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EXHIBIT 1.A (5)(G)
We, National Life Insurance Company, agree to pay the Death Benefit to the
Beneficiary, subject to the terms of this policy, when we receive at our Home
Office due proof that the Insured died while this policy was in force.
GENERAL TERMS OF THIS POLICY
CONSIDERATION. This policy is issued in consideration of the application and
payment of at least the Minimum Initial Premium shown in the Data Section. We
will incur no liability if no premium is paid.
ENTIRE CONTRACT. On the Date of Issue the entire contract between the parties
is this policy and a copy of the application which is attached at issue. Any
change of this contract must be written and may be made only by one of our
authorized officers or registrars. We will send the Owner a copy of any
application for a change which we approve. It and any additional Data Section
shall become part of this contract on the effective date of such change.
REPRESENTATIONS. Any statement made by or for the Insured shall be deemed a
representation and not a warranty. Unless such statement is in the attached
application or in any subsequent application, it shall not be used to:
1. make this policy void; or
2. make any increase in Face Amount void; or
3. make any Reinstatement void; or
4. defend any claim.
INCONTESTABILITY. After this policy has been in force during the life of the
Insured for two years from the policy Date of Issue, we will not contest it;
however,
1. we may contest any increase in Face Amount for which an application is
required until such increase has been in force during the life of the
Insured for two years from its Effective Date; and
2. we may contest any Reinstatement until such Reinstatement has been in
force during the life of the Insured for two years from its Effective
Date.
POLICY MONTHS, YEARS AND ANNIVERSARIES. Policy Months, Years and Anniversaries
shall be measured from the Date of Issue.
The Date of Issue is the first Monthly Policy Date. The Monthly Policy Date
shown in the Data Section occurs on the same day each month or on the last day
of any month having no such date.
A Contract Anniversary falls on each successive anniversary of the Date of
Issue. The first Contract Year begins on the Date of Issue and ends on the day
before the first Contract Anniversary. Each subsequent Contract Year begins on
a Contract Anniversary and ends on the day before the next Contract
Anniversary.
POLICY EFFECTIVE DATES. The Face Amount on the Date of Issue shall become
effective on the Date of Issue shown in the Data Section.
Any increase in Face Amount for which an application is required shall become
effective on the Monthly Policy Date on or next following the date we approve
the application for such increase in Face Amount.
Any increase in Face Amount for which an application is not required shall
become effective on the Monthly Policy Date on or next following the date we
receive the request for such increase unless otherwise provided by the policy.
Any decrease in Face Amount requested shall become effective on the Monthly
Policy Date on or next following the date we receive the request for such
decrease.
Any reinstatement of this policy shall become effective on the Monthly Policy
Date on or next following the date we approve the application for
Reinstatement.
Any change of Death Benefit Option shall become effective on the Monthly Policy
Date on or next following the date we receive the request for such change.
ATTAINED AGE. The Attained Age of the Insured on any date is the Issue Age
shown in the Data Section plus the number of full Policy Years which have
passed since the Date of Issue.
MISSTATEMENT OF AGE. The Issue Age shown in the Data Section is the age of the
Insured on the Insured's birthday nearest to the Date of Issue. It is based on
the date of birth shown in the application.
If the age of the Insured has been misstated, we will adjust the Accumulated
Value to be the Accumulated Value that would have resulted had the Cost of
Insurance Charges been based on the correct age of the Insured. The adjustment
shall take effect on the Monthly Policy Date on or next following the date we
have proof to our satisfaction of such misstatement.
If the Insured has died, we will similarly adjust the Accumulated Value as of
the last Monthly Policy Date prior to the Insured's death. To the extent that
the recomputed, adjusted Accumulated Value is negative, we will deduct such
negative amount from the Death Benefit otherwise payable.
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day that the New
York Stock Exchange is customarily open for trading, except for:
1. the day following Thanksgiving in each year; and
2. any day on which trading is restricted by directive of the Securities
and Exchange Commission.
A Valuation Period is the period between two successive Valuation Dates.
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INTEREST RATES. All interest rates stated in this policy are effective annual
rates.
BASIS OF VALUES. Any guaranteed values for this policy are equal to or greater
than those required by the law of the state where this policy is delivered.
Any guaranteed values are based on interest at the Minimum General Account
Interest Rate and the Mortality Table shown in the Data Section. A detailed
statement of the method of computing values has been filed in the state in
which this policy is delivered.
PAYMENT OF BENEFITS. We will pay all benefits under this policy at our Home
Office. Before payment of any Death Benefit we may investigate the death.
