83 0.86 0.90 0.93
67 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
68 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
69 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
70 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
71 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
72 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
73 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
74 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
75 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
76 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
77 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
78 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
79 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
80 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
81 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
82 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
83 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
84 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
85 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
A-12
TABLE 7: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
1 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
2 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
3 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
4 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
5 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
6 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
7 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
8 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
9 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
10 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
11 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
12 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
13 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
14 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
15 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
16 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
17 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
18 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
19 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
20 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
21 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
22 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
23 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
24 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
25 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
26 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
27 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
28 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
29 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
30 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
31 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
32 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
33 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
34 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
35 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
36 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
37 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
38 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
39 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
40 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
41 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
42 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
43 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.28
A-13
TABLE 7: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
44 0.19 0.20 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.29
45 0.20 0.21 0.22 0.24 0.25 0.26 0.27 0.28 0.29 0.31
46 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
47 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
48 0.23 0.24 0.26 0.27 0.28 0.30 0.31 0.32 0.34 0.35
49 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
50 0.25 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38
51 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38 0.40
52 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
53 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
54 0.28 0.30 0.31 0.33 0.35 0.36 0.38 0.40 0.41 0.43
55 0.29 0.31 0.32 0.34 0.36 0.38 0.39 0.41 0.43 0.44
56 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
57 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
58 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.51 0.54
59 0.36 0.38 0.40 0.42 0.44 0.47 0.49 0.51 0.53 0.55
60 0.38 0.40 0.42 0.45 0.47 0.49 0.51 0.54 0.56 0.58
61 0.41 0.43 0.46 0.48 0.51 0.53 0.55 0.58 0.60 0.63
62 0.42 0.44 0.47 0.49 0.52 0.54 0.57 0.59 0.62 0.64
63 0.45 0.48 0.50 0.53 0.56 0.58 0.61 0.64 0.66 0.69
64 0.46 0.49 0.51 0.54 0.57 0.60 0.62 0.65 0.68 0.70
65 0.49 0.52 0.55 0.58 0.61 0.63 0.66 0.69 0.72 0.75
66 0.48 0.51 0.54 0.56 0.59 0.62 0.65 0.68 0.71 0.73
67 0.48 0.51 0.54 0.56 0.59 0.62 0.65 0.68 0.71 0.73
68 0.48 0.51 0.54 0.56 0.59 0.62 0.65 0.68 0.71 0.73
69 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
70 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
71 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
72 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
73 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
74 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
75 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
76 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
77 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
78 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
79 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
80 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
81 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
82 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
83 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
84 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
85 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
A-14
TABLE 8: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
1 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
2 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
3 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
4 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
5 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
6 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
7 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
8 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
9 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
10 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
11 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
12 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
13 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
14 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
15 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
16 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
17 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
18 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
19 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
20 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
21 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
22 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
23 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
24 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
25 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
26 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
27 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
28 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
29 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
30 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
31 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
32 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
33 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
34 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
35 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
36 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
37 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
38 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
39 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
40 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.28
41 0.20 0.21 0.22 0.24 0.25 0.26 0.27 0.28 0.29 0.31
42 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32
43 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
A-15
TABLE 8: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
FEMALE INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
44 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
45 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
46 0.25 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38
47 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38 0.40
48 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
49 0.28 0.30 0.31 0.33 0.35 0.36 0.38 0.40 0.41 0.43
50 0.29 0.31 0.32 0.34 0.36 0.38 0.39 0.41 0.43 0.44
51 0.30 0.32 0.34 0.35 0.37 0.39 0.41 0.42 0.44 0.46
52 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
53 0.32 0.34 0.36 0.38 0.40 0.41 0.43 0.45 0.47 0.49
54 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
55 0.34 0.36 0.38 0.40 0.42 0.44 0.46 0.48 0.50 0.52
56 0.36 0.38 0.40 0.42 0.44 0.47 0.49 0.51 0.53 0.55
57 0.38 0.40 0.42 0.45 0.47 0.49 0.51 0.54 0.56 0.58
58 0.41 0.43 0.46 0.48 0.51 0.53 0.55 0.58 0.60 0.63
59 0.42 0.44 0.47 0.49 0.52 0.54 0.57 0.59 0.62 0.64
60 0.45 0.48 0.50 0.53 0.56 0.58 0.61 0.64 0.66 0.69
61 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
62 0.49 0.52 0.55 0.58 0.61 0.63 0.66 0.69 0.72 0.75
63 0.51 0.54 0.57 0.60 0.63 0.66 0.69 0.72 0.75 0.78
64 0.54 0.57 0.60 0.64 0.67 0.70 0.73 0.76 0.79 0.83
65 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
66 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
67 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
68 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
69 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
70 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
71 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
72 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
73 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
74 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
75 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
76 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
77 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
78 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
79 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
80 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
81 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
82 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
83 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
84 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
85 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
A-16
TABLE 9: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.08
1 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
2 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
3 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
4 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
5 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
6 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09
7 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
8 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
9 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
10 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
11 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
12 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
13 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
14 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
15 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
16 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
17 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
18 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
19 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
20 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
21 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
22 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
23 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
24 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
25 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
26 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
27 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
28 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
29 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
30 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
31 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
32 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
33 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
34 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
35 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
36 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
37 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
38 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
39 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
40 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.28
41 0.19 0.20 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.29
42 0.20 0.21 0.22 0.24 0.25 0.26 0.27 0.28 0.29 0.31
43 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32
A-17
TABLE 9: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE NON-TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
44 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
45 0.23 0.24 0.26 0.27 0.28 0.30 0.31 0.32 0.34 0.35
46 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
47 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38 0.40
48 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
49 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
50 0.29 0.31 0.32 0.34 0.36 0.38 0.39 0.41 0.43 0.44
51 0.30 0.32 0.34 0.35 0.37 0.39 0.41 0.42 0.44 0.46
52 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
53 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
54 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
55 0.34 0.36 0.38 0.40 0.42 0.44 0.46 0.48 0.50 0.52
56 0.36 0.38 0.40 0.42 0.44 0.47 0.49 0.51 0.53 0.55
57 0.38 0.40 0.42 0.45 0.47 0.49 0.51 0.54 0.56 0.58
58 0.40 0.42 0.45 0.47 0.49 0.52 0.54 0.56 0.59 0.61
59 0.42 0.44 0.47 0.49 0.52 0.54 0.57 0.59 0.62 0.64
60 0.45 0.48 0.50 0.53 0.56 0.58 0.61 0.64 0.66 0.69
61 0.47 0.50 0.53 0.55 0.58 0.61 0.64 0.66 0.69 0.72
62 0.50 0.53 0.56 0.59 0.62 0.65 0.68 0.71 0.74 0.76
63 0.52 0.55 0.58 0.61 0.64 0.67 0.70 0.73 0.76 0.80
64 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
65 0.58 0.61 0.65 0.68 0.72 0.75 0.78 0.82 0.85 0.89
66 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
67 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
68 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
69 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
70 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
71 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
72 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
73 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
74 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
75 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
76 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
77 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
78 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
79 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
80 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
81 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
82 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
83 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
84 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
85 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
A-18
TABLE 10: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
0 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
1 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
2 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
3 0.07 0.07 0.08 0.08 0.09 0.09 0.09 0.10 0.10 0.11
4 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
5 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
6 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
7 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
8 0.08 0.08 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.12
9 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
10 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
11 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
12 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14
13 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
14 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
15 0.10 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.15
16 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
17 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
18 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
19 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17
20 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
21 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
22 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
23 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
24 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
25 0.12 0.13 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.18
26 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
27 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
28 0.13 0.14 0.15 0.15 0.16 0.17 0.18 0.18 0.19 0.20
29 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
30 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
31 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21 0.21
32 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
33 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
34 0.15 0.16 0.17 0.18 0.19 0.19 0.20 0.21 0.22 0.23
35 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.24
36 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26
37 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.28
38 0.19 0.20 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.29
39 0.21 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32
40 0.22 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.32 0.34
41 0.23 0.24 0.26 0.27 0.28 0.30 0.31 0.32 0.34 0.35
42 0.24 0.25 0.27 0.28 0.30 0.31 0.32 0.34 0.35 0.37
43 0.26 0.28 0.29 0.31 0.32 0.34 0.35 0.37 0.38 0.40
A-19
TABLE 10: MAXIMUM MONTHLY EXPENSE CHARGES PER $1000 OF FACE AMOUNT FOR A
UNISEX INSURED IN THE TOBACCO UNDERWRITING CLASS WHO SELECTED
ACCOUNTING BENEFIT OPTION II
ISSUE
AGE POLICY YEAR
---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10
---------------------------------------------------------------------------------------------------------------
44 0.27 0.29 0.30 0.32 0.33 0.35 0.37 0.38 0.40 0.41
45 0.28 0.30 0.31 0.33 0.35 0.36 0.38 0.40 0.41 0.43
46 0.30 0.32 0.34 0.35 0.37 0.39 0.41 0.42 0.44 0.46
47 0.31 0.33 0.35 0.36 0.38 0.40 0.42 0.44 0.46 0.47
48 0.32 0.34 0.36 0.38 0.40 0.41 0.43 0.45 0.47 0.49
49 0.33 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.50
50 0.35 0.37 0.39 0.41 0.43 0.45 0.47 0.49 0.51 0.54
51 0.36 0.38 0.40 0.42 0.44 0.47 0.49 0.51 0.53 0.55
52 0.37 0.39 0.41 0.44 0.46 0.48 0.50 0.52 0.54 0.57
53 0.38 0.40 0.42 0.45 0.47 0.49 0.51 0.54 0.56 0.58
54 0.40 0.42 0.45 0.47 0.49 0.52 0.54 0.56 0.59 0.61
55 0.41 0.43 0.46 0.48 0.51 0.53 0.55 0.58 0.60 0.63
56 0.43 0.46 0.48 0.51 0.53 0.56 0.58 0.61 0.63 0.66
57 0.46 0.49 0.51 0.54 0.57 0.60 0.62 0.65 0.68 0.70
58 0.48 0.51 0.54 0.56 0.59 0.62 0.65 0.68 0.71 0.73
59 0.51 0.54 0.57 0.60 0.63 0.66 0.69 0.72 0.75 0.78
60 0.54 0.57 0.60 0.64 0.67 0.70 0.73 0.76 0.79 0.83
61 0.55 0.58 0.61 0.65 0.68 0.71 0.74 0.78 0.81 0.84
62 0.56 0.59 0.63 0.66 0.69 0.72 0.76 0.79 0.82 0.86
63 0.57 0.60 0.64 0.67 0.70 0.74 0.77 0.80 0.84 0.87
64 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
65 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
66 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
67 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
68 0.60 0.64 0.67 0.71 0.74 0.78 0.81 0.85 0.88 0.92
69 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
70 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
71 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
72 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
73 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
74 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