POSTPONEMENT OF PAYMENTS. We will pay any amounts which are payable as a
result of Cash Surrender, Withdrawals, or Policy Loans and which are allocated
to the
SEPARATE ACCOUNT within seven days after we receive written request in a
form satisfactory to us. However, determination and payment of any amount
payable from the Separate Account may be postponed whenever:
1. the New York Stock Exchange is closed (except for normal holiday
closing); or
2. an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which it is not reasonably practicable to
dispose of securities or to determine the value of the net assets of the
Separate Account.
Transfers to or from the Sub-Accounts of the Separate Account, though normally
occurring on the same day we receive the request for transfer, may also be
postponed upon any of the above events.
We may delay payment of any amounts which are payable as a result of Cash
Surrender, Withdrawals, or Policy Loans and which are allocated to the GENERAL
ACCOUNT for up to six months after we receive written request in a form
satisfactory to us. If such amounts are not mailed or delivered to the Owner
within ten days of our receipt of the required written request, we will pay
interest on said amounts at the rate then in effect under Payment Option 1
-Payments of Interest Only from the date of our receipt of the required written
request to the date of payment.
We will pay the Death Benefit within seven days after we receive due proof
satisfactory to us of the Insured's death while this policy is in force. We
may postpone determination and payment of any Death Benefit in excess of the
Face Amount, net of any debt to us on this policy, upon any of the events
enumerated above.
We have the right to postpone payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has
been paid by the bank or other financial institution on which it is drawn.
NOTICES. Unless this policy provides otherwise, any requests, changes, or
notices:
1. from us to the Owner shall be sent to the last address known to us of
the Owner; and
2. from us to an assignee shall be sent to the last address known to us
of such assignee; and
3. from the Owner or an assignee to us must be in writing and received
by us at our Home Office in Montpelier, Vermont.
ANNUAL REPORT. At least once each Policy Year we will send a report to the
Owner. The report will show, as of its date:
1. the Accumulated Value of the policy, detailing the Accumulated Value
in the General Account and the Accumulated Value in each Sub-Account of
the Separate Account; and
2. the Face Amount; and
3. the Cash Surrender Value; and
4. any debt to us on this policy, and
5. the Death Benefit.
The report will also show a summary of transactions of the previous year and
any information required by law, or by the supervisory insurance official of
the Insurance Department where the policy was delivered.
PROJECTION REPORT. The Owner may request in writing a report which projects
future values and future Death Benefits for this policy. The report will also
show any information required bylaw. The Projection Report will be based on:
1. data the Owner gives us as to Face Amount and premiums; and
2. such assumptions as either we or the Owner specifies.
We may charge the Owner a reasonable fee for each Projection Report, not to
exceed $25.
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ROLES IN THIS POLICY
If used, the term "estate" of any person shall be deemed to be a designation of
the executors or administrators of that person's estate.
OWNER. The Owner may exercise all rights under this policy, including those
described below:
1. assign the policy; and
2. surrender the policy for its Cash Surrender Value; and
3. change the policy if we agree to such change; and
4. change the Beneficiary as stated in the Beneficiary provision; and
5. enjoy the benefits under this policy.
These actions may be taken without the consent and against the interest of any
Beneficiary and any contingent owner. If the Owner has waived the right to
change the Beneficiary, these actions may be taken by the Owner only with the
written consent of all Beneficiaries that the Owner can not change. These
actions may be taken only while the Insured is alive.
INSURED. The Death Benefit becomes payable upon the death of the Insured. The
Insured, in his or her role as the Insured, has no rights and receives no
benefits under this policy.
BENEFICIARY. The Beneficiary receives the Death Benefit payable upon the death
of the Insured. Unless later changed, the Beneficiary shall be as stated in
the application. The interest of any Beneficiary who dies before the Insured
shall vest in the Owner unless otherwise stated.
CHANGE OF BENEFICIARY. The Owner has the right to change the Beneficiary. If
the Owner expressly waives this right, no change can be made without the
written consent of the Beneficiary.
A new Beneficiary may be named during the life of the Insured by filing at our
Home Office written notice in such form as we may require. When notice is
received at our Home Office, the change shall take effect as of the date the
notice is signed whether or not the Insured is living at the time of receipt.
We will not be liable for any payment we make before receipt of the written
notice at our Home Office.
TRUST BENEFICIARY. Unless an authorized officer or registrar of the Company
explicitly agrees otherwise in writing, the following provision shall apply
when a trust is named as Beneficiary.