75 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
76 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
77 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
78 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
79 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
80 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
81 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
82 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
83 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
84 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
85 0.59 0.62 0.66 0.69 0.73 0.76 0.80 0.83 0.87 0.90
A-20
APPENDIX B-MAXIMUM SURRENDER CHARGES
INITIAL SURRENDER CHARGES PER $1000 OF FACE AMOUNT
ACCOUNTING BENEFIT OPTION I
-------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
Preferred- Preferred Standard- Preferred- Preferred Standard-
Plus Non- Non- Non- Male Plus Non- Non- Non- Female
Issue Age Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco
-------------------------------------------------------------------------------------------------------
0 3.36 3.36 3.37 3.57 3.23 3.23 3.23 3.35
1 3.39 3.39 3.39 3.59 3.25 3.25 3.25 3.37
2 3.41 3.42 3.42 3.62 3.27 3.27 3.28 3.40
3 3.45 3.45 3.45 3.67 3.30 3.30 3.30 3.43
4 3.48 3.48 3.48 3.71 3.33 3.33 3.33 3.46
5 3.52 3.52 3.52 3.76 3.36 3.36 3.36 3.50
6 3.55 3.55 3.56 3.81 3.39 3.39 3.39 3.53
7 3.59 3.59 3.60 3.86 3.42 3.42 3.43 3.57
8 3.63 3.64 3.64 3.92 3.46 3.46 3.46 3.61
9 3.68 3.68 3.68 3.98 3.49 3.50 3.50 3.66
10 3.72 3.72 3.72 4.04 3.53 3.53 3.54 3.70
11 3.76 3.76 3.77 4.10 3.57 3.57 3.57 3.75
12 3.81 3.81 3.82 4.16 3.61 3.61 3.62 3.80
13 3.86 3.86 3.86 4.23 3.65 3.65 3.66 3.85
14 3.90 3.91 3.91 4.30 3.70 3.70 3.70 3.90
15 3.95 3.96 3.97 4.37 3.74 3.74 3.75 3.95
16 4.01 4.01 4.02 4.44 3.79 3.79 3.79 4.01
17 4.06 4.06 4.07 4.51 3.84 3.84 3.84 4.07
18 4.11 4.12 4.13 4.58 3.89 3.89 3.90 4.13
19 4.17 4.17 4.18 4.65 3.94 3.95 3.95 4.19
20 4.23 4.23 4.24 4.73 4.00 4.00 4.01 4.26
21 4.29 4.30 4.31 4.81 4.06 4.06 4.06 4.33
22 4.36 4.36 4.37 4.89 4.12 4.12 4.13 4.40
23 4.43 4.44 4.44 4.99 4.19 4.19 4.19 4.47
24 4.51 4.51 4.52 5.09 4.26 4.26 4.26 4.55
25 4.59 4.60 4.60 5.20 4.33 4.33 4.33 4.64
26 4.68 4.68 4.69 5.32 4.40 4.40 4.41 4.73
27 4.77 4.77 4.78 5.44 4.48 4.48 4.49 4.82
28 4.87 4.87 4.88 5.56 4.56 4.57 4.57 4.92
29 4.97 4.97 4.98 5.70 4.65 4.65 4.66 5.02
30 5.08 5.08 5.09 5.84 4.74 4.75 4.75 5.13
31 5.19 5.19 5.20 5.99 4.84 4.84 4.85 5.24
32 5.31 5.31 5.32 6.15 4.94 4.94 4.95 5.36
33 5.43 5.44 5.45 6.32 5.05 5.05 5.06 5.49
34 5.57 5.57 5.58 6.49 5.16 5.16 5.17 5.62
35 5.70 5.71 5.72 6.68 5.27 5.28 5.28 5.75
36 5.84 5.84 5.85 6.85 5.38 5.38 5.39 5.88
37 5.97 5.98 5.99 7.03 5.49 5.50 5.51 6.01
38 6.12 6.13 6.14 7.23 5.61 5.62 5.63 6.15
39 6.28 6.28 6.29 7.43 5.74 5.74 5.75 6.29
40 6.44 6.45 6.46 7.64 5.87 5.88 5.89 6.45
41 6.61 6.62 6.63 7.86 6.01 6.02 6.03 6.61
----------------------------------------------------------
Unisex Unisex Unisex
Preferred- Preferred Standard-
Plus Non- Non- Non- Unisex
Issue Age Tobacco Tobacco Tobacco Tobacco
----------------------------------------------------------
0 3.34 3.34 3.34 3.53
1 3.36 3.36 3.36 3.55
2 3.39 3.39 3.39 3.58
3 3.42 3.42 3.42 3.62
4 3.45 3.45 3.45 3.67
5 3.49 3.49 3.49 3.71
6 3.52 3.52 3.53 3.76
7 3.56 3.56 3.56 3.81
8 3.60 3.60 3.60 3.86
9 3.64 3.64 3.65 3.92
10 3.68 3.69 3.69 3.98
11 3.73 3.73 3.73 4.04
12 3.77 3.77 3.78 4.10
13 3.82 3.82 3.83 4.16
14 3.86 3.87 3.87 4.23
15 3.91 3.92 3.93 4.29
16 3.97 3.97 3.98 4.36
17 4.02 4.02 4.03 4.43
18 4.07 4.08 4.08 4.50
19 4.13 4.13 4.14 4.57
20 4.19 4.19 4.20 4.65
21 4.25 4.25 4.26 4.72
22 4.32 4.32 4.33 4.81
23 4.39 4.39 4.40 4.90
24 4.46 4.47 4.47 5.00
25 4.54 4.55 4.55 5.10
26 4.63 4.63 4.64 5.21
27 4.72 4.72 4.73 5.33
28 4.81 4.81 4.82 5.45
29 4.91 4.91 4.92 5.58
30 5.02 5.02 5.03 5.71
31 5.13 5.13 5.14 5.86
32 5.24 5.24 5.25 6.01
33 5.36 5.37 5.37 6.17
34 5.49 5.49 5.50 6.34
35 5.62 5.63 5.64 6.51
36 5.75 5.76 5.77 6.68
37 5.89 5.89 5.90 6.85
38 6.03 6.03 6.04 7.03
39 6.18 6.18 6.19 7.22
40 6.33 6.34 6.35 7.42
41 6.50 6.51 6.52 7.64
B-1
INITIAL SURRENDER CHARGES PER $1000 OF FACE AMOUNT
ACCOUNTING BENEFIT OPTION I
--------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
Preferred- Preferred Standard- Preferred- Preferred Standard-
Plus Non- Non- Non- Male Plus Non- Non- Non- Female
Issue Age Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco
--------------------------------------------------------------------------------------------------------------
42 6.80 6.80 6.82 8.10 6.16 6.17 6.18 6.78
43 6.99 7.00 7.02 8.35 6.31 6.32 6.33 6.95
44 7.20 7.20 7.22 8.61 6.48 6.48 6.50 7.13
45 7.41 7.42 7.45 8.89 6.65 6.65 6.67 7.32
46 7.64 7.65 7.67 9.18 6.83 6.83 6.85 7.52
47 7.88 7.89 7.92 9.48 7.02 7.02 7.04 7.73
48 8.13 8.14 8.17 9.79 7.22 7.22 7.24 7.95
49 8.39 8.41 8.44 10.11 7.42 7.43 7.45 8.18
50 8.67 8.68 8.72 10.45 7.65 7.65 7.68 8.42
51 8.97 8.98 9.02 10.80 7.88 7.89 7.91 8.67
52 9.28 9.29 9.33 11.16 8.13 8.14 8.16 8.94
53 9.61 9.63 9.67 11.56 8.39 8.40 8.43 9.22
54 9.96 9.98 10.03 11.97 8.67 8.68 8.71 9.52
55 10.33 10.35 10.40 12.41 8.97 8.98 9.01 9.84
56 10.70 10.72 10.78 12.84 9.27 9.28 9.31 10.16
57 11.09 11.11 11.17 13.29 9.58 9.60 9.63 10.50
58 11.49 11.52 11.59 13.49 9.92 9.94 9.98 10.86
59 11.92 11.95 12.03 13.42 10.28 10.30 10.34 11.24
60 12.37 12.41 12.49 13.35 10.66 10.68 10.72 11.64
61 12.83 12.87 12.96 13.30 11.05 11.07 11.12 12.06
62 13.31 13.35 13.45 13.25 11.46 11.49 11.54 12.49
63 13.39 13.39 13.40 13.21 11.90 11.92 11.98 12.94
64 13.31 13.32 13.32 13.16 12.36 12.39 12.45 13.42
65 13.23 13.24 13.24 13.11 12.85 12.88 12.95 13.37
66 13.21 13.21 13.21 13.09 13.42 13.45 13.52 13.35
67 13.18 13.18 13.18 13.06 13.50 13.50 13.50 13.33
68 13.15 13.15 13.15 13.03 13.47 13.47 13.47 13.30
69 13.12 13.12 13.12 13.01 13.44 13.44 13.45 13.28
70 13.09 13.09 13.09 12.98 13.41 13.42 13.42 13.25
71 13.05 13.05 13.06 12.95 13.38 13.38 13.38 13.22
72 13.02 13.02 13.02 12.92 13.34 13.34 13.35 13.19
73 12.98 12.98 12.98 12.88 13.30 13.31 13.31 13.15
74 12.94 12.94 12.95 12.85 13.26 13.27 13.27 13.11
75 12.90 12.90 12.91 12.82 13.22 13.23 13.23 13.07
76 12.86 12.86 12.87 12.78 13.18 13.18 13.19 13.03
77 12.82 12.82 12.83 12.75 13.14 13.14 13.14 12.99
78 12.78 12.78 12.78 12.71 13.09 13.09 13.10 12.95
79 12.74 12.74 12.74 12.68 13.04 13.05 13.05 12.91
80 12.70 12.70 12.70 12.64 13.00 13.00 13.01 12.87
81 12.65 12.66 12.67 12.62 12.95 12.96 12.95 12.81
82 12.61 12.62 12.64 12.60 12.91 12.91 12.90 12.77
83 12.57 12.58 12.61 12.58 12.86 12.87 12.85 12.73
84 12.53 12.54 12.58 12.55 12.81 12.82 12.80 12.69
85 12.49 12.49 12.54 12.52 12.77 12.77 12.75 12.62
------------------------------------------------------------
Unisex Unisex Unisex
Preferred- Preferred Standard-
Plus Non- Non- Non- Unisex
Issue Age Tobacco Tobacco Tobacco Tobacco
------------------------------------------------------------
42 6.68 6.69 6.70 7.86
43 6.86 6.87 6.89 8.09
44 7.06 7.07 7.09 8.34
45 7.27 7.28 7.30 8.60
46 7.49 7.50 7.52 8.87
47 7.72 7.73 7.75 9.16
48 7.96 7.97 8.00 9.45
49 8.21 8.22 8.25 9.76
50 8.48 8.49 8.52 10.07
51 8.76 8.78 8.81 10.41
52 9.06 9.08 9.11 10.75
53 9.38 9.40 9.43 11.13
54 9.72 9.74 9.78 11.52
55 10.07 10.09 10.14 11.93
56 10.43 10.45 10.50 12.34
57 10.80 10.83 10.88 12.77
58 11.19 11.22 11.28 13.21
59 11.61 11.64 11.71 13.49
60 12.04 12.08 12.15 13.42
61 12.49 12.52 12.60 13.37
62 12.95 13.00 13.08 13.31
63 13.45 13.45 13.45 13.26
64 13.37 13.37 13.38 13.21
65 13.30 13.30 13.30 13.16
66 13.27 13.27 13.27 13.14
67 13.24 13.24 13.24 13.11
68 13.21 13.21 13.22 13.09
69 13.18 13.18 13.19 13.06
70 13.15 13.15 13.16 13.03
71 13.12 13.12 13.12 13.00
72 13.08 13.08 13.08 12.97
73 13.04 13.04 13.05 12.94
74 13.00 13.01 13.01 12.90
75 12.97 12.97 12.97 12.87
76 12.92 12.93 12.93 12.83
77 12.88 12.89 12.89 12.80
78 12.84 12.84 12.85 12.76
79 12.80 12.80 12.80 12.72
80 12.76 12.76 12.76 12.69
81 12.71 12.72 12.73 12.66
82 12.67 12.67 12.69 12.64
83 12.63 12.63 12.66 12.61
84 12.59 12.59 12.63 12.58
85 12.55 12.55 12.58 12.54
B-2
INITIAL SURRENDER CHARGES PER $1000 OF FACE AMOUNT
ACCOUNTING BENEFIT OPTION II
-----------------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
Preferred- Preferred Standard- Preferred- Preferred Standard-
Plus Non- Non- Non- Male Plus Non- Non- Non- Female
Issue Age Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco
-----------------------------------------------------------------------------------------------------------------------
0 10.09 10.09 10.11 10.70 9.68 9.68 9.69 10.04
1 10.16 10.16 10.17 10.77 9.74 9.75 9.75 10.10
2 10.24 10.25 10.25 10.87 9.82 9.82 9.83 10.19
3 10.34 10.34 10.35 11.00 9.90 9.90 9.91 10.28
4 10.44 10.44 10.45 11.13 9.98 9.99 9.99 10.38
5 10.55 10.55 10.56 11.28 10.07 10.08 10.08 10.49
6 10.66 10.66 10.67 11.43 10.17 10.17 10.18 10.60
7 10.78 10.78 10.79 11.59 10.27 10.27 10.28 10.72
8 10.90 10.91 10.91 11.76 10.37 10.38 10.38 10.84
9 11.03 11.03 11.04 11.93 10.48 10.49 10.49 10.97
10 11.16 11.16 11.17 12.12 10.60 10.60 10.61 11.11
11 11.29 11.29 11.31 12.30 10.71 10.72 10.72 11.25
12 11.43 11.43 11.45 12.49 10.83 10.84 10.85 11.40
13 11.57 11.57 11.59 12.69 10.96 10.96 10.97 11.55
14 11.71 11.72 11.74 12.90 11.09 11.10 11.11 11.70
15 11.86 11.87 11.90 13.11 11.23 11.23 11.24 11.86
16 12.02 12.03 12.06 13.32 11.37 11.37 11.38 12.03
17 12.18 12.19 12.22 13.54 11.52 11.52 11.53 12.20
18 12.34 12.35 12.38 13.75 11.67 11.68 11.69 12.38
19 12.51 12.52 12.55 13.96 11.83 11.84 11.85 12.57
20 12.69 12.70 12.73 14.19 12.00 12.01 12.02 12.77
21 12.88 12.89 12.92 14.43 12.18 12.18 12.19 12.98
22 13.08 13.09 13.11 14.68 12.37 12.37 12.38 13.19
23 13.30 13.31 13.33 14.97 12.56 12.57 12.58 13.42
24 13.54 13.54 13.57 15.28 12.77 12.77 12.78 13.66
25 13.78 13.79 13.81 15.61 12.98 12.99 13.00 13.91
26 14.04 14.05 14.07 15.95 13.21 13.21 13.22 14.18
27 14.31 14.32 14.34 16.31 13.44 13.45 13.46 14.46
28 14.60 14.61 14.63 16.69 13.69 13.70 13.71 14.75
29 14.91 14.92 14.94 17.10 13.96 13.96 13.97 15.06
30 15.23 15.24 15.26 17.53 14.23 14.24 14.25 15.38
31 15.57 15.58 15.60 17.98 14.52 14.53 14.54 15.73
32 15.93 15.94 15.96 18.46 14.82 14.83 14.85 16.09
33 16.30 16.31 16.34 18.96 15.14 15.15 15.17 16.46
34 16.70 16.71 16.73 19.48 15.47 15.48 15.50 16.85
35 17.11 17.13 17.15 20.03 15.82 15.83 15.85 17.25
36 17.51 17.52 17.55 20.55 16.14 16.15 16.17 17.63
37 17.92 17.94 17.97 21.10 16.48 16.49 16.52 18.03
38 18.36 18.38 18.41 21.68 16.84 16.85 16.88 18.45
39 18.83 18.84 18.88 22.28 17.22 17.23 17.26 18.88
40 19.32 19.34 19.38 22.92 17.62 17.63 17.66 19.34
41 19.84 19.86 19.90 23.59 18.04 18.05 18.09 19.82
42 20.39 20.41 20.46 24.30 18.48 18.50 18.53 20.33
43 20.97 21.00 21.05 25.05 18.94 18.96 19.00 20.85
44 21.59 21.61 21.67 25.83 19.43 19.45 19.49 21.40
45 22.24 22.27 22.34 26.66 19.94 19.96 20.01 21.97
----------------------------------------------------------------
Unisex Unisex Unisex
Preferred- Preferred Standard-
Plus Non- Non- Non- Unisex
Issue Age Tobacco Tobacco Tobacco Tobacco
----------------------------------------------------------------
0 10.01 10.02 10.03 10.58
1 10.08 10.08 10.09 10.65
2 10.16 10.17 10.17 10.75
3 10.25 10.26 10.26 10.87
4 10.35 10.36 10.36 11.00
5 10.46 10.46 10.47 11.13
6 10.57 10.57 10.58 11.28
7 10.68 10.69 10.69 11.43
8 10.80 10.81 10.81 11.59
9 10.93 10.93 10.94 11.76
10 11.05 11.06 11.06 11.93
11 11.18 11.19 11.20 12.11
12 11.31 11.32 11.33 12.29
13 11.45 11.46 11.48 12.48
14 11.59 11.60 11.62 12.68
15 11.74 11.75 11.78 12.88
16 11.90 11.91 11.93 13.09
17 12.05 12.07 12.09 13.30
18 12.21 12.23 12.25 13.50
19 12.38 12.40 12.42 13.71
20 12.56 12.57 12.60 13.94
21 12.75 12.76 12.78 14.17
22 12.95 12.96 12.98 14.42
23 13.17 13.17 13.19 14.70
24 13.39 13.40 13.42 14.99
25 13.63 13.64 13.66 15.30
26 13.89 13.90 13.91 15.63
27 14.15 14.16 14.18 15.98
28 14.44 14.44 14.46 16.35
29 14.73 14.74 14.76 16.73
30 15.05 15.06 15.08 17.14
31 15.38 15.39 15.41 17.58
32 15.72 15.73 15.76 18.03
33 16.09 16.10 16.12 18.51
34 16.47 16.48 16.51 19.01
35 16.87 16.89 16.91 19.53
36 17.26 17.27 17.30 20.03
37 17.66 17.67 17.70 20.55
38 18.08 18.10 18.13 21.09
39 18.53 18.55 18.58 21.67
40 19.00 19.02 19.06 22.27
41 19.50 19.52 19.57 22.91
42 20.03 20.06 20.10 23.58
43 20.59 20.62 20.67 24.28
44 21.19 21.21 21.27 25.02
45 21.81 21.84 21.90 25.80
B-3
INITIAL SURRENDER CHARGES PER $1000 OF FACE AMOUNT
ACCOUNTING BENEFIT OPTION II
-----------------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
Preferred- Preferred Standard- Preferred- Preferred Standard-
Plus Non- Non- Non- Male Plus Non- Non- Non- Female
Issue Age Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco
-----------------------------------------------------------------------------------------------------------------------
46 22.92 22.95 23.02 27.53 20.48 20.50 20.55 22.56
47 23.63 23.67 23.75 28.44 21.05 21.07 21.12 23.19
48 24.38 24.42 24.51 29.37 21.65 21.67 21.73 23.84
49 25.17 25.22 25.31 30.34 22.27 22.30 22.36 24.53
50 26.01 26.05 26.15 31.35 22.94 22.96 23.03 25.25
51 26.90 26.94 27.05 32.40 23.64 23.67 23.74 26.01
52 27.83 27.88 27.99 33.49 24.39 24.42 24.49 26.81
53 28.83 28.89 29.01 34.68 25.18 25.21 25.29 27.66
54 29.88 29.94 30.08 35.92 26.02 26.05 26.14 28.56
55 30.99 31.06 31.21 37.22 26.91 26.95 27.04 29.52
56 32.09 32.17 32.33 38.51 27.80 27.85 27.94 30.48
57 33.26 33.34 33.52 39.86 28.75 28.80 28.90 31.49
58 34.48 34.57 34.77 40.48 29.77 29.82 29.93 32.58
59 35.76 35.86 36.08 40.26 30.84 30.90 31.02 33.73
60 37.10 37.22 37.46 40.04 31.97 32.03 32.16 34.93
61 38.48 38.60 38.87 39.90 33.14 33.21 33.36 36.17
62 39.92 40.06 40.35 39.76 34.38 34.46 34.62 37.47
63 40.18 40.18 40.19 39.62 35.69 35.77 35.94 38.82
64 39.94 39.95 39.95 39.48 37.08 37.16 37.35 40.26
65 39.70 39.71 39.72 39.33 38.56 38.65 38.85 40.10
66 39.62 39.62 39.63 39.26 40.26 40.36 40.57 40.04
67 39.53 39.54 39.55 39.18 40.49 40.49 40.50 39.98
68 39.44 39.45 39.46 39.10 40.41 40.41 40.42 39.91
69 39.35 39.36 39.37 39.02 40.33 40.33 40.34 39.84
70 39.26 39.26 39.27 38.94 40.24 40.25 40.26 39.76
71 39.15 39.16 39.17 38.85 40.14 40.14 40.15 39.66
72 39.05 39.05 39.06 38.75 40.03 40.03 40.04 39.56
73 38.94 38.94 38.95 38.65 39.91 39.92 39.93 39.45
74 38.82 38.83 38.84 38.55 39.79 39.80 39.81 39.34
75 38.71 38.71 38.72 38.45 39.67 39.68 39.69 39.22
76 38.59 38.59 38.60 38.35 39.54 39.55 39.56 39.10
77 38.46 38.47 38.48 38.24 39.41 39.41 39.43 38.98
78 38.34 38.34 38.35 38.14 39.27 39.28 39.29 38.86
79 38.22 38.22 38.23 38.03 39.13 39.14 39.15 38.73
80 38.09 38.10 38.11 37.93 38.99 39.00 39.02 38.60
81 37.96 37.97 38.01 37.87 38.86 38.87 38.85 38.44
82 37.84 37.85 37.92 37.80 38.72 38.73 38.71 38.32
83 37.72 37.73 37.84 37.74 38.58 38.60 38.56 38.19
84 37.60 37.61 37.75 37.66 38.44 38.46 38.41 38.06
85 37.48 37.48 37.63 37.56 38.30 38.32 38.24 37.85
----------------------------------------------------------------
Unisex Unisex Unisex
Preferred- Preferred Standard-
Plus Non- Non- Non- Unisex
Issue Age Tobacco Tobacco Tobacco Tobacco
----------------------------------------------------------------
46 22.46 22.49 22.56 26.62
47 23.15 23.18 23.26 27.48
48 23.87 23.91 23.99 28.36
49 24.63 24.67 24.75 29.27
50 25.43 25.47 25.56 30.22
51 26.28 26.33 26.42 31.22
52 27.18 27.23 27.33 32.26
53 28.14 28.19 28.30 33.38
54 29.15 29.21 29.33 34.55
55 30.22 30.28 30.42 35.79
56 31.28 31.35 31.50 37.01
57 32.40 32.48 32.64 38.30
58 33.58 33.67 33.85 39.64
59 34.82 34.92 35.12 40.46
60 36.13 36.23 36.45 40.25
61 37.46 37.57 37.81 40.10
62 38.86 38.99 39.25 39.94
63 40.34 40.34 40.35 39.79
64 40.11 40.12 40.13 39.64
65 39.89 39.89 39.90 39.48
66 39.81 39.81 39.82 39.41
67 39.72 39.73 39.73 39.33
68 39.63 39.64 39.65 39.26
69 39.54 39.55 39.56 39.18
70 39.45 39.46 39.47 39.10
71 39.35 39.35 39.36 39.00
72 39.24 39.24 39.25 38.91
73 39.13 39.13 39.14 38.81
74 39.01 39.02 39.03 38.70
75 38.90 38.90 38.91 38.60
76 38.77 38.78 38.79 38.49
77 38.65 38.66 38.67 38.39
78 38.52 38.53 38.54 38.28
79 38.40 38.40 38.41 38.17
80 38.27 38.28 38.29 38.07
81 38.14 38.15 38.18 37.98
82 38.02 38.02 38.08 37.91
83 37.89 37.90 37.98 37.83
84 37.77 37.77 37.88 37.75
85 37.64 37.65 37.75 37.63
B-4
INDEX TO FINANCIAL STATEMENTS
Canada Life of America Variable Life Variable Account 1
Report of Independent Accountants
Statements of Assets and Liabilities, December 31, 2002
Statements of Operations for the Years Ended December 31, 2002, 2001 and
2000
Statements of Changes in Net Assets for the Years Ended December 31,
2002, 2001, and 2000
Notes to Financial Statements
Canada Life Insurance Company of America
Report of Independent Accountants
Statutory Balance Sheets, December 31, 2002 and 2001
Statutory Statements of Operations for the Years Ended December 31, 2002
and 2001
Statutory Statements of Capital and Surplus for the Years Ended
December 31, 2002 and 2001
Statutory Statements of Cash Flows for the Years Ended December 31, 2002
and 2001
Notes to Statutory Financial Statements
FINANCIAL STATEMENTS
CANADA LIFE OF AMERICA
VARIABLE LIFE ACCOUNT 1
DECEMBER 31, 2002
WITH REPORT OF INDEPENDENT AUDITORS
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
FINANCIAL STATEMENTS
DECEMBER 31, 2002
CONTENTS
Report of Independent Auditors........................................... 1
Audited Financial Statements
Statements of Assets and Liabilities.................................... 2
Statements of Operation................................................. 13
Statements of Changes in Net Assets..................................... 25
Notes to Financial Statements........................................... 42
REPORT OF INDEPENDENT AUDITORS
Board of Directors of Canada Life Insurance Company of America
and Contract Owners of Canada Life of America Variable Life Account 1
We have audited the accompanying statements of assets and liabilities of CANADA
LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1 (the "Variable Account") (comprising,
the Alger American Small Capitalization, Growth, MidCap Growth, Leveraged
AllCap; Berger IPT International, IPT Small Company Growth; Dreyfus Growth and
Income, Appreciation, Socially Responsible Growth; Fidelity VIP Growth, VIP
Money Market, VIP High Income, VIP Overseas, Fidelity VIP II Asset Manager, VIP
II Contrafund, VIP II Index 500, VIP II Investment Grade Bond, Fidelity VIP III
Growth Opportunities; Goldman Sachs VIT Capital Growth, VIT Core U.S. Equity,
VIT Global Income, VIT Growth & Income; Montgomery Emerging Markets, Growth;
Seligman Communications and Information, Frontier, Global Technology, Small-Cap
Value; ProFunds VP Ultra Small-Cap, VP Money Market, VP Bull Plus, VP Bear, VP
Ultra Mid-Cap, and VP Short Small-Cap Sub-accounts), as of December 31, 2002,
and the related statements of operations, statements of changes in net assets
for the periods disclosed in the financial statements. These financial
statements and financial highlights are the responsibility of the Variable
Account's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights 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, 2002, by correspondence with the custodian
and broker. 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 sub-accounts
constituting the Canada Life of America Variable Life Account 1 as of December
31, 2002, and the results of their operations, changes in their net assets for
the periods disclosed in the financial statements, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Ernst & Young LLP
Atlanta, Georgia
January 27, 2003
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
THE ALGER AMERICAN FUND
------------------------
SMALL MIDCAP LEVERAGED
CAPITALIZATION GROWTH GROWTH ALLCAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------------------------------------------------------
ASSETS:
Investment in Alger American at market value $ 34,400 $ 172,255 $ 448,257 $ 226,512
--------------------------------------------------------------------------
TOTAL ASSETS 34,400 172,255 448,257 226,512
--------------------------------------------------------------------------
NET ASSETS $ 34,400 $ 172,255 $ 448,257 $ 226,512
==========================================================================
NET ASSETS:
Accumulation units $ 34,400 $ 172,255 $ 448,257 $ 226,512
--------------------------------------------------------------------------
TOTAL NET ASSETS: $ 34,400 $ 172,255 $ 448,257 $ 226,512
==========================================================================
UNITS OUTSTANDING 1,087 3,518 14,358 8,291
==========================================================================
UNIT VALUE (ACCUMULATION) $ 31.64 $ 48.96 $ 31.22 $ 27.32
==========================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 2,817 6,994 36,005 10,864
Cost of shares outstanding $ 38,242 $ 243,054 $ 609,853 $ 322,392
See accompanying Notes.
2
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
BERGER INSTITUTIONAL PRODUCTS TRUST
-----------------------------------
IPT IPT SMALL COMPANY
INTERNATIONAL GROWTH
SUB-ACCOUNT SUB-ACCOUNT
---------------------------------------------
ASSETS:
Investment in Berger at market value $ 267,993 $ 32,780
---------------------------------------------
TOTAL ASSETS 267,993 32,780
---------------------------------------------
NET ASSETS $ 267,993 $ 32,780
=============================================
NET ASSETS:
Accumulation units $ 267,993 $ 32,780
---------------------------------------------
TOTAL NET ASSETS: $ 267,993 $ 32,780
=============================================
UNITS OUTSTANDING 31,870 4,418
=============================================
UNIT VALUE (ACCUMULATION) $ 8.41 $ 7.42
=============================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 36,964 4,540
Cost of shares outstanding $ 345,354 $ 46,906
See accompanying Notes.
3
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
DREYFUS VARIABLE INVESTMENT FUND
---------------------------------
SOCIALLY
GROWTH RESPONSIBLE
AND INCOME APPRECIATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------------------------------------
ASSETS:
Investment in Dreyfus at market value $ 235,216 $ 72,717 $ 21,385
-------------------------------------------------------
TOTAL ASSETS 235,216 72,717 21,385
-------------------------------------------------------
NET ASSETS $ 235,216 $ 72,717 $ 21,385
=======================================================
NET ASSETS:
Accumulation units $ 235,216 $ 72,717 $ 21,385
-------------------------------------------------------
TOTAL NET ASSETS $ 235,216 $ 72,717 $ 21,385
=======================================================
UNITS OUTSTANDING 10,119 2,265 931
=======================================================
UNIT VALUE (ACCUMULATION) $ 23.24 $ 32.10 $ 22.97
=======================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 14,646 2,527 1,131
Cost of shares outstanding $ 293,690 $ 88,197 $ 28,339
See accompanying Notes.
4
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
VIP VIP
GROWTH MONEY MARKET VIP HIGH INCOME VIP OVERSEAS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-----------------------------------------------------------------------------
ASSETS:
Investment in Fidelity at market value $ 135,824 $ 591,422 $ 14,473 $ 88,341
-----------------------------------------------------------------------------
TOTAL ASSETS 135,824 591,422 14,473 88,341
-----------------------------------------------------------------------------
NET ASSETS $ 135,824 $ 591,422 $ 14,473 $ 88,341
=============================================================================
NET ASSETS:
Accumulation units $ 135,824 $ 591,422 $ 14,473 $ 88,341
-----------------------------------------------------------------------------
TOTAL NET ASSETS: $ 135,824 $ 591,422 $ 14,473 $ 88,341
=============================================================================
UNITS OUTSTANDING 2,876 165,574 489 4,573
=============================================================================
UNIT VALUE (ACCUMULATION) $ 47.23 $ 3.57 $ 29.60 $ 19.32
=============================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 5,795 591,422 2,441 8,046
Cost of shares outstanding $ 185,851 $ 591,364 $ 14,845 $ 105,975
See accompanying Notes.
5
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
---------------------------------------------
VIP II
VIP II VIP II VIP II INVESTMENT
ASSET MANAGER CONTRAFUND INDEX 500 GRADE BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-----------------------------------------------------------------------------
ASSETS:
Investment in Fidelity at market value $ 251,343 $ 88,887 $ 724,929 $ 415,363
-----------------------------------------------------------------------------
TOTAL ASSETS 251,343 88,887 724,929 415,363
-----------------------------------------------------------------------------
NET ASSETS $ 251,343 $ 88,887 $ 724,929 $ 415,363
=============================================================================
NET ASSETS:
Accumulation units $ 251,343 $ 88,887 $ 724,929 $ 415,363
-----------------------------------------------------------------------------
TOTAL NET ASSETS: $ 251,343 $ 88,887 $ 724,929 $ 415,363
=============================================================================
UNITS OUTSTANDING 8,731 3,533 6,032 14,063
=============================================================================
UNIT VALUE (ACCUMULATION) $ 28.79 $ 25.16 $ 120.18 $ 29.54
=============================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 19,713 4,911 7,255 30,318
Cost of shares outstanding $ 279,555 $ 96,026 $ 860,229 $ 389,758
See accompanying Notes.
6
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
FIDELITY VARIABLE
INSURANCE
PRODUCTS FUND III
-------------------
VIP III
GROWTH
OPPORTUNITIES
SUB-ACCOUNT
-------------------
ASSETS:
Investment in Fidelity at market value $ 27,625
-------------------
TOTAL ASSETS 27,625
-------------------
NET ASSETS $ 27,625
===================
NET ASSETS:
Accumulation units $ 27,625
-------------------
TOTAL NET ASSETS: $ 27,625
===================
UNITS OUTSTANDING 1,882
===================
UNIT VALUE (ACCUMULATION) $ 14.68
===================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 2,359
Cost of shares outstanding $ 30,597
See accompanying Notes.
7
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
GOLDMAN SACHS VARIABLE INSURANCE TRUST
--------------------------------------
VIT VIT VIT VIT GROWTH &
CAPITAL GROWTH CORE U.S. EQUITY GLOBAL INCOME INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-----------------------------------------------------------------------------
ASSETS:
Investment in Goldman Sachs at market value $ 13,015 $ 270,607 $ - $ 67,458
-----------------------------------------------------------------------------
TOTAL ASSETS 13,015 270,607 - 67,458
-----------------------------------------------------------------------------
NET ASSETS $ 13,015 $ 270,607 $ - $ 67,458
=============================================================================
NET ASSETS:
Accumulation units $ 13,015 $ 270,607 $ - $ 67,458
-----------------------------------------------------------------------------
TOTAL NET ASSETS: $ 13,015 $ 270,607 $ - $ 67,458
=============================================================================
UNITS OUTSTANDING 1,517 30,550 - 7,923
=============================================================================
UNIT VALUE (ACCUMULATION) $ 8.58 $ 8.86 $ - $ 8.51
=============================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 1,675 31,874 - 8,287
Cost of shares outstanding $ 14,896 $ 346,446 $ - $ 73,579
See accompanying Notes.
8
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
THE MONTGOMERY FUNDS III
------------------------
EMERGING
MARKETS GROWTH
SUB-ACCOUNT SUB-ACCOUNT
-------------------------------------------
ASSETS:
Investment in Montgomery at market value $ 29,414 $ -
-------------------------------------------
TOTAL ASSETS 29,414 $ -
-------------------------------------------
NET ASSETS $ 29,414 $ -
===========================================
NET ASSETS:
Accumulation units $ 29,414 $ -
-------------------------------------------
TOTAL NET ASSETS: $ 29,414 $ -
===========================================
UNITS OUTSTANDING 4,482 -
===========================================
UNIT VALUE (ACCUMULATION) $ 6.56 $ -
===========================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 4,518 -
Cost of shares outstanding $ 31,822 $ -
See accompanying Notes.
9
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
SELIGMAN PORTFOLIOS, INC.
--------------------------
COMMUNICATIONS & GLOBAL SMALL-CAP
INFORMATION FRONTIER TECHNOLOGY VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------------- ------------------- ------------------ -------------------
ASSETS:
Investment in Seligman at market value
$ 279,392 $ 9,931 $ 1,612 $ 270,560
---------------------------------------------------------------------------------
TOTAL ASSETS 279,392 9,931 1,612 270,560
---------------------------------------------------------------------------------
NET ASSETS $ 279,392 $ 9,931 $ 1,612 $ 270,560
==================================================================================
NET ASSETS:
Accumulation units $ 279,392 $ 9,931 $ 1,612 $ 270,560
---------------------------------------------------------------------------------
TOTAL NET ASSETS: $ 279,392 $ 9,931 $ 1,612 $ 270,560
=================================================================================
UNITS OUTSTANDING 13,722 746 145 24,507
=================================================================================
UNIT VALUE (ACCUMULATION) $ 20.36 $ 13.31 $ 11.12 $ 11.04
=================================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 34,707 1,030 183 24,936
Cost of shares outstanding $ 424,824 $ 12,173 $ 1,985 $ 311,965
See accompanying Notes.
10
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
PROFUNDS
--------
VP ULTRA VP MONEY
SMALL-CAP MARKET VP BULL PLUS VP BEAR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------------------------------------------------------------------------
ASSETS:
Investment in ProFunds at market value $ - $ 1,196,695 $ 103,900 $ -
---------------------------------------------------------------------------------
TOTAL ASSETS - 1,196,695 103,900 -
---------------------------------------------------------------------------------
NET ASSETS $ - $ 1,196,695 $ 103,900 $ -
=================================================================================
NET ASSETS:
Accumulation units $ - $ 1,196,695 $ 103,900 $ -
---------------------------------------------------------------------------------
TOTAL NET ASSETS: $ - $ 1,196,695 $ 103,900 $ -
=================================================================================
UNITS OUTSTANDING - 1,193,218 7,161 -
=================================================================================
UNIT VALUE (ACCUMULATION) $ 14.87 $ 1.00 $ 14.51 $ 42.37
=================================================================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding - 1,196,695 7,161 -
Cost of shares outstanding $ - $ 1,196,695 $ 103,767 $ -
See accompanying Notes.
11
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 2002
PROFUNDS (CONTINUED)
--------------------
VP ULTRA VP SHORT
MID-CAP SMALL-CAP
SUB-ACCOUNT SUB-ACCOUNT
-------------------------------------------
ASSETS:
Investment in ProFunds at market value $ 89,059 $ -
-------------------------------------------
TOTAL ASSETS 89,059 -
-------------------------------------------
NET ASSETS $ 89,059 $ -
===========================================
NET ASSETS:
Accumulation units $ 89,059 $ -
-------------------------------------------
TOTAL NET ASSETS: $ 89,059 $ -
===========================================
UNITS OUTSTANDING 15,425 -
===========================================
UNIT VALUE (ACCUMULATION) $ 5.77 $ 28.74
===========================================
SUPPLEMENTAL INFORMATION:
Number of shares outstanding 5,142 -
Cost of shares outstanding $ 88,590 $ -
See accompanying Notes.
12
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS
THE ALGER AMERICAN FUND - SMALL CAPITALIZATION SUB-ACCOUNT
-----------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 2 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (502) (27) -
Change in unrealized appreciation (depreciation) during the
year (3,895) 53 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (4,397) $ 28 $ -
-------------------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND - GROWTH SUB-ACCOUNT:
----------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 66 $ 7,059 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (7,195) (9,785) -
Change in unrealized appreciation (depreciation) during the
year (61,429) (9,371) (6)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (68,558) $ (12,097) $ (6)
-------------------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND - MIDCAP GROWTH SUB-ACCOUNT:
----------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 24,953 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (11,849) (3,947)
Change in unrealized appreciation (depreciation) during the
year (141,104) (20,493) 327
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (152,953) $ 513 $ 327
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
13
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
THE ALGER AMERICAN FUND - LEVERAGED ALLCAP SUB-ACCOUNT:
-------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 17 $ 913 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (6,040) (8,554) -
Change in unrealized appreciation (depreciation) during the
year (92,091) (3,790) (36)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (98,114) $ (11,431) $ (36)
-------------------------------------------------------------------------------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST - IPT INTERNATIONAL SUB-ACCOUNT:
--------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 10,366 $ 682 $ 1
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (2,381) (316) -
Change in unrealized appreciation (depreciation) during the
year (77,370) 8 60
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (69,385) $ 374 $ 61
-------------------------------------------------------------------------------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST - IPT SMALL COMPANY GROWTH SUB-ACCOUNT:
---------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-------------- --------------- ---------------
2002 2001 2000
-------------- --------------- ---------------
INCOME:
Dividends and capital gain distributions $ - $ 127 $ 2
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (2,481) (442) -
Change in unrealized appreciation (depreciation) during the
year (12,669) (1,492) 58
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (15,150) $ (1,807) $ 60
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
14
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
DREYFUS VARIABLE INVESTMENT FUND - GROWTH & INCOME SUB-ACCOUNT:
----------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-------------- --------------- ---------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 1,508 $ 1,448 $ 69
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (6,890) (229) -
Change in unrealized appreciation (depreciation) during the
year (60,514) 2,068 (27)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (65,896) $ 3,287 $ 42
-------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND - APPRECIATION SUB-ACCOUNT:
-------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 896 $ 617 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1,416) (203) -
Change in unrealized appreciation (depreciation) during the
year (13,993) (1,488) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (14,513) $ (1,074) $ -
-------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND - SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT:
----------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 55 $ 41 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (17,985) (526) -
Change in unrealized appreciation (depreciation) during the
year (3,867) (3,088) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (21,797) $ (3,573) $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
15
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP GROWTH SUB-ACCOUNT:
-------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 229 $ 1,917 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (9,528) (1,144) -
Change in unrealized appreciation (depreciation) during the
year (41,302) (8,725) (21)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (50,601) $ (7,952) $ (21)
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP MONEY MARKET SUB-ACCOUNT:
-------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 4,636 $ 3,527 $ 150
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares - - -
Change in unrealized appreciation (depreciation) during the
year 4 - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 4,640 $ 3,527 $ 150
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP HIGH INCOME SUB-ACCOUNT:
------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 726 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (431) (35) -
Change in unrealized appreciation (depreciation) during the
year 221 (593) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 516 $ 628) $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
16
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS SUB-ACCOUNT:
----------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 271 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1,672) (76) -
Change in unrealized appreciation (depreciation) during the
year (16,129) (1,505) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (17,530) $ (1,581) $ -
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II ASSET MANAGER SUB-ACCOUNT:-
-------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 9,068 $ 173 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (3,679) (160) 23
Change in unrealized appreciation (depreciation) during the
year (28,805) 593 (11)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (23,416) $ 606 $ 12
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II CONTRAFUND SUB-ACCOUNT:
-----------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 142 $ 77 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1.359) (100) -
Change in unrealized appreciation (depreciation) during the
year (6,779) (359) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (7,996) $ (382) $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
17
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II INDEX 500 SUB-ACCOUNT:
----------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 4,586 $ 101 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (40,811) (878) -
Change in unrealized appreciation (depreciation) during the
year (119,168) (16,132) 7
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (155,393) $ (16,909) $ 7
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II INVESTMENT GRADE BOND SUB-ACCOUNT:
----------------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 16,619 $ 7,229 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares 521 2,013 -
Change in unrealized appreciation (depreciation) during the
year 22,593 3,013 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 39,733 $ 12,255 $ -
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III GROWTH OPPORTUNITIES SUB-ACCOUNT:
-----------------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 190 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (362) 26 -
Change in unrealized appreciation (depreciation) during the
year (4,600) 1,629 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (4,772) $ 1,655 $ -
-------------------------------------------------------------------------- ----------------------------------------------
See accompanying Notes.
18
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT CAPITAL GROWTH SUB-ACCOUNT:
------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 28 $ 28 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (537) (4) -
Change in unrealized appreciation (depreciation) during the
year (1,678) (203) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (2,187) $ (179) $ -
-------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT CORE U.S. EQUITY SUB-ACCOUNT:
--------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
-------------- --------------- ---------------
INCOME:
Dividends and capital gain distributions $ 1,757 $ 106 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (3,432) 22 -
Change in unrealized appreciation (depreciation) during the
year (74.602) (1,236) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (76,277) $ (1,108) $ -
-------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT GLOBAL INCOME SUB-ACCOUNT:
-----------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 42 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (7) 6 -
Change in unrealized appreciation (depreciation) during the
year 20 (20) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 13 $ 28 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
19
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT GROWTH & INCOME SUB-ACCOUNT:
-------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 1,093 $ 315 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (506) 80 -
Change in unrealized appreciation (depreciation) during the
year (9,331) 3,211 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (8,744) $ 3,606 $ -
-------------------------------------------------------------------------------------------------------------------------
THE MONTGOMERY FUNDS III - EMERGING MARKETS SUB-ACCOUNT:
--------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 49 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (131) (8) -
Change in unrealized appreciation (depreciation) during the
year (3,040) 632 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (3,122) $ 624 $ -
-------------------------------------------------------------------------------------------------------------------------
THE MONTGOMERY FUNDS III - GROWTH SUB-ACCOUNT:
----------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 254 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1,307) (12) -
Change in unrealized appreciation (depreciation) during the
year 460 (460) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (847) $ (218) $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
20
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
SELIGMAN PORTFOLIOS, INC. - COMMUNICATION & INFORMATION SUB-ACCOUNT:
--------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 30,067 $ 4
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (23,589) (206) (5)
Change in unrealized appreciation (depreciation) during the
year (122,945) (22,487) (130)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (146,534) $ 7,374 $ (131)
-------------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. - FRONTIER SUB-ACCOUNT:
--------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 118 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (147) (2) -
Change in unrealized appreciation (depreciation) during the
year (2,204) (38) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (2,351) $ 78 $ -
-------------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. - GLOBAL TECHNOLOGY SUB-ACCOUNT:
----------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ 1,811 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1,253) (401) -
Change in unrealized appreciation (depreciation) during the
year 579 (952) -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (674) $ 458 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
21
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
SELIGMAN PORTFOLIOS, INC. - SMALL-CAP VALUE SUB-ACCOUNT:
--------------------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 4,776 $ 70 $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (9,885) (2,099) -
Change in unrealized appreciation (depreciation) during the
year (46,818) 5,412 -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (51,927) $ 3,383 $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP ULTRA SMALL-CAP SUB-ACCOUNT:
------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (1,819) - -
Change in unrealized appreciation (depreciation) during the
year - - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (1,819) $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP MONEY MARKET SUB-ACCOUNT:
----------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 600 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares - - -
Change in unrealized appreciation (depreciation) during the
year - - -
-------------------------------------------------------------------------- -------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 600 $ - $ -
-------------------------------------------------------------------------- -------------- --------------- ---------------
See accompanying Notes.
22
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
PROFUNDS - VP BULL PLUS SUB-ACCOUNT:
------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (9,742) - -
Change in unrealized appreciation (depreciation) during the
year 133 - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (9,609) $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP BEAR SUB-ACCOUNT:
-------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ 500 $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (21,017) - -
Change in unrealized appreciation (depreciation) during the
year - - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (20,517) $ - $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
23
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF OPERATIONS (CONTINUED)
PROFUNDS - VP ULTRA MID-CAP SUB-ACCOUNT:
----------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares (6,413) - -
Change in unrealized appreciation (depreciation) during the
year 469 - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (5,944) $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP SHORT SMALL-CAP SUB-ACCOUNT:
------------------------------------------
PERIODS ENDED DECEMBER 31
----------------------------------------------
2002 2001 2000
----------------------------------------------
INCOME:
Dividends and capital gain distributions $ - $ - $ -
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Realized gain (loss) on sale of fund shares 2,763 - -
Change in unrealized appreciation (depreciation) during the
year - - -
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 2,763 $ - $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
24
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS
THE ALGER AMERICAN FUND - SMALL CAPITALIZATION SUB-ACCOUNT:
-----------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 2 $ -
Realized gains (losses) (502) (27) -
Unrealized appreciation (depreciation) during the year (3,895) 53 -
-----------------------------------------------
Net increase (decrease) in net assets from operations (4,397) 28 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 10,937 1,536 -
Transfers between sub-accounts (including fixed assets), net 20,201 10,633 -
Transfers for contract benefits and terminations (187) - -
Contract maintenance charges (3,683) (668) -
-----------------------------------------------
Net increase in net assets from contract transactions 27,268 11,501 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 22,871 11,529 -
NET ASSETS AT BEGINNING OF PERIOD 11,529 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 34,400 $ 11,529 $ -
-------------------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND - GROWTH SUB-ACCOUNT:
---------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 66 $ 7,059 $ -
Realized gains (losses) (7,195) (9,785) -
Unrealized appreciation (depreciation) during the year (61,429) (9,371) (6)
-----------------------------------------------
Net increase (decrease) in net assets from operations (68,558) (12,097) (6)
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 71,082 138,562 10,043
Transfers between sub-accounts (including fixed assets), net 28,566 46,876 3,079
Transfers for contract benefits and terminations (750) - -
Contract maintenance charges (27,462) (16,866) (214)
-----------------------------------------------
Net increase in net assets from contract transactions 71,436 168,572 12,908
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,878 156,475 12,902
NET ASSETS AT BEGINNING OF PERIOD 169,377 12,902 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 172,255 $ 169,377 $ 12,902
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
25
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
THE ALGER AMERICAN FUND - MIDCAP GROWTH SUB-ACCOUNT:
-----------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 24,953 $ -
Realized gains (losses) (11,849) (3,947) -
Unrealized appreciation (depreciation) during the year (141,104) (20,493) 327
-----------------------------------------------
Net increase (decrease) in net assets from operations (152,953) 513 327
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 261,450 286,262 8,581
Transfers between sub-accounts (including fixed assets), net 35,830 59,198 185
Transfers for contract benefits and terminations - - -
Contract maintenance charges (38,858) (12,134) (144)
-----------------------------------------------
Net increase in net assets from contract transactions 258,422 333,326 8,622
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 105,469 333,839 8,949
NET ASSETS AT BEGINNING OF PERIOD 342,788 8,949 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 448,257 $ 342,788 $ 8,949
-------------------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND - LEVERAGED ALLCAP SUB-ACCOUNT:
-------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 17 $ 913 $ -
Realized gains (losses) (6,040) (8,554) -
Unrealized appreciation (depreciation) during the year (92,091) (3,790) (36)
-----------------------------------------------
Net increase (decrease) in net assets from operations (98,114) (11,431) (36)
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 98,124 240,629 8,113
Transfers between sub-accounts (including fixed assets), net 40,099 (23,405) 150
Transfers for contract benefits and terminations - - -
Contract maintenance charges (16,854) (10,647) (116)
-----------------------------------------------
Net increase in net assets from contract transactions 121,369 206,577 8,147
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 23,255 195,146 8,111
NET ASSETS AT BEGINNING OF PERIOD 203,257 8,111 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 226,512 $ 203,257 $ 8,111
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
26
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
BERGER INSTITUTIONAL PRODUCTS TRUST - INTERNATIONAL SUB-ACCOUNT:
----------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
--------------- --------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 10,366 $ 682 $ 1
Realized gains (losses) (2,381) (316) -
Unrealized appreciation (depreciation) during the year (77,370) 8 60
-----------------------------------------------
Net increase (decrease) in net assets from operations (69,385) 374 61
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 93,272 238,034 2,600
Transfers between sub-accounts (including fixed assets), net 16,925 5,510 187
Transfers for contract benefits and terminations (3,038) - -
Contract maintenance charges (14,391) (2,156) -
-----------------------------------------------
Net increase in net assets from contract transactions 92,768 241,388 2,787
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 23,383 241,762 2,848
NET ASSETS AT BEGINNING OF PERIOD 244,610 2,848 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 267,993 $ 244,610 $ 2,848
-------------------------------------------------------------------------------------------------------------------------
BERGER INSTITUTIONAL PRODUCTS TRUST - SMALL COMPANY GROWTH SUB-ACCOUNT:
-----------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 127 $ 2
Realized gains (losses) (2,481) (442) -
Unrealized appreciation (depreciation) during the year (12,669) (1,492) 58
-----------------------------------------------
Net increase (decrease) in net assets from operations (15,150) (1,807) 60
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 24,887 3,674 1,727
Transfers between sub-accounts (including fixed assets), net 16,448 11,551 167
Transfers for contract benefits and terminations - - -
Contract maintenance charges (5,776) (3,001) -
-----------------------------------------------
Net increase in net assets from contract transactions 35,559 12,224 1,894
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 20,409 10,417 1,954
NET ASSETS AT BEGINNING OF PERIOD 12,371 1,954 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 32,780 $ 12,371 $ 1,954
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes
27
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
DREYFUS VARIABLE INVESTMENT FUND - GROWTH & INCOME SUB-ACCOUNT:
---------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 1,508 $ 1,448 $ 69
Realized gains (losses) (6,890) (229) -
Unrealized appreciation (depreciation) during the year (60,514) 2,068 (27)
-----------------------------------------------
Net increase (decrease) in net assets from operations (65,896) 3,287 42
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 87,578 91,202 3,464
Transfers between sub-accounts (including fixed assets), net 53,345 116,794 292
Transfers for contract benefits and terminations (1,093) - -
Contract maintenance charges (41,232) (12,567) -
-----------------------------------------------
Net increase in net assets from contract transactions 98,598 195,429 3,756
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 32,702 198,716 3,798
NET ASSETS AT BEGINNING OF PERIOD 202,514 3,798 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 235,216 $ 202,514 $ 3,798
-------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND - APPRECIATION SUB-ACCOUNT:
------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 896 $ 617 $ -
Realized gains (losses) (1,416) (203) -
Unrealized appreciation (depreciation) during the year (13,993) (1,488) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (14,513) (1,074) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 25,326 69,965 -
Transfers between sub-accounts (including fixed assets), net 1,705 11,302 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (12,126) (7,868) -
-----------------------------------------------
Net increase in net assets from contract transactions 14,905 73,399 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 392 72,325 -
NET ASSETS AT BEGINNING OF PERIOD 72,325 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 72,717 $ 72,325 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes
28
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
DREYFUS VARIABLE INVESTMENT FUND - SOCIALLY RESPONSIBLE GROWTH SUB-ACCOUNT:
---------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 55 $ 41 $ -
Realized gains (losses) (17,985) (526) -
Unrealized appreciation (depreciation) during the year (3,867) (3,088) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (21,797) (3,573) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 12,743 51,665 -
Transfers between sub-accounts (including fixed assets), net (26,674) 25,460 43
Transfers for contract benefits and terminations - - -
Contract maintenance charges (10,091) (6,391) -
-----------------------------------------------
Net increase (decrease) in net assets from contract transactions (24,022) 70,734 43
-----------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (45,819) 67,161 43
NET ASSETS AT BEGINNING OF PERIOD 67,204 43 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 21,385 $ 67,204 $ 43
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP GROWTH SUB-ACCOUNT:
-------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 229 $ 1,917 $ -
Realized gains (losses) (9,528) (1,144) -
Unrealized appreciation (depreciation) during the year (41,302) (8,725) (21)
-----------------------------------------------
Net increase (decrease) in net assets from operations (50,601) (7,952) (21)
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 94,713 88,117 6,586
Transfers between sub-accounts (including fixed assets), net 11,870 36,176 43
Transfers for contract benefits and terminations - - -
Contract maintenance charges (30,343) (12,649) (115)
-----------------------------------------------
Net increase in net assets from contract transactions 76,240 111,644 6,514
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 25,639 103,692 6,493
NET ASSETS AT BEGINNING OF PERIOD 110,185 6,493 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 135,824 $ 110,185 $ 6,493
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes
29
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP MONEY MARKET SUB-ACCOUNT:
-------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 4,636 $ 3,527 $ 150
Realized gains (losses) - - -
Unrealized appreciation (depreciation) during the year 4 - -
-----------------------------------------------
Net increase (decrease) in net assets from operations 4,640 3,527 150
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 798,267 1,071,056 93,168
Transfers between sub-accounts (including fixed assets), net (401,290) (893,768) (4,462)
Transfer for contract benefits and terminations - - -
Contract maintenance charges (51,980) (26,096) (1,790)
-----------------------------------------------
Net increase in net assets from contract transactions 344,997 151,192 86,916
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 349,637 154,719 87,066
NET ASSETS AT BEGINNING OF PERIOD 241,785 87,066 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 591,422 $ 241,785 $ 87,066
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP HIGH INCOME SUB-ACCOUNT:
------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 726 $ - $ -
Realized gains (losses) (431) (35) -
Unrealized appreciation (depreciation) during the year 221 (593) -
-----------------------------------------------
Net increase (decrease) in net assets from operations 516 (628) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 4,704 1,677 -
Transfers between sub-accounts (including fixed assets), net 5,746 8,482 -
Transfers for contract benefits and terminations (3,113) - -
Contract maintenance charges (2,304) (607) -
-----------------------------------------------
Net increase in net assets from contract transactions 5,033 9,552 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 5,549 8,924 -
NET ASSETS AT BEGINNING OF PERIOD 8,924 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 14,473 $ 8,924 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
30
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCT FUND - VIP OVERSEAS SUB-ACCOUNT:
--------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 271 $ - $ -
Realized gains (losses) (1,672) (76) -
Unrealized appreciation (depreciation) during the year (16,129) (1,505) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (17,530) (1,581) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 56,598 2,652 -
Transfers between sub-accounts (including fixed assets), net 20,011 35,893 -
Transfers for contract benefits and terminations (736) - -
Contract maintenance charges (5,680) (1,286) -
-----------------------------------------------
Net increase in net assets from contract transactions 70,193 37,259 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 52,663 35,678 -
NET ASSETS AT BEGINNING OF PERIOD 35,678 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 88,341 $ 35,678 $ -
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II ASSET MANAGER SUB-ACCOUNT:
--------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 9,068 $ 173 $ -
Realized gains (losses) (3,679) (160) 23
Unrealized appreciation (depreciation) during the year (28,805) 593 (11)
-----------------------------------------------
Net increase (decrease) in net assets from operations (23,416) 606 12
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 91,538 192,024 1,549
Transfers between sub-accounts (including fixed assets), net 7,051 8,765 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (19,699) (6,644) (443)
-----------------------------------------------
Net increase in net assets from contract transactions 78,890 194,145 1,106
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 55,474 194,751 1,118
NET ASSETS AT BEGINNING OF PERIOD 195,869 1,118 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 251,343 $ 195,869 $ 1,118
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
31
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCT FUND II - VIP II CONTRAFUND SUB-ACCOUNT:
----------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 142 $ 77 $ -
Realized gains (losses) (1,359) (100) -
Unrealized appreciation (depreciation) during the year (6,779) (359) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (7,996) (382) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 59,421 3,637 -
Transfers between sub-accounts (including fixed assets), net 32,953 13,722 43
Transfers for contract benefits and terminations - - -
Contract maintenance charges (10,672) (1,839) -
-----------------------------------------------
Net increase in net assets from contract transactions 81,702 15,520 43
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 73,706 15,138 43
NET ASSETS AT BEGINNING OF PERIOD 15,181 43 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 88,887 $ 15,181 $ 43
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II INDEX 500 SUB-ACCOUNT:
----------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 4,586 $ 101 $ -
Realized gains (losses) (40,811) (878) -
Unrealized appreciation (depreciation) during the year (119,168) (16,132) 7
-----------------------------------------------
Net increase (decrease) in net assets from operations (155,393) (16,909) 7
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 400,633 112,397 1,731
Transfers between sub-accounts (including fixed assets), net 326,527 284,571 167
Transfers for contract benefits and terminations (107,008) - -
Contract maintenance charges (97,829) (23,965) -
-----------------------------------------------
Net increase in net assets from contract transactions 522,323 373,003 1,898
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 366,930 356,094 1,905
NET ASSETS AT BEGINNING OF PERIOD 357,999 1,905 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 724,929 $ 357,999 $ 1,905
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
32
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II INVESTMENT GRADE SUB-ACCOUNT:
-----------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 16,619 $ 7,229 $ -
Realized gains (losses) 521 2,013 -
Unrealized appreciation (depreciation) during the year 22,593 3,013 -
-----------------------------------------------
Net increase (decrease) in net assets from operations 39,733 12,255 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 93,402 294,588 -
Transfers between sub-accounts (including fixed assets), net (18,865) 27,201 -
Transfers for contract benefits and terminations (654) - -
Contract maintenance charges (23,788) (8,509) -
-----------------------------------------------
Net increase in net assets from contract transactions 50,095 313,280 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 89,828 325,535 -
NET ASSETS AT BEGINNING OF PERIOD 325,535 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 415,363 $ 325,535 $ -
-------------------------------------------------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III GROWTH OPPORTUNITIES SUB-ACCOUNT:
-----------------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 190 $ - $ -
Realized gains (losses) (362) 26 -
Unrealized appreciation (depreciation) during the year (4,600) 1,629 -
-----------------------------------------------
Net increase (decrease) in net assets from operations (4,772) 1,655 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 14,774 16,635 -
Transfers between sub-accounts (including fixed assets), net (76) 3,654 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (3,136) (1,109) -
-----------------------------------------------
Net increase in net assets from contract transactions 11,562 19,180 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 6,790 20,835 -
NET ASSETS AT BEGINNING OF PERIOD 20,835 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 27,625 $ 20,835 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
33
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT CAPITAL GROWTH SUB-ACCOUNT:
------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 28 $ 28 $ -
Realized gains (losses) (537) (4) -
Unrealized appreciation (depreciation) during the year (1,678) (203) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (2,187) (179) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 4,733 1,025 -
Transfers between sub-accounts (including fixed assets), net 6,153 5,586 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (1,606) (510) -
-----------------------------------------------
Net increase in net assets from contract transactions 9,280 6,101 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 7,093 5,922 -
NET ASSETS AT BEGINNING OF PERIOD 5,922 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 13,015 $ 5,922 $ -
-------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT CORE U.S. EQUITY SUB-ACCOUNT:
--------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 1,757 $ 106 $ -
Realized gains (losses) (3,432) 22 -
Unrealized appreciation (depreciation) during the year (74,602) (1,236) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (76,277) (1,108) -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 82,628 250,584 -
Transfers between sub-accounts (including fixed assets), net 20,727 8,934 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (12,696) (2,185) -
-----------------------------------------------
Net increase in net assets from contract transactions 90,659 257,333 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 14,382 256,225 -
NET ASSETS AT BEGINNING OF PERIOD 256,225 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 270,607 $ 256,225 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
34
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT GLOBAL INCOME SUB-ACCOUNT:
-----------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ $ 42 $ -
Realized gains (losses) (7) 6 -
Unrealized appreciation (depreciation) during the year 20 (20) -
-----------------------------------------------
Net increase (decrease) in net assets from operations 13 28 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 1,976 99 -
Transfers between sub-accounts (including fixed assets), net (2,903) 1,380 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (229) (364) -
-----------------------------------------------
Net increase (decrease) in net assets from contract transactions (1,156) 1,115 -
-----------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,143) 1,143 -
NET ASSETS AT BEGINNING OF PERIOD 1,143 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ $ 1,143 $ -
-------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST - VIT GROWTH & INCOME SUB-ACCOUNT:
-------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 1,093 $ 315 $ -
Realized gains (losses) (506) 80 -
Unrealized appreciation (depreciation) during the year (9,331) 3,211 -
-----------------------------------------------
Net increase (decrease) in net assets from operations (8,744) 3,606 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 17,145 8,896 -
Transfers between sub-accounts (including fixed assets), net 2,586 56,183 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (9,907) (2,307) -
-----------------------------------------------
Net increase in net assets from contract transactions 9,824 62,772 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,080 66,378 -
NET ASSETS AT BEGINNING OF PERIOD 66,378 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 67,458 $ 66,378 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
35
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
THE MONTGOMERY FUNDS III - EMERGING MARKETS SUB-ACCOUNT:
---------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 49 $ - $ -
Realized gains (losses) (131) (8) -
Unrealized appreciation (depreciation) during the year (3,040) 632 -
-----------------------------------------------
Net increase (decrease) in net assets from operations (3,122) 624 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 5,535 5,402 -
Transfers between sub-accounts (including fixed assets), net 19,037 4,953 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (2,548) (467) -
-----------------------------------------------
Net increase in net assets from contract transactions 22,024 9,888 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 18,902 10,512 -
NET ASSETS AT BEGINNING OF PERIOD 10,512 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 29,414 $ 10,512 $ -
-------------------------------------------------------------------------------------------------------------------------
THE MONTGOMERY FUNDS III - GROWTH SUB-ACCOUNT:
----------------------------------------------
PERIODS ENDED DECEMBER 31
---------------------------------------------
2002 2001 2000
---------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 254 $ -
Realized gains (losses) (1,307) (12) -
Unrealized appreciation (depreciation) during the year 460 (460) -
---------------------------------------------
Net increase (decrease) in net assets from operations (847) (218) -
---------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 724 432 -
Transfers between sub-accounts (including fixed assets), net (1,623) 2,328 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (498) (298) -
---------------------------------------------
Net increase (decrease) in net assets from contract transactions (1,397) 2,462 -
---------------------------------------------
TOTAL INCREASE IN NET ASSETS (2,244) 2,244 -
NET ASSETS AT BEGINNING OF PERIOD 2,244 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ - $ 2,244 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
36
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SELIGMAN PORTFOLIOS, INC. - COMMUNICATION & INFORMATION SUB-ACCOUNT:
--------------------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 30,067 $ 4
Realized gains (losses) (23,589) (206) (5)
Unrealized appreciation (depreciation) during the year (122,945) (22,487) (130)
-----------------------------------------------
Net increase (decrease) in net assets from operations (146,534) 7,374 (131)
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 150,036 200,708 7,515
Transfers between sub-accounts (including fixed assets), net (11,641) 112,234 106
Transfers for contract benefits and terminations (3,686) - -
Contract maintenance charges (25,212) (11,234) (143)
-----------------------------------------------
Net increase in net assets from contract transactions 109,497 301,708 7,478
-----------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (37,037) 309,082 7,347
NET ASSETS AT BEGINNING OF PERIOD 316,429 7,347 -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 279,392 $ 316,429 $ 7,347
-------------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. - FRONTIER SUB-ACCOUNT:
-------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 118 $ -
Realized gains (losses) (147) (2) -
Unrealized appreciation (depreciation) during the year (2,204) (38) -
-----------------------------------------------
Net increase (decrease) in net assets from operations (2,351) 78 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 6,089 2,391 -
Transfers between sub-accounts (including fixed assets), net 4,700 58 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (941) (93) -
-----------------------------------------------
Net increase in net assets from contract transactions 9,848 2,356 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 7,497 2,434 -
NET ASSETS AT BEGINNING OF PERIOD 2,434 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 9,931 $ 2,434 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
37
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SELIGMAN PORTFOLIOS, INC. - GLOBAL TECHNOLOGY SUB-ACCOUNT:
-----------------------------------------------------------
PERIODS ENDED DECEMBER 31
---------------------------------------------
2002 2001 2000
---------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ 1,811 $ -
Realized gains (losses) (1,253) (401) -
Unrealized appreciation (depreciation) during the year 579 (952) -
---------------------------------------------
Net increase (decrease) in net assets from operations (674) 458 -
---------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 1,811 10 -
Transfers between sub-accounts (including fixed assets), net (9,505) 9,995 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (405) (78) -
---------------------------------------------
Net increase (decrease) in net assets from contract transactions (8,099) 9,927 -
---------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (8,773) 10,385 -
NET ASSETS AT BEGINNING OF PERIOD 10,385 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 1,612 $ 10,385 $ -
-------------------------------------------------------------------------------------------------------------------------
SELIGMAN PORTFOLIOS, INC. - SMALL-CAP VALUE SUB-ACCOUNT:
--------------------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 4,776 $ 70 $ -
Realized gains (losses) (9,885) (2,099) -
Unrealized appreciation (depreciation) during the year (46,818) 5,412 -
-----------------------------------------------
Net increase (decrease) in net assets from operations (51,927) 3,383 -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 91,637 236,514 -
Transfers between sub-accounts (including fixed assets), net (27,738) 30,653 -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (10,979) (983) -
-----------------------------------------------
Net increase in net assets from contract transactions 52,920 266,184 -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 993 269,567 -
NET ASSETS AT BEGINNING OF PERIOD 269,567 - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 270,560 $ 269,567 $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
38
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
PROFUNDS - VP ULTRA SMALL-CAP SUB-ACCOUNT:
------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ - $ -
Realized gains (losses) (1,819) - -
Unrealized appreciation (depreciation) during the year - - -
-----------------------------------------------
Net increase (decrease) in net assets from operations (1,819) - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners - - -
Transfers between sub-accounts (including fixed assets), net 1,819 - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges - - -
-----------------------------------------------
Net increase in net assets from contract transactions 1,819 - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS - - -
NET ASSETS AT BEGINNING OF PERIOD - - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ - $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP MONEY MARKET SUB-ACCOUNT:
---------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 600 $ - $ -
Realized gains (losses) - - -
Unrealized appreciation (depreciation) during the year - - -
-----------------------------------------------
Net increase (decrease) in net assets from operations 600 - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 1,547,589 - -
Transfers between sub-accounts (including fixed assets), net (346,913) - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (4,581) - -
-----------------------------------------------
Net increase in net assets from contract transactions 1,196,095 - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,196,695 - -
NET ASSETS AT BEGINNING OF PERIOD - - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 1,196,695 $ - $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
39
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
PROFUNDS - VP BULL PLUS SUB-ACCOUNT:
------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ - $ -
Realized gains (losses) (9,742) - -
Unrealized appreciation (depreciation) during the year 133 - -
-----------------------------------------------
Net increase (decrease) in net assets from operations (9,609) - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 1,105 - -
Transfers between sub-accounts (including fixed assets), net 112,424 - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (20) - -
-----------------------------------------------
Net increase in net assets from contract transactions 113,509 - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 103,900 - -
NET ASSETS AT BEGINNING OF PERIOD - - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 103,900 $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP BEAR SUB-ACCOUNT:
-------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ 500 $ - $ -
Realized gains (losses) (21,017) - -
Unrealized appreciation (depreciation) during the year - - -
-----------------------------------------------
Net increase (decrease) in net assets from operations (20,517) - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 1,197 - -
Transfers between sub-accounts (including fixed assets), net 19,512 - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (192) - -
-----------------------------------------------
Net increase in net assets from contract transactions 20,517 - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS - - -
NET ASSETS AT BEGINNING OF PERIOD - - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ $ $ -
-------------------------------------------------------------------------------------------------------------------------
See accompanying Notes.
40
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
PROFUNDS - VP ULTRA MID-CAP SUB-ACCOUNT:
-----------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ - $ -
Realized gains (losses) (6,413) - -
Unrealized appreciation (depreciation) during the year 469 - -
-----------------------------------------------
Net increase (decrease) in net assets from operations (5,944) - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners 2 - -
Transfers between sub-accounts (including fixed assets), net 95,039 - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges (38) - -
-----------------------------------------------
Net increase in net assets from contract transactions 95,003 - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS 89,059 - -
NET ASSETS AT BEGINNING OF PERIOD - - -
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 89,059 $ - $ -
-------------------------------------------------------------------------------------------------------------------------
PROFUNDS - VP SHORT SMALL-CAP SUB-ACCOUNT:
------------------------------------------
PERIODS ENDED DECEMBER 31
-----------------------------------------------
2002 2001 2000
-----------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ - $ - $ -
Realized gains (losses) 2,763 - -
Unrealized appreciation (depreciation) during the year - - -
-----------------------------------------------
Net increase (decrease) in net assets from operations 2,763 - -
-----------------------------------------------
CONTRACT TRANSACTIONS:
Payments received from contract owners - - -
Transfers between sub-accounts (including fixed assets), net (2,763) - -
Transfers for contract benefits and terminations - - -
Contract maintenance charges - - -
-----------------------------------------------
Net increase in net assets from contract transactions (2,763) - -
-----------------------------------------------
TOTAL INCREASE IN NET ASSETS - - -
NET ASSETS AT BEGINNING OF PERIOD - - -
------------------------------------------------------------------------- --------------- --------------- ---------------
NET ASSETS AT END OF PERIOD $ - $ - $ -
------------------------------------------------------------------------- --------------- --------------- ---------------
See accompanying Notes.
41
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. ORGANIZATION
Canada Life of America Variable Life Account 1 ("the Variable Account") was
initially established on July 22, 1988 as a Separate Account of Canada Life
Insurance Company of America ("CLICA" or the "Company"). The Variable Account
became operational during 2000 and supports the Canada Life Prestige Series
Variable Universal Life ("Prestige VUL") policies issued by CLICA. The Variable
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended.
The assets of the Variable Account are the property of CLICA. The portion of the
Variable Account assets applicable to the policies will not be charged with
liabilities arising out of any other business CLICA may conduct.
As of December 31, 2002 the Variable Account consisted of thirty-two investment
sub-accounts available to the policyholders each of which invests in an
independently managed mutual fund portfolio ("fund"). The funds and the dates of
initial investment (inception) and termination, if applicable, are as follows:
THE ALGER AMERICAN FUND:
Small Capitalization (initial investment - February 2001)
Growth (initial investment - December 2000)
MidCap Growth (initial investment - December 2000)
Leveraged AllCap (initial investment - December 2000)
BERGER INSTITUTIONAL PRODUCTS TRUST:
IPT International (initial investment - December 2000)
IPT Small Company Growth (initial investment - December 2000)
DREYFUS VARIABLE INVESTMENT FUND:
Growth & Income (initial investment - December 2000)
Appreciation (initial investment - January 2001)
Socially Responsible Growth (initial investment - December 2000)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Growth (initial investment - December 2000)
VIP Money Market (initial investment - November 2000)
VIP High Income (initial investment - April 2001)
VIP Overseas (initial investment - January 2001)
42
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
1. ORGANIZATION (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Asset Manager (initial investment - November 2000)
VIP II Contrafund (initial investment - December 2000)
VIP II Index 500 (initial investment - December 2000)
VIP II Investment Grade Bond (initial investment - January 2001)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III:
VIP III Growth Opportunities (initial investment - March 2001)
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
VIT Capital Growth (initial investment - March 2001)
VIT Core U.S. Equity (initial investment - March 2001)
VIT Global Income (initial investment - April 2001; investment terminated -
October 2002)
VIT Growth & Income (initial investment - March 2001)
THE MONTGOMERY FUNDS III:
Emerging Markets (initial investment - March 2001)
Growth (initial investment - March 2001; investment terminated - April
2002)
SELIGMAN PORTFOLIOS, INC.:
Communications and Information (initial investment - December 2000)
Frontier (initial investment - May 2001)
Global Technology (initial investment - October 2001)
Small-Cap Value (initial investment - May 2001)
PROFUNDS:
VP Ultra Small-Cap (initial investment - September 2002)
VP Money Market (initial investment - September 2002)
VP Bull Plus (initial investment - \September 2002)
VP Bear (initial investment - September 2002)
VP Ultra Mid-Cap (initial investment - September 2002)
VP Short Small-Cap (initial investment - December 2002)
The Prestige VUL policies allow the policyholders to specify the allocation of
their net premiums to the various funds. They can also transfer their account
values among the funds. The Prestige VUL product also provides the policyholders
the option to allocate their net premiums, or to transfer their account values
to a Fixed Account in the Company's General Account, which guarantees principal
and a rate of interest to the policyholder.
43
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments in shares of the funds are valued at the reported net asset values
of the respective portfolios. Realized gains and losses are computed on the
basis of average cost. The difference between cost and current market value of
investments owned is recorded as an unrealized gain or loss on investments.
DIVIDENDS
Dividends and capital gain distributions are recorded on the ex-dividend date
and reflect the dividends declared by the funds from their accumulated net
investment income and net realized investment gains. Dividends in the Fidelity
VIP Money Market and ProFund VP Money Market sub-accounts are declared daily and
paid monthly. Dividends in all other Sub-accounts are declared and paid
annually. Dividends paid to the Variable Account are reinvested in additional
shares of the respective Sub-accounts at the net asset value per share.
POLICY DEDUCTIONS
The Prestige VUL policies provide for certain deductions for sales and tax loads
from premium payments received from the policyholders. These deductions are
taken by the Company prior to the purchase of fund shares. In addition,
surrender charges and taxes are deducted from amounts paid to policyholders.
Such deductions are taken after the redemption of sub-account units in the
Separate Account.
POLICY LOANS
The Prestige VUL policies allow the policyholders to borrow against their
policies by using them as collateral for a loan. At the time of borrowing
against the policies, an amount equal to the loan amount is transferred from the
Variable Account sub-accounts to the Fixed Account in the Company's General
Account to secure the loan. As payments are made on the policy loan, amounts are
transferred back from the Fixed Account to the Variable Account. Interest is
credited to the balance in the Fixed Account at a fixed rate. The Fixed Account
is not variable in nature and is not included in these Separate Account
statements.
44
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
The Variable Account is not taxed separately because the operations of the
Variable Account will be included in the federal income tax return of the
Company, which is taxed as a "life insurance company" under the provisions of
the Internal Revenue Code.
OTHER
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect amounts reported therein. Actual results could
differ from these estimates.
45
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
3. PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments for the year ended
December 31, 2002, were as follows:
PURCHASES SALES
---------------------- ----------------------
THE ALGER AMERICAN FUND
Small Capitalization $ 32,371 $ 5,605
Growth 101,204 36,897
MidCap Growth 304,127 57,554
Leveraged AllCap 143,972 28,626
BERGER INSTITUTIONAL PRODUCTS TRUST
IPT International 127,045 26,292
IPT Small Company Growth 42,664 9,621
DREYFUS VARIABLE INVESTMENT FUND
Growth & Income 140,359 47,143
Appreciation 29,094 14,709
Socially Responsible Growth 18,339 60,292
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
VIP Growth 109,737 42,797
VIP Money Market 1,280,520 930,941
VIP High Income 11,237 5,909
VIP Overseas 82,323 13,531
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
VIP II Asset Manager 122,676 38,397
VIP II Contrafund 98,682 18,196
VIP II Index 500 760,998 274,900
VIP II Investment Grade Bond 191,264 124,029
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
VIP III Growth Opportunities 17,167 5,777
GOLDMAN SACHS VARIABLE INSURANCE TRUST
VIT Capital Growth 13,250 4,479
VIT Core U.S. Equity 112,413 23,429
VIT Global Income 1,963 3,126
VIT Growth & Income 27,238 16,826
THE MONTGOMERY FUNDS III
Emerging Markets 34,645 12,703
Growth 6,712 9,417
SELIGMAN PORTFOLIOS, INC.
Communications & Information 205,713 119,805
Frontier 10,985 1,284
Global Technology 2,044 11,396
Small-Cap Value 253,446 205,635
46
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
3. PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
PURCHASES SALES
---------------------- ----------------------
PROFUNDS
VP Ultra Small-Cap $ 155,523 $ 155,523
VP Money Market 5,184,678 3,987,983
VP Bull Plus 1,178,863 1,075,097
VP Bear 3,615,017 3,615,017
VP Ultra Mid-Cap 551,463 462,873
VP Short Small-Cap 179,348 179,348
---------------- -----------------
$ 15,147,080 $ 11,625,157
================ =================
4. EXPENSES AND RELATED PARTY TRANSACTIONS
CLICA assumes mortality and expense risks related to the operations of the
Variable Account and deducts a charge at each monthly processing date equal to
an annual rate of .35% of the net asset value of each sub-account for the first
10 policy years and .10% thereafter. A cost of insurance charge based on the age
and underwriting class of each policyholder is deducted at each monthly
processing date to cover the cost of insurance protection under the policy. In
addition, expense charges and administration fees are deducted at each monthly
processing date to reimburse CLICA for underwriting, acquisition and policy
maintenance costs. These items are collectively referred to as "contract
maintenance charges" in the accompanying statements of changes in net assets.
47
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
5. CHANGES IN UNITS OUTSTANDING
The changes in units outstanding for the periods ended December 31, 2002 and
2001 were as follows:
THE ALGER AMERICAN FUND
Small Capitalization Growth MidCap Growth
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 933 284 1,721 2,393 7,752 7,834
Units Redeemed (115) (15) (521) (230) (1,130) (286)
---------------------------- ---------------------------- ----------------------------
Net Increase 818 269 1,200 2,163 6,622 7,548
============================ ============================ ============================
THE ALGER AMERICAN FUND
(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST
Leveraged AllCap IPT International IPT Small Company Growth
- ------
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 4,005 5,874 10,812 22,879 4,339 956
Units Redeemed (631) (1,122) (1,834) (200) (767) (199)
---------------------------- ---------------------------- ----------------------------
Net Increase 3,374 4,752 8,978 22,679 3,572 757
============================ ============================ ============================
DREYFUS VARIABLE INVESTMENT FUND
Growth & Income Appreciation Socially Responsible
Sub-Account Sub-Account Growth Sub-Account
----------- ----------- ------------------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 5,318 6,804 734 2,081 535 2,274
Units Redeemed (1,705) (414) (345) (205) (1,682) (196)
---------------------------- ---------------------------- ----------------------------
Net Increase (Decrease) 3,613 6,390 389 1,876 (1,147) 2,078
============================ ============================ ============================
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
VIP Growth VIP Money Market VIP High Income
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 1,852 1,738 248,236 312,585 368 333
Units Redeemed (607) (187) (151,498) (269,565) (191) (21)
---------------------------- ---------------------------- ----------------------------
Net Increase 1,245 1,551 96,738 43,020 177 312
============================ ============================ ============================
VIP Overseas
Sub-Account
2002 2001
---- ----
Units Issued 3,409 1,523
Units Redeemed (308) (51)
----------------------------
Net Increase 3,101 1,472
============================
48
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
5. CHANGES IN UNITS OUTSTANDING (CONTINUED)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
VIP II Asset Manager VIP II Contrafund VIP II Index 500
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 3,195 6,390 3,392 613 5,190 2,461
Units Redeemed (674) (214) (406) (67) (1,474) (155)
---------------------------- ---------------------------- ----------------------------
Net Increase 2,521 6,176 2,986 546 3,716 2,306
============================ ============================ ============================
FIDELITY VARIABLE INSURANCE FIDELITY VARIABLE INSURANCE
PRODUCTS FUND II (CONTINUED) PRODUCTS FUND III
VIP II Investment Grade VIP III Growth
Bond Sub-Account Opportunities Sub-Account
---------------- -------------------------
2002 2001 2002 2001
---- ---- ---- ----
Units Issued 3,449 12,488 1,070 1,171
Units Redeemed (1,548) (327) (297) (62)
---------------------------- ----------------------------
Net Increase 1,901 12,161 773 1,109
============================ ============================
GOLDMAN SACHS VARIABLE INSURANCE TRUST
VIT Capital Growth VIT Core U.S. Equity VIT Global Income
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 1,331 567 9,277 22,789 162 123
Units Redeemed (336) (45) (1,320) (196) (255) (30)
---------------------------- ---------------------------- ----------------------------
Net Increase (Decrease) 995 522 7,957 22,593 (93) 93
============================ ============================ ============================
GOLDMAN SACHS VARIABLE
INSURANCE TRUST (CONTINUED) THE MONTGOMERY FUNDS III
VIT Growth & Income Emerging Markets Growth
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 2,308 7,158 3,642 1,515 64 172
Units Redeemed (1,297) (246) (607) (68) (216) (20)
---------------------------- ---------------------------- ----------------------------
Net Increase (Decrease) 1,011 6,912 3,035 1,447 (152) 152
============================ ============================ ============================
49
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
5. CHANGES IN UNITS OUTSTANDING (CONTINUED)
SELIGMAN PORTFOLIOS, INC.
Communications & Frontier Global Technology
Information Sub-Account Sub-Account Sub-Account
----------------------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 5,196 10,064 675 139 137 643
Units Redeemed (1,411) (370) (63) (5) (630) (5)
---------------------------- ---------------------------- ----------------------------
Net Increase (Decrease) 3,785 9,694 612 134 (493) 638
============================ ============================ ============================
Small-Cap Value
Sub-Account
2002 2001
---- ----
Units Issued 6,968 20,705
Units Redeemed (3,088) (78)
----------------------------
Net Increase 3,880 20,627
============================
PROFUNDS
VP Ultra Small- Cap VP Money Market VP Bull Plus
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 10,225 - 4,504,812 - 66,295 -
Units Redeemed (10,225) - 3,311,594 - (59,134) -
----------------------------- ---------------------------- ----------------------------
Net Increase - - 1,193,218 - 7,161 -
============================= ============================ ============================
VP Bear VP Ultra Mid-Cap VP Short Small-Cap
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Units Issued 69,838 - 93,977 - 6,199 -
Units Redeemed (69,838) - (78,552) - (6,199) -
----------------------------- ---------------------------- ----------------------------
Net Increase - - 15,425 - - -
============================= ============================ ============================
50
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
6. UNIT VALUES
A summary of unit values and units outstanding for variable annuity contracts
and the expense ratios, excluding expenses of the underlying funds, for each of
the periods ended December 31, 2002, 2001 and 2000, follows:
Net Assets
------------------------------------
Units Total
Outstanding Unit Value (000s) Return
----------- ---------- ----------- -------
THE ALGER AMERICAN FUND
Small Capitalization
--------------------
2002 1,087 $ 31.64 $ 34 -26.18%
2001* 269 42.86 12 -25.16%
Growth
------
2002 3,518 $ 48.96 $ 172 -33.00%
2001 2,318 73.07 169 -11.80%
2000* 156 82.85 13 0.40%
MidCap Growth
-------------
2002 14,358 $ 31.22 $ 448 -29.54%
2001 7,736 44.31 343 -6.52%
2000* 189 47.40 9 6.72%
Leveraged AllCap
----------------
2002 8,291 $ 27.32 $ 227 -33.91%
2001 4,917 41.34 203 -15.92%
2000* 165 49.17 8 -0.87%
BERGER INSTITUTIONAL PRODUCTS TRUST
IPT International
-----------------
2002 31,870 $ 8.41 $ 268 -21.33%
2001 22,892 10.69 245 -20.22%
2000* 213 13.40 3 2.49%
IPT Small Company Growth
------------------------
2002 4,418 $ 7.42 $ 33 -49.25%
2001 846 14.62 12 -33.48%
2000* 89 21.98 2 5.33%
* The initial investment in this sub-account occurred during this period.
Results not annualized.
51
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
6. UNIT VALUES (CONTINUED)
Net Assets
------------------------------------
Units Total
Outstanding Unit Value (000s) Return
----------- ---------- ----------- -------
DREYFUS VARIABLE INVESTMENT FUND
Growth & Income
---------------
2002 10,119 $ 23.24 $ 235 -25.35%
2001 6,505 31.13 203 -5.84%
2000* 115 33.06 4 3.55%
Appreciation
------------
2002 2,265 $ 32.10 $ 73 -16.73%
2001* 1,876 38.55 72 -7.31%
Socially Responsible Growth
---------------------------
2002 931 $ 22.97 $ 21 -28.95%
2001 2,079 32.33 67 -22.58%
2000* 1 41.76 - -0.35%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
VIP Growth
----------
2002 2,876 $ 47.23 $ 136 -30.13%
2001 1,630 67.60 110 -17.62%
2000* 79 82.06 6 -0.32%
VIP Money Market
----------------
2002 165,574 $ 3.57 $ 591 1.71%
2001 68,836 3.51 242 4.15%
2000* 25,816 3.37 87 0.98%
VIP High Income
---------------
2002 489 $ 29.60 $ 14 3.50%
2001* 312 28.60 9 -11.70%
VIP Overseas
------------
2002 4,573 $ 19.32 $ 88 -20.30%
2001* 1,472 24.24 36 -22.23%
* The initial investment in this sub-account occurred during this period.
Results not annualized.
52
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
6. UNIT VALUES (CONTINUED)
Net Assets
------------------------------------
Units Total
Outstanding Unit Value (000s) Return
----------- ---------- ----------- -------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
VIP II Asset Manager
---------------------
2002 8,731 $ 28.79 $ 251 -8.72%
2001 6,210 31.54 196 -4.08%
2000* 34 32.88 1 -2.45%
VIP II Contrafund
------------------
2002 3,533 $ 25.16 $ 89 -9.33%
2001 547 27.75 15 -12.24%
2000* 1 31.62 - 3.11%
VIP II Index 500
-----------------
2002 6,032 $ 120.18 $ 725 -22.25%
2001 2,316 154.58 358 -12.10%
2000* 11 175.86 2 0.47%
VIP II Investment Grade Bond
-----------------------------
2002 14,063 $ 29.54 $ 415 10.35%
2001* 12,161 26.77 326 7.94%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
VIP III Growth Opportunities
----------------------------
2002 1,882 $ 14.68 $ 28 -21.87%
2001* 1,109 18.79 21 -5.67%
GOLDMAN SACHS VARIABLE
INSURANCE TRUST
VIT Capital Growth
------------------
2002 1,517 $ 8.58 $ 13 -24.34%
2001* 522 11.34 6 -8.60%
* The initial investment in this sub-account occurred during this period.
Results not annualized.
53
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
6. UNIT VALUES (CONTINUED)
Net Assets
------------------------------------
Units Total
Outstanding Unit Value (000s) Return
----------- ---------- ----------- -------
GOLDMAN SACHS VARIABLE INSURANCE TRUST
(CONTINUED)
VIT Core U.S. Equity
--------------------
2002 30,550 $ 8.86 $ 271 -21.87%
2001* 22,593 11.34 256 -6.24%
VIT Global Income
-----------------
2002 - $ - $ - -100.00%
2001* 93 12.29 1 -2.04%
VIT Growth & Income
-------------------
2002 7,923 $ 8.51 $ 67 -11.35%
2001* 6,912 9.60 66 -3.71%
THE MONTGOMERY FUNDS III
Emerging Markets
----------------
2002 4,482 $ 6.56 $ 29 -9.64%
2001* 1,447 7.26 11 -7.87%
Growth
------
2002 - $ - $ - -100.00%
2001* 152 14.76 2 -11.66%
SELIGMAN PORTFOLIOS, INC.
Communications & Information
----------------------------
2002 13,722 $ 20.36 $ 279 -36.06%
2001 9,937 31.84 316 5.33%
2000* 243 30.23 7 -0.94%
Frontier
--------
2002 746 $ 13.31 $ 10 -26.71%
2001* 134 18.16 2 1.18%
Global Technology
-----------------
2002 145 $ 11.12 $ 2 -31.70%
2001* 638 16.28 10 11.71%
Small-Cap Value
---------------
2002 24,507 $ 11.04 $ 271 -15.53%
2001* 20,627 13.07 270 11.90%
* The initial investment in this sub-account occurred during this period.
Results not annualized.
54
CANADA LIFE OF AMERICA VARIABLE LIFE ACCOUNT 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
6. UNIT VALUES (CONTINUED)
Net Assets
------------------------------------
Units Total
Outstanding Unit Value (000s) Return
----------- ---------- ----------- -------
PROFUNDS
VP Ultra Small-Cap
------------------
2002* - $ 14.87 $ - 3.55%
VP Money Market
---------------
2002* 1,193,218 $ 1.00 $ 1,197 0.00%
VP Bull Plus
------------
2002* 7,161 $ 14.51 $ 104 2.98%
VP Bear
-------
2002* - $ 42.37 $ - -5.17%
VP Ultra Mid-Cap
----------------
2002* 15,425 $ 5.77 $ 89 0.17%
VP Short Small-Cap
------------------
2002* - $ 28.74 $ - 0.38%
* The initial investment in this sub-account occurred during this period.
Results not annualized.
55
AUDITED FINANCIAL STATEMENTS - STATUTORY BASIS
Canada Life Insurance Company of America
For the Years Ended December 31, 2002 and 2001
with Report of Independent Auditors
CANADA LIFE INSURANCE COMPANY OF AMERICA
STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
CONTENTS
Report of Independent Auditors ............................................... 1
Statutory Balance Sheets...................................................... 2
Statutory Statements of Operations ........................................... 3
Statutory Statements of Capital and Surplus................................... 4
Statutory Statements of Cash Flows............................................ 5
Notes to Statutory Financial Statements....................................... 6
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Canada Life Insurance Company of America
We have audited the accompanying statutory balance sheets of CANADA LIFE
INSURANCE COMPANY OF AMERICA as of December 31, 2002 and 2001, and the related
statutory statements of operations, capital and surplus, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with 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.
As described in Note B to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Michigan Insurance Department, which practices differ from
accounting principles generally accepted in the United States. The variances
between such practices and accounting principles generally accepted in the
United States are described in Note B. The effects on the financial statements
of these variances are not reasonably determinable but are presumed to be
material.
In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States,
the financial position of Canada Life Insurance Company of America at December
31, 2002 and 2001, or the results of its operations or its cash flows for the
years then ended.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Canada Life
Insurance Company of America at December 31, 2002 and 2001, and the results of
its operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Michigan Insurance
Department.
As discussed in Note B to the financial statements, in 2001, Canada Life
Insurance Company of America changed various accounting policies to be in
accordance with the revised NAIC Accounting Practices and Procedures Manual, as
adopted by the Michigan Insurance Department.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 21, 2003
CANADA LIFE INSURANCE COMPANY OF AMERICA
STATUTORY BALANCE SHEETS
[in thousands of dollars except share data]
AT DECEMBER 31 2002 2001
----------------------------------------------------------------------------------------------------------------------
ADMITTED ASSETS
INVESTMENTS [note C]
Bonds $1,461,630 $1,465,356
Mortgage loans 901,917 919,350
Common and preferred stocks, including subsidiaries 11,607 15,202
Real estate 1,600 1,600
Short-term investments 20,695 5,800
Policy loans 342 289
Cash 523 1,390
Receivable for securities 668 397
Other invested assets 5,939 6,447
----------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND INVESTMENTS 2,404,921 2,415,831
Investment income due and accrued 30,412 30,917
Reinsurance balances [note F] 180 --
Federal income tax recoverable and interest thereon (including $1,078 and
$1,711 net deferred tax assets at December 31, 2002 and 2001
respectively) [note E] 5,723 1,711
Assets held in Separate Accounts [note H] 432,935 503,097
----------------------------------------------------------------------------------------------------------------------
TOTAL ADMITTED ASSETS $2,874,171 $2,951,556
======================================================================================================================
LIABILITIES AND CAPITAL AND SURPLUS
LIABILITIES
POLICY LIABILITIES
Life and annuity reserves [note I] $1,747,055 $1,751,072
Liability for deposit-type contracts [note I] 501,631 484,988
Other policy and contract liabilities 1,270 610
----------------------------------------------------------------------------------------------------------------------
TOTAL POLICY LIABILITIES 2,249,956 2,236,670
Interest maintenance reserve 25,092 23,349
Amounts owing to parent and affiliates [note G] 4,854 3,999
Reinsurance balances [note F] 2,814 10,309
Miscellaneous liabilities 5,707 7,720
Asset valuation reserve 27,025 20,456
Transfers to Separate Accounts due or accrued (net) [note H] (11,081) (11,311)
Liabilities from Separate Accounts [note H] 432,935 503,097
----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,737,302 2,794,289
----------------------------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS [note J]
Common stock - $10.00 par value, authorized - 25,000,000
Shares; issued and outstanding - 500,000 shares 5,000 5,000
Redeemable preferred stock - $10.00 par value, authorized -
25,000,000 shares; issued and outstanding - 0 shares in 2002 and 2,720,000 in
2001 -- 27,200
Paid-in surplus 76,000 76,000
Accumulated surplus 55,869 49,067
----------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 136,869 157,267
----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $2,874,171 $2,951,556
======================================================================================================================
See accompanying Notes.
2
CANADA LIFE INSURANCE COMPANY OF AMERICA
STATUTORY STATEMENTS OF OPERATIONS
[in thousands of dollars]
YEARS ENDED DECEMBER 31 2002 2001
--------------------------------------------------------------------------------------------------------
REVENUES
Premiums for insurance and annuity considerations [note F] $302,242 $342,895
Net investment income [note C] 197,300 188,908
Other income 9,288 7,513
--------------------------------------------------------------------------------------------------------
TOTAL REVENUES 508,830 539,316
--------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
BENEFITS PAID OR PROVIDED TO POLICYHOLDERS
Annuity 391,490 289,676
Life 20 --
Interest and adjustments on policy or deposit-type contract funds 27,646 31,589
(Decrease) increase in actuarial reserves (4,017) 163,068
--------------------------------------------------------------------------------------------------------
TOTAL BENEFITS PAID OR PROVIDED TO POLICYHOLDERS 415,139 484,333
Commissions and expense allowances on reinsurance assumed 13,607 13,673
Commissions 5,332 5,241
General insurance expenses 12,625 11,641
Taxes, licenses and fees 657 457
Other expense 878 1,370
Transfers to (from) Separate Accounts [note H] 40,587 (1,209)
--------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 488,825 515,506
--------------------------------------------------------------------------------------------------------
Gain from operations before federal income taxes and
net realized capital losses 20,005 23,810
Federal income taxes (excluding capital gains tax) [note E] 2,812 8,464
--------------------------------------------------------------------------------------------------------
Gain from operations before
net realized capital losses 17,193 15,346
Net realized capital losses [note C] (11,641) (4,915)
--------------------------------------------------------------------------------------------------------
NET INCOME $ 5,552 $ 10,431
========================================================================================================
See accompanying Notes.
3
CANADA LIFE INSURANCE COMPANY OF AMERICA
STATUTORY STATEMENTS OF CAPITAL AND SURPLUS
[in thousands of dollars]
YEARS ENDED DECEMBER 31 2002 2001
---------------------------------------------------------------------------------------------------
COMMON STOCK AT BEGINNING AND END OF YEAR $ 5,000 $ 5,000
REDEEMABLE PREFERRED STOCK AT BEGINNING OF YEAR 27,200 41,000
Redemption of preferred stock (27,200) (13,800)
----------------------
REDEEMABLE PREFERRED STOCK AT END OF YEAR -- 27,200
----------------------
PAID-IN SURPLUS AT BEGINNING AND END OF YEAR 76,000 76,000
ACCUMULATED SURPLUS AT BEGINNING OF YEAR 49,067 24,392
Net income 5,552 10,431
Change in surplus on account of:
Net unrealized capital gains (losses) 5,791 (8,831)
Actuarial valuation basis -- 11,100
Asset valuation reserve (6,569) 7,726
Adjustment for loss in currency exchange -- (6)
Net deferred tax (2,627) 3,244
Cumulative effect of changes in accounting principles -- 4,001
Nonadmitted assets 4,655 (2,990)
---------------------------------------------------------------------------------------------------
ACCUMULATED SURPLUS AT END OF YEAR 55,869 49,067
---------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS $ 136,869 $157,267
===================================================================================================
See accompanying Notes.
4
CANADA LIFE INSURANCE COMPANY OF AMERICA
STATUTORY STATEMENTS OF CASH FLOWS
[in thousands of dollars]
YEARS ENDED DECEMBER 31 2002 2001
------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Premiums, policy proceeds, and other considerations $ 302,242 $ 342,895
Net investment income received 187,068 177,817
Benefits paid (402,034) (289,314)
Insurance expenses paid (32,454) (30,361)
Federal income taxes paid (10,675) (6,292)
Other income 9,288 7,513
Other disbursements (878) (3,210)
Net transfers from Separate Accounts (40,357) 1,551
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATIONS 12,200 200,599
INVESTING ACTIVITIES
Proceeds from sales, maturities, or
repayments of investments:
Bonds 418,777 384,704
Mortgage loans and real estate 91,939 81,826
Equity and other investments 397 913
Cost of investments acquired:
Bonds (403,462) (526,918)
Mortgage loans and real estate (73,219) (113,211)
Equity and other investments (1,018) (1,060)
Change in policy loans (53) (289)
Taxes paid on capital gains and losses 2,153 247
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY INVESTMENTS 35,514 (173,788)
FINANCING AND MISCELLANEOUS ACTIVITIES
Redemption of redeemable preferred stock (27,200) (13,800)
Other uses (6,486) (27,665)
------------------------------------------------------------------------------------------------------
NET CASH USED BY FINANCING AND MISCELLANEOUS (33,686) (41,465)
------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 14,028 (14,654)
CASH AND SHORT-TERM INVESTMENTS - BEGINNING OF YEAR 7,190 21,844
------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS - END OF YEAR $ 21,218 $ 7,190
======================================================================================================
See accompanying Notes.
5
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE A
Nature of Operations. Canada Life Insurance Company of America (CLICA or the
Company) was incorporated on April 12, 1988 in the State of Michigan and is a
wholly-owned subsidiary of The Canada Life Assurance Company (CLA), a stock life
and accident and health insurance company. The Company's business consists
primarily of group and individual annuity policies assumed from CLA. The
Company's direct business consists of individual variable annuity and
institutional investment products. The Company is licensed to sell its products
in 49 states and the District of Columbia; however, its primary markets are
California, Illinois, Arkansas, Missouri and Georgia. The Company's variable
annuity products are sold by agents who are licensed and registered
representatives of the Company's subsidiary, Canada Life of America Financial
Services, Inc. as well as other independent agents.
The preparation of financial statements of insurance companies 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.
NOTE B
Accounting Practices and Basis of Presentation. The accompanying financial
statements have been prepared in accordance with accounting practices prescribed
or permitted by the Office of Financial and Insurance Services for the State of
Michigan, which practices differ from generally accepted accounting principles.
Effective January 1, 2001, the State of Michigan required that insurance
companies domiciled in the State of Michigan prepare their statutory basis
financial statements in accordance with the NAIC Accounting Practices and
Procedures Manual - Version effective January 1, 2001 subject to any deviations
prescribed or permitted by the State of Michigan Insurance Commissioner.
Accounting changes adopted to conform to the provisions of the NAIC Accounting
Practices and Procedures Manual - Version effective January 1, 2001 are reported
as changes in accounting principles. The cumulative effect of changes in
accounting principles is reported as an adjustment to unassigned surplus in the
period of the change in accounting principle. The cumulative effect is the
difference between the amount of capital and surplus at the beginning of the
year and the amount of capital and surplus that would have been reported at that
date if the new accounting principles had been applied retroactively for all
prior periods.
As a result of these changes, the Company reported a change of accounting
principle, as an increase to unassigned surplus, of $4,001,000 as of January 1,
2001. Included in this total adjustment is an increase in unassigned surplus of
$1,715,000 related to deferred tax assets, a decrease in unassigned surplus of
$1,068,000 related to bond impairments and an increase in unassigned surplus of
$3,354,000 related to interest rate swaps.
6
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
The statutory accounting practices (SAP) followed by the Company differ from
accounting principles generally accepted in the United States (GAAP) primarily
as follows:
- Investments: For SAP, all fixed maturities are reported at amortized cost
less write-downs for certain temporary and other-than-temporary
impairments. For SAP, the fair values of bonds and stocks are based on
values specified by the NAIC versus a quoted or estimated fair value as
required for GAAP.
For GAAP, such fixed maturity investments would be designated at purchase
as held-to-maturity, trading, or available-for-sale. Held-to-maturity fixed
investments would be reported at amortized cost, and the remaining fixed
maturity investments would be reported at fair value with unrealized
holding gains and losses reported in operations for those designated as
trading and as a component of shareholder's equity for those designated as
available-for-sale.
Credit tenant loans are classified as bonds for SAP and would be considered
mortgage loans for GAAP.
Changes between cost and admitted asset amounts of investment real estate
are credited or charged directly to unassigned surplus rather than to
income as would be the case for GAAP.
Realized gains and losses on investments for SAP are reported in income,
net of tax. Under GAAP, realized capital gains and losses would be reported
in the income statement on a pre tax basis in the period the asset is sold.
An interest maintenance reserve (IMR) is established under SAP and serves
to defer the portion of realized gains and losses on sales of fixed income
investments, principally bonds and mortgage loans, attributable to changes
in the general level of interest rates. The deferred gains and losses are
amortized into investment income over the remaining period to maturity
based on groupings of individual investments sold in one to ten-year time
periods. Under GAAP, realized capital gains and losses would be reported in
the income statement on a pre-tax basis in the period that the assets
giving rise to the gains or losses are sold.
Under SAP, an asset valuation reserve (AVR) is established and represents a
provision for market and credit based fluctuations in the statement value
of invested assets. It is determined by an NAIC prescribed formula and is
reported as a liability rather than as a reduction in the cost basis of the
investment. The change in the AVR flows directly through unassigned
surplus. Under GAAP the cost basis of the investments would be reduced when
there has been a decline in value deemed other-than-temporary, in which
case the decline would be charged to earnings.
7
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
Valuation allowances, if necessary, are established for mortgage loans
based on (1) the difference between the unpaid loan balance and the
estimated fair value of the underlying real estate when such loans are
determined to be in default as to scheduled payments and (2) a reduction to
a maximum percentage of 75% of the most recently appraised value of the
underlying real estate, exclusive of insured, guaranteed or purchase money
mortgages. Under GAAP, valuation allowances would be established when the
Company determines it is probable that it will be unable to collect all
amounts due (both principal and interest) according to the contractual
terms of the loan agreement. The initial valuation allowance and subsequent
changes in the allowance for mortgage loans are charged or credited
directly to unassigned surplus for SAP, rather than being included as a
component of earnings as would be required for GAAP.
- Policy Acquisition Costs: For SAP, the cost of acquiring and renewing
business are expensed when incurred. Under GAAP, to the extent recoverable
from future gross profits, deferred policy acquisition costs are amortized
generally in proportion to the present value of expected gross profits from
surrender charges and investment, mortality, and expense margins.
- Nonadmitted Assets: Certain assets designated as "nonadmitted", principally
software development costs, past due agents' balances and deferred tax
assets that will not be realized within one year of the balance sheet date,
would be included in GAAP assets but are excluded from the SAP balance
sheets with changes therein credited or charged directly to unassigned
surplus.
- Subsidiaries: The accounts and operations of the Company's subsidiaries are
not consolidated with the accounts and operations of the Company as would
be required under GAAP.
- Recognition of Premiums: For SAP, revenues for annuity policies with
mortality or morbidity risk consist of the entire premium received and
benefits incurred represent the total of death benefits paid and the change
in policy reserves. Premiums received for annuity policies without
mortality or morbidity risk are recorded using deposit accounting, and
credited directly to the liability for policy reserves without recognizing
premium income. Under GAAP, premiums received in excess of policy charges
would not be recognized as premium revenue and benefits would represent the
excess of benefits paid over the policy account value and interest credited
to the account values.
- Benefit Reserves: Certain policy reserves are calculated based on
statutorily required interest and mortality assumptions rather than on
estimated expected experience or actual account balances as would be
required under GAAP.
8
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
- Reinsurance: Policy and contract liabilities ceded to reinsurers have been
reported as reductions of the related reserves rather than as assets as
would be required under GAAP. For SAP, commissions allowed by reinsurers on
business ceded are reported as income when received rather than being
deferred and amortized with deferred policy acquisition costs as required
under GAAP.
- Deferred Income Taxes: Deferred tax assets are limited to 1) the amount of
federal income taxes paid in prior years that can be recovered through loss
carrybacks for existing temporary differences that reverse by the end of
the subsequent calendar year, plus 2) the lesser of the remaining gross
deferred tax assets expected to be realized within one year of the balance
sheet date or 10% of capital and surplus excluding any net deferred tax
assets, EDP equipment and operating software and any net positive goodwill,
plus 3) the amount of remaining gross deferred tax assets that can be
offset against existing gross deferred tax liabilities. The remaining
deferred tax assets are nonadmitted. Deferred taxes do not include amounts
for state taxes. Under GAAP, state taxes are included in the computation of
deferred taxes, a deferred tax asset is recorded for the amount of gross
deferred tax assets expected to be realized in future years, and a
valuation allowance is established for deferred tax assets not realizable.
- Policyholder Dividends: Policyholder dividends are recognized when declared
rather than over the term of the related policies as required for GAAP.
- Statements of Cash Flows: Cash and short term investments in the statement
of cash flows represent cash balances and investments with initial
maturities of one year or less. Under GAAP, the corresponding captions of
cash and cash equivalents include cash balances and investments with
initial maturities of three months or less.
The effects of the foregoing variances from GAAP on the accompanying statutory
financial statements have not been determined, but are presumed to be material.
Other significant accounting practices are as follows:
- Investments: Bonds, mortgage loans, common stocks, preferred stocks, real
estate, policy loans, short-term investments and derivative instruments are
stated at values prescribed by the NAIC, as follows:
9
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
Bonds not backed by other loans, loan-backed bonds and structured
securities are stated at amortized cost using the constant yield method
except those with an NAIC designation of 6, which are stated at the lower
of amortized cost or fair value. These securities are revalued for
significant changes in the prepayment assumptions using the retrospective
method.
Canada Life of America Financial Services, Inc. and CL Capital Management,
Inc. are wholly-owned subsidiaries. The Company values its subsidiaries in
accordance with Part 8, Section 3 (b) of the Purposes and Procedures manual
of the Securities Valuation Office of the NAIC.
Mortgage loans on real estate are stated at amortized cost using the
straight-line method.
Common stocks are stated at market value, except that investments in the
stocks of uncombined subsidiaries and affiliates in which the Company has
an interest of 20% or more are carried on the equity basis.
Preferred stocks are carried at actual cost.
Investments in real estate or property acquired in satisfaction of debt are
carried at depreciated cost less encumbrances.
Policy loans are carried at the aggregate unpaid principal balance.
Short-term investments include investments with maturities of less than one
year at the date of acquisition. The carrying values reported in the
balance sheet are at amortized cost which approximates fair value.
All derivatives are stated at fair value with the change in fair value
recognized in the Statements of Operations.
- Premiums and Annuity Considerations: Premium revenues are recognized when
due for other than annuities, which are recognized when received.
- Separate Accounts: Separate Accounts are maintained to receive and invest
premium payments under individual variable annuity and variable universal
life policies issued by the Company. The assets and liabilities of the
Separate Account are clearly identifiable and distinguishable from other
assets and liabilities of the Company. The contractholder bears the
investment risk. Separate Account assets are reported at fair value. The
operations of the Separate Account are not included in the accompanying
financial statements.
10
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
- Life Insurance and Annuity Reserves: All policies, except variable
universal life and variable annuity products, were acquired through
coinsurance reinsurance agreements with CLA. The reserves established meet
the requirements of the Insurance Law and Regulations of the State of
Michigan and are consistent with the reserving practices of CLA.
Some policies promise a surrender value in excess of the reserve as legally
computed. This excess is calculated on a policy by policy basis.
Policies issued at premiums corresponding to ages higher than the true ages
are valued at the rated-up ages. For policies issued with, or subsequently
subject to, an extra premium payable annually, an extra reserve is held.
The extra premium reserve is 45% of the gross extra premium payable during
the year if the policies are rated for reasons other than medical
impairments. For medical impairments, the extra premium reserve is
calculated at the excess of the reserve based on rated mortality over that
of standard mortality.
At the end of 2002 and 2001, the Company had no insurance in force for
which the gross premiums were less than the net premiums according to the
standard of valuation set by the State of Michigan. The tabular interest
and tabular cost have been determined from the basic data for the
calculation of policy reserves. The tabular less actual reserve released
and the tabular interest on funds not involving life contingencies have
been determined by formula. Other increases are insignificant and relate to
the Company valuing the deferred acquisition costs and/or back-end charges
in connection with the variable annuity.
All sub-standard annuities other than structured settlements are valued at
their true ages, while structured settlements are valued using constant
addition to the mortality rate at their true ages.
11
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE B
Accounting Practices and Basis of Presentation (continued).
The Company has sold variable annuity contracts containing a
dollar-for-dollar withdrawal provision, which provides for a reduction in
the guaranteed minimum death benefit (GMDB) on a dollar-for-dollar basis
when a partial withdrawal occurs. Currently there is ambiguity as to the
correct interpretation of Actuarial Guideline XXXIII, "Determining CARVM
Reserves for Annuity Contracts with Elective Benefits" (AG XXXIII) and
Actuarial Guideline XXXIV, "Variable Annuity Minimum Guaranteed Death
Benefit Reserves" (AG XXXIV) as to the appropriate application of these
guidelines in determining the reserves for these products. In calculating
the policy liability reserves for these variable annuity contracts, the
Company does not consider the benefit streams where all policyholders take
the maximum partial withdrawal under these policies while maintaining the
GMDB.
At the time of issuance of these financial statements, the Michigan
Insurance Department, which is ultimately responsible for determining the
appropriate reserving methods for the statutory financial statements of
Michigan domiciled insurance companies, has acknowledged the inherent
ambiguity and controversy as to the correct interpretation of AG XXXIII and
AG XXXIV with respect to GMDB benefit reserves required for variable
annuity contracts containing dollar-for-dollar withdrawal provisions. As a
result, the Michigan Insurance Department has allowed the Company to
continue to follow its current method of reserving for these variable
annuity contracts until such time that guidance is issued that clarifies
the ambiguity between AG XXXIII and AG XXXIV. If the Company had provided
additional reserves through the use of the maximum partial withdrawal
scenarios of AG XXXIII as of December 31, 2002, assuming no change to the
opening reserve balance, policy liability reserves would have increased by
approximately $30 million and surplus would have decreased by approximately
$30 million.
- Federal Income Tax: Federal income taxes are provided based on an estimate
of the amount currently payable which may not bear a normal relationship to
pretax income because of timing and other differences in the calculation of
taxable income.
12
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments.
The fair value for fixed maturities is based on values specified by the NAIC. In
cases where NAIC prices are not available, fair values are based on estimates
using values obtained from independent pricing services, or, in the case of
private placements, by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and maturity of the
investments. The NAIC does not specify fair values for mortgage/asset-backed
bonds, therefore carrying value approximates fair value. The carrying value and
the fair value of investments in bonds are summarized as follows (in thousands
of dollars):
DECEMBER 31, 2002
---------------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
----------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATIONS $ 155,781 $37,193 $ -- $ 192,974
ALL OTHER CORPORATE BONDS 802,422 36,707 (13,462) 825,667
PUBLIC UTILITIES 80,959 2,891 (91) 83,759
MORTGAGE/ASSET-BACKED SECURITIES 178,010 518 -- 178,528
FOREIGN SECURITIES 244,458 15,176 (16) 259,618
----------------------------------------------------------------------------------------------------
TOTAL FIXED MATURITIES $1,461,630 $92,485 $(13,569) $1,540,546
====================================================================================================
DECEMBER 31, 2001
---------------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
----------------------------------------------------------------------------------------------------
U. S. government obligations $ 143,946 $23,301 $ (362) $ 166,885
All other corporate bonds 822,221 15,062 (11,155) 826,128
Public utilities 66,629 870 (279) 67,220
Mortgage/Asset-backed
Securities 193,845 -- -- 193,845
Foreign securities 238,715 7,159 (329) 245,545
----------------------------------------------------------------------------------------------------
TOTAL FIXED MATURITIES $1,465,356 $46,392 $(12,125) $1,499,623
====================================================================================================
13
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments (continued).
The carrying value and fair value of fixed maturity investments at December 31,
2002 by contractual maturity are shown below (in thousands of dollars). Expected
maturities may differ from contractual maturities because certain borrowers have
the right to call or prepay obligations with or without call or prepayment
penalties. In addition, Company requirements may result in sales before
maturity.
CARRYING VALUE FAIR VALUE
-------------------------------------------------------------------------------
IN 2003 $ 65,981 $ 66,393
IN 2004 - 2007 259,503 265,207
IN 2008 - 2012 186,195 186,442
2013 AND AFTER 771,941 843,976
MORTGAGE/ASSET-BACKED SECURITIES 178,010 178,528
-------------------------------------------------------------------------------
TOTAL FIXED MATURITIES $1,461,630 $1,540,546
===============================================================================
At December 31, 2002, and 2001, bonds with an admitted asset value of $4,635,000
and $4,671,000, respectively, were on deposit with state insurance departments
to satisfy regulatory requirements.
Proceeds from the sales and maturities of investments in debt securities during
2002 and 2001 were $418,777,000 and $384,704,000; gross gains of $13,499,000 and
$6,210,000, and gross losses of $9,235,000 and $7,271,000 were realized on those
sales, respectively.
Information on mortgage loans at December 31 is as follows (in thousands of
dollars):
2002 2001
--------------------------------------------------------------------------------
Impaired loans $ 3,306 $ 1,898
Non-impaired loans 898,611 917,452
--------------------------------------------------------------------------------
Total mortgage loans $901,917 $919,350
================================================================================
There was no income accrued or received on impaired loans in 2002 or 2001.
The maximum and minimum lending rates for commercial mortgage loans in 2002 were
10.25% and 5.65%, respectively. Fire insurance is required on all properties
covered by mortgage loans at least equal to the excess of the loan over the
maximum loan which would be permitted by law on the land without the buildings.
During 2002, the Company did not reduce interest rates on any outstanding
mortgage loan. Mortgages held by the Company on which interest was more than 180
days overdue were $1,883,000 and $1,898,000 at December 31, 2002 and 2001,
respectively.
14
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments (continued).
The mortgage loans are typically collateralized by the related properties and
the loan-to-value ratios at the date of loan origination generally do not exceed
75%. The Company's exposure to credit loss in the event of non-performance by
the borrowers, assuming that the associated collateral proved to be of no value,
is represented by the outstanding principal and accrued interest balances of the
respective loans. Non-admitted mortgage loans decreased $1,350,000 in 2002 and
increased $1,369,000 in 2001. At December 31, 2002 and 2001 the Company held no
mortgages with prior outstanding liens.
The Company reported no accumulated depreciation on investment real estate as of
December 31, 2002.
Major categories of CLICA's net investment income for years ended December 31
are summarized as follows (in thousands of dollars):
2002 2001
-------------------------------------------------------------------------------
Income:
Fixed maturities $110,516 $105,834
Equity securities 212 216
Mortgage loans 84,760 82,865
Real estate 77 73
Short-term investments 317 1,195
Derivatives 2,566 994
Policy loans 20 1
Amortization of IMR 1,053 416
Other income 282 258
-------------------------------------------------------------------------------
Total investment income 199,803 191,852
Less: investment expenses 2,509 2,918
bank deposit - interest expense (6) 26
-------------------------------------------------------------------------------
NET INVESTMENT INCOME $197,300 $188,908
================================================================================
The Company's policy is to exclude due and accrued income from investment income
on mortgage loans in foreclosure or delinquent more than ninety days and on
bonds where the collection of income is uncertain. The total amount excluded as
of December 31, 2002 and 2001 was $0 and $1,934,000, respectively.
CLICA uses the grouped method of computing the IMR amortization for
interest-related gains and losses arising from the sale of fixed income
investments. The method is unchanged from prior years.
15
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments (continued).
Realized capital gains (losses) for years ended December 31 are reported net of
federal income taxes and amounts transferred to the IMR and are summarized as
follows (in thousands of dollars):
2002 2001
-----------------------------------------------------------------------------
Fixed maturities:
Gross gains $ 13,499 $ 6,210
Gross losses (16,034) (11,508)
---------------------
Total fixed maturities (2,535) (5,298)
Equity securities:
Gross gains 4 118
Gross losses (6,140) (278)
---------------------
Total equity securities (6,136) (160)
Mortgage loans -- (725)
Derivative instruments (457) (1,751)
---------------------
(9,128) (7,934)
Income tax benefit 283 681
Transfer to IMR (2,796) 2,338
-----------------------------------------------------------------------------
NET REALIZED CAPITAL LOSSES $(11,641) $ (4,915)
=============================================================================
Realized capital losses include $12,108,000 and $4,237,000 related to securities
that have experienced other-than-temporary decline in value in 2002 and 2001,
respectively.
Unrealized capital gains and losses for equity securities are recorded directly
to surplus. The change in the unrealized gains and losses on equity securities
was $2,198,000 and $(2,605,000) for the years ended December 31, 2002 and 2001,
respectively. The accumulated gross unrealized gains and losses on unaffiliated
equity securities at December 31 are as follows (in thousands of dollars):
2002 2001
------------------------------------------------------------------------------
Accumulated gross unrealized gains $ 6,176 $ 1,833
Accumulated gross unrealized losses (6,680) (4,535)
------------------------------------------------------------------------------
Net unrealized losses $ (504) $(2,702)
==============================================================================
Market Risk: The Company confines its use of derivative products to the
following derivative products: currency forwards, futures, options, swaps, caps
and floors. The Company transacted only in futures and swaps during the current
year, and these are the only derivative instruments that are open at December 31
of the current year.
16
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments (continued).
Futures: Financial futures are exchange-traded contracts that settle at a future
date and are used by the Company as a tool to manage interest rate risk. The
price volatility of these contracts is based on sensitivity to interest rate
changes over time. The use of futures exposes the Company to minimal credit risk
because trades are effected through a regulated exchange and positions are
marked to market on a daily basis. The Company is required to put up collateral
for any futures contracts that are entered. The amount of collateral that is
required is determined by the exchange on which it is traded. The Company
currently utilizes US Treasury bills to satisfy this collateral requirement.
Strategies that the Company is engaging in or has employed in the past are:
- Purchase of futures to hedge new business annuity commitments
- Sale of futures where the Company commits to final asset pricing without a
liability commitment
- Purchase or sale of futures to move the Company's asset duration and
convexity in line with its liabilities
- Purchase or sale of futures as a cost-efficient alternative to a cash
transaction involving conventional fixed income investments for reasons of
market liquidity, or in circumstances where a conventional transaction
would force the realization of large capital gains or losses.
The Company recognized no gains or losses during 2002 resulting from derivatives
that no longer qualify for hedge accounting.
Futures are marked-to-market daily, and gains and losses are recognized in
current earnings. The notional value at December 31, 2002 for all open futures
was $206,639,000.
Swaps: Swaps are over-the-counter contracts that arrange for the exchange of
cash flows at specified intervals. The Company uses swaps to hedge currency risk
and interest rate risk of its bonds and mortgages. The Company is exposed to
credit risk by the potential for a swap counterparty to fail to meet its
obligations under the contract. The Company mitigates credit risk by limiting
its acceptable counterparties to those with a minimum credit rating of AA-, as
defined by Standard & Poor's.
Strategies that the Company is engaging in or has employed in the past are:
- Currency swap transactions whereby cash flows of foreign paying securities
are exchanged for US currency equivalents
- Interest rate swap transactions, generally exchanging the difference
between fixed-rate and floating-rate interest amounts, in order to reduce
market risks from changes in interest rates and to alter interest rate
exposures arising from mismatches between assets and liabilities.
17
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE C
Investments (continued).
Swaps are carried at fair value, with the change in fair value recognized in
current earnings. The notional value at December 31, 2002 for all open swaps was
$15,000,000.
NOTE D
Concentration of Credit Risk. At December 31, 2002, CLICA held unrated or
less-than-investment grade corporate bonds with a carrying value of $156,383,000
and an aggregate fair value of $142,629,000. These holdings amounted to 10.7% of
the bond portfolio and 5.2% of CLICA's total admitted assets. The portfolio is
well diversified by industry.
CLICA's mortgage portfolio is well diversified by region and property type with
16.0% in California (book value - $144,174,000), 12.0% in New York (book value -
$108,339,000), 11.6% in Ohio (book value - $104,248,000), 10.4% in Michigan
(book value - $93,335,000) and with investments in the remainder of the states
less than 10%. The investments consist of first mortgage liens. Significant
outstanding balances on individual properties include $16,052,000 on an
apartment property in Pennsylvania and $11,505,000 on an apartment property in
New York. All other mortgage loans have outstanding principal of less than
$10,000,000.
NOTE E
Federal Income Taxes.
The main components of the deferred tax balance are as follows (in thousands of
dollars):
DEFERRED TAX ASSETS 2002 2001
------- -------
Life & A&H Reserves, and Deposit Fund Liabilities $14,893 21,923
Invested Assets 6,028 4,171
Deferred Acquisition Costs 1,771 748
Other Expenses 95 241
------- -------
Total deferred tax assets 22,787 27,083
Less: non-admitted deferred tax assets 20,251 25,368
------- -------
Admitted deferred tax assets 2,536 1,715
------- -------
DEFERRED TAX LIABILITIES
Derivatives 1,452 --
Accrued Dividends - common stock 4 4
Other 2 --
------- -------
Total deferred tax liabilities 1,458 4
------------------------------------------------------------------------------
Net admitted deferred tax asset $ 1,078 $ 1,711
==============================================================================
During 2002 the non-admitted deferred tax asset decreased by $5,117,000 to
$20,251,000.
18
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE E
Federal Income Taxes (continued)
The changes in the main components of DTAs and DTLs are as follows (in thousands
of dollars):
DEC 31, 2002 DEC 31, 2001 CHANGE
----------------------------------------
Total deferred tax assets $22,787 27,083 $(4,296)
Total deferred tax liabilities 1,458 4 1,454
---------------------------------------
Net deferred tax asset (liability) $21,329 $ 27,079 (5,750)
=========================
Change in tax effect of unrealized
Gains (losses) 3,123
-------
Change in net deferred income tax $(2,627)
=======
The Company's income tax expense and change in deferred taxes differs from the
amount obtained by applying the federal statutory rate of 35% to net gain from
operations. The significant differences are as follows (in thousands of
dollars):
---------------------------
YEAR ENDED YEAR ENDED
DEC 31, 2002 DEC 31, 2001
---------------------------
Provision computed at statutory rate of 35% on
Operating income and capital gains $ 3,807 $ 5,557
Amortization of IMR (369) (146)
Dividend Received Deductions (3) (11)
Deferred Tax related True-up Items 1,738 2,096
Other (17) (437)
------- -------
Total incurred taxes $ 5,156 $ 7,059
======= =======
Federal income taxes incurred on operating income $ 2,812 $ 8,464
Federal income tax benefit on capital losses (283) (681)
Change in net deferred income taxes 2,627 (724)
------- -------
Total incurred taxes $ 5,156 $ 7,059
======= =======
At December 31, 2002 and 2001, current federal income taxes receivable (payable)
were $4,645,000 and $(1,351,000), respectively.
At December 31, 2002 the Company had $0 of operating loss carry forwards.
Income taxes incurred in the current and prior years that will be available for
recoupment in the event of future net losses are $5,821,000, $6,864,000 and
$12,634,000 for 2002, 2001 and 2000, respectively.
19
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE F
Reinsurance. Various reinsurance agreements exist between the Company and CLA.
The effect of the agreements is to have the Company assume certain existing and
future insurance and annuity business of CLA. Except for variable universal life
policies, variable annuity contracts and institutional investment products
issued, all premiums for insurance and annuity considerations and benefit
expenses recorded for the years ended December 31, 2002 and 2001 were the result
of the coinsurance agreements. Additionally, the Company maintains a funds
withheld coinsurance treaty under which certain annuity risks are ceded to Crown
Life Insurance Company of Canada, a modified coinsurance treaty whereby certain
variable universal life insurance risks are ceded to First Allmerica Financial
Life Insurance Company and yearly renewable term treaties with several
reinsurers.
At December 31, 2002 and 2001 the payable to reinsurers under these agreements,
is as follows (in thousands of dollars):
2002 2001
-----------------------------------------------------------------------------
CLA $3,040 $10,102
First Allmerica Financial Life Insurance Company (226) 207
------------------
Total reinsurance balances $2,814 $10,309
==================
The effect of reinsurance on premiums and annuity considerations earned for
years ended December 31 follow (in thousands of dollars):
2002 2001
--------------------------------------------------------------------------------
Direct premiums $ 169,376 $ 71,861
Premiums assumed from CLA 133,993 273,829
Premiums ceded (1,127) (2,795)
--------------------------------------------------------------------------------
Net premiums and annuity considerations $ 302,242 $ 342,895
================================================================================
NOTE G
Related Party Transactions. In addition to the coinsurance agreements mentioned
above, CLA has a cost allocation arrangement based on generally accepted
accounting principles with CLICA. For the years ended December 31, 2002 and
2001, these allocated costs amounted to $14,068,000 and $12,662,000,
respectively.
20
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE G
Related Party Transactions (continued).
At December 31, 2002 and 2001, the amounts receivable and payable to CLA and
affiliates, which include outstanding administrative expenses, are as follows
(in thousands of dollars):
2002 2001
============================================================================
Total Receivable $ 307 $ 43
Total Payable (5,161) (4,042)
----------------------------------------------------------------------------
Net Payable $(4,854) $(3,999)
============================================================================
NOTE H
Separate Accounts. The Company's non-guaranteed separate accounts represent
funds invested in variable annuity and variable universal life policies issued
by the Company. The assets of these funds are invested in shares of nine
unaffiliated management investment companies.
Premiums or deposits for years ended December 31, 2002 and 2001 were
$158,772,000 and $60,864,000, respectively. Total reserves were $421,653,000 and
$491,717,000 at December 31, 2002 and 2001, respectively. All reserves were
subject to discretionary withdrawal, at fair value, with a surrender charge of
up to 6%.
A reconciliation of the amounts transferred to and from the Separate Accounts
for years ended December 31 is presented below (in thousands of dollars):
2002 2001
-------------------------------------------------------------------------------------------
Transfers as reported in the Summary of Operations of the
Separate Accounts statement:
Transfers to Separate Accounts $ 158,772 $ 60,864
Transfers from Separate Accounts (117,874) (64,083)
-------------------------------------------------------------------------------------------
Net transfers to (from) Separate Accounts 40,898 (3,219)
Reconciling adjustments:
Net policyholder transactions (311) 2,010
-------------------------------------------------------------------------------------------
Transfers as reported in the Statements of Operations $ 40,587 $ (1,209)
===========================================================================================
21
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE I
Annuity Reserves and Deposit Fund Liabilities. CLICA's withdrawal
characteristics for annuity reserves and deposit fund liabilities at December 31
are summarized as follows (in thousands of dollars):
AMOUNT PERCENT OF TOTAL
------------------------- --------------------
2002 2001 2002 2001
------------------------------------------------------------------------------------------------
Subject to discretionary withdrawal:
With market value adjustment $173,638 $ 231,026 7.7% 10.3%
At book value less surrender charge of
5% or more 162,770 157,100 7.2% 7.0%
------------------------------------------------------------------------------------------------
Subtotal 336,408 388,126 14.9% 17.3%
Subject to discretionary withdrawal
without adjustment at book value
(minimal or no charge or adjustment) 105,566 118,592 4.7% 5.3%
Not subject to discretionary withdrawal 1,480,095 1,496,367 65.7% 66.8%
Structured settlement 330,434 235,862 14.7% 10.6%
------------------------------------------------------------------------------------------------
Total (gross) 2,252,503 2,238,947 100.0% 100.0%
Less: reinsurance ceded 3,308 2,800
-------------------------
Net annuity reserves and deposit fund
liabilities $2,249,195 $2,236,147
=========================
A reconciliation to the Life & Accident & Health Annual Statement net annuity
reserves and deposit fund liabilities at December 31, 2002 is as follows (in
thousands of dollars):
Exhibit 5, Section B, Total (net) $ 1,707,491
Exhibit 5, Section C, Total (net) 19,086
Exhibit 5, Section G, Total Lines 070001,070002 and 070004
19,917
Exhibit 7, Column 1, Line 14 501,631
Exhibit 8, Part 1, Column 4, Line 3.4 1,070
------------
Total $ 2,249,195
============
NOTE J
Capital and Surplus. The Company has two classes of capital stock: redeemable
preferred stock ($10.00 par value) and common stock ($10.00 par value), ranked
in order of liquidation preference. The preferred shares have no interest rate
assigned and are non-voting. During 2002, the Company redeemed all remaining
issued preferred shares at a redemption price of $10.00 per share.
Under applicable Michigan insurance law, the Company is required to maintain
unimpaired capital and surplus of $7,000,000 and additional unimpaired surplus
of $500,000. At December 31, 2002, unimpaired capital and surplus was
$136,869,000.
22
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE J
Capital and Surplus (continued).
The maximum amount of dividends which can be paid, by insurance companies
domiciled in the State of Michigan, to shareholders without prior approval of
the Insurance Commissioner is limited to an amount which (together with any
other dividends or distributions made within the preceding 12 months) does not
exceed the lesser of: (i) the insurer's earned surplus (excluding surplus
arising from unrealized capital gains); or (ii) the greater of (a) 10% of the
insurer's surplus or (b) its net gain from operations for the preceding year
ended December 31. Statutory surplus at December 31, 2002 was $131,869,000. The
maximum dividend payout which may be made without prior approval in 2003 is $0.
Dividends are non-cumulative.
At December 31, 2002, the Company's capital and surplus exceeded the NAIC's
"Risk Based Capital" requirements for life and health companies.
NOTE K
Fair Value of Financial Instruments. The fair value of certain financial
instruments along with their corresponding carrying values at December 31 follow
(in thousands of dollars). As the fair value of all the Company's assets and
liabilities is not presented, this information in the aggregate does not
represent the underlying value of the Company.
2002 2001
--------------------------- ----------------------------
FAIR CARRYING FAIR CARRYING VALUATION
VALUE VALUE VALUE VALUE METHOD
------------------------------------------------------------------------------------------------------------
Financial Assets
----------------
Bonds $1,540,546 $1,461,630 $1,499,622 $1,465,356 1
Common & preferred stocks
excluding investment in
subsidiaries
11,496 11,496 15,093 15,093 2
Mortgage loans 1,056,868 901,917 1,015,493 919,350 3
Interest rate swaps 5,016 5,016 3,647 3,647 4
Futures 877 877 2,759 2,759 4
Financial Liabilities
---------------------
Investment -type
Insurance contracts 456,560 429,450 504,969 495,195 5
1. The fair value for fixed maturities is based on values specified by the
NAIC. In cases where NAIC prices are not available, fair values are based
on estimates using values obtained from independent pricing services, or,
in the case of private placements, by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality
and maturity of the investments.
23
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE K
Fair Value of Financial Instruments (continued).
2. Fair values are based on publicly quoted market prices at the close of
trading on the last business day of the year.
3. Fair values are estimated using discounted cash flow analysis based on
interest rates currently being offered for similar credit ratings.
4. Fair values for future contracts and interest rate swaps that have not
settled are based on current settlement values.
5. Fair values for liabilities under investment-type insurance contracts are
estimated using discounted liability calculations, adjusted to approximate
the effect of current market interest rates for the assets supporting the
liabilities.
NOTE L
Transfer and Servicing of Financial Assets.
The Company lends its own securities to increase portfolio returns. Lending
activities are covered by the Company's Investment Policy: borrowers must be
approved by the Company, standards for collateral must be met, and aggregate
collateral value must be maintained at a minimum of 102% of the fair value of
the securities loaned. Securities on loan at December 31, 2002, amounted to
$135,983,000 aggregated as follows (in thousands of dollars):
Securities Description FAIR VALUE
---------------------- ----------
US treasury bills $ 6,600
US treasury bond strips 20,709
US treasury bonds 17,369
US treasury notes 33,499
Other than US Treasury Securities 57,806
--------
Grand Total $135,983
========
The Company has no servicing assets or liabilities.
NOTE M
Contingencies. The Company has been named in various pending legal proceedings
considered to be ordinary routine litigation incidental to the business of the
Company. The Company believes contingent liabilities arising from litigation,
income taxes and other matters will not have a material adverse effect on the
Company's future results of operations or financial position.
24
CANADA LIFE INSURANCE COMPANY OF AMERICA
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE N
Events Subsequent. On February 17, 2003, the Board of Directors of the Company's
ultimate parent, Canada Life Financial Corporation, issued a recommendation to
its common shareholders to accept an offer for $7.1 billion (Canadian dollars)
made on February 17, 2003 by Great-West Lifeco Inc. to acquire all the
outstanding common shares of Canada Life Financial Corporation. It is not
possible to project the outcome of the offer nor the impact on the Company's
future results.
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