In no event is the Company responsible for the application or disposition of
any proceeds it pays to a Trust Beneficiary. Payment to a Trust Beneficiary is
a full discharge of the liability of the Company. If a designated trust
provides for successor trustees, the designation in this policy includes
successor trustees. Likewise, if the trust allows amendments, the trust, if so
amended, remains as a designated Beneficiary.
A Trust Beneficiary is considered to be a Beneficiary who did not survive the
Insured if:
1. the trust has been terminated; or
2. the specified testamentary trust does not qualify as such; or
3. for any other reason a Trust Beneficiary is not entitled to any
proceeds.
UNNAMED BENEFICIARY. We may rely on an affidavit by any person who in our
judgment knows the facts to identify any Beneficiary not specified by name.
All our liability shall cease when we pay on the basis of such affidavit.
If used, the term "children" of any person shall include only lawful children
born to or legally adopted by that person.
ASSIGNMENTS. If this contract is assigned, such assignment shall transfer to
the assignee the interest of:
1. any Beneficiary whom the assignor can change; and
2. any contingent owner.
If the assignee acquires a right to proceeds, they shall be paid in one sum
even though a Payment Option may be in effect at the time the assignment was
signed. However, if we specifically agree, an assignment may limit the method
of payment of any proceeds.
We are not responsible for the validity or effect of any assignment of this
policy. We will not recognize any assignment until it has been filed at our
Home Office.
SPENDTHRIFT PROVISION. If we receive at our Home Office written request by the
Owner for this Spendthrift Provision, then, to the extent allowed by law and by
this policy,
1. only the Owner may transfer, anticipate, commute, or encumber the
proceeds of this policy; and
2. only legal process against the Owner may affect the proceeds of this
policy.
Any proceeds payable after this request is withdrawn by the Owner shall not be
affected by this provision.
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PREMIUMS
POLICY PROTECTION PERIOD. The first 60 months following the Date of Issue
during which this policy remains continuously in force is referred to as the
Policy Protection Period.
PAYMENT OF PREMIUMS. A premium at least equal to the Minimum Initial Premium
stated in the Data Section is due on the Date of Issue. Thereafter, premiums
may be paid towards this policy under the circumstances described below.
During the Policy Protection Period payment of total accumulated premiums, in
excess of withdrawals and debt, at least equal to the sum of all unique Minimum
Monthly Premiums in effect since the Date of Issue times the number of Monthly
Policy Dates that have elapsed while each Minimum Monthly Premium was in effect,
will keep the policy in force to the next Monthly Policy Date. This policy will
always remain in force, both during the Policy Protection Period and beyond, as
long as the Cash Surrender Value is sufficient to provide for Monthly
Deductions.
The Minimum Monthly Premium will be redetermined upon an increase in Face
Amount or when rider coverages are added after issue of this policy.
References to "unique" Minimum Monthly Premiums acknowledge that different
Minimum Monthly Premiums may be in effect at different times while this policy
is in force.
The Planned Periodic Premiums are the premiums the Applicant has requested be
billed. The Owner may change the amount or frequency of Planned Periodic
Premiums at any time by sending a written notice to us at our Home Office. We
may, however, limit any increase in either amount or frequency.
In addition, we will accept unscheduled premiums, which are premiums in
addition to the Minimum Initial, Minimum Monthly, or Planned Periodic Premiums.
We may limit the number and amount of such premiums.
All premiums are limited by a minimum and a maximum. The minimum is $50 per
premium payment. The maximum is the limit imposed by the Internal Revenue Code
for qualifying the policy as "Life Insurance" for Federal Income Tax purposes,
without raising the Death Benefit of the policy through inflation of the Death
Benefit Standard. We will not accept any premium in excess of the maximum.
The first premium may be paid to us either through our duly authorized agent in
exchange for a receipt signed by that agent, or at our Home Office. All later
premiums must be paid to us at our Home Office, and will be credited and
allocated on the day we receive them.
NET PREMIUM. A net premium is the amount of any premium paid after the
deduction of the applicable Premium Tax.
PREMIUM TAX. We will deduct from each premium paid percentages for the payment
of premium taxes before allocating such premium to the Accumulated Value. The
State Premium Tax percentage and the percentage for Taxes Attributable to
Specified Policy Acquisition Expenses under Internal Revenue Code Section 848
deducted from the premium paid as of the Date of Issue of the policy are stated
in the Data Section.
RIGHT TO POLICY REVIEW. This policy may be returned to us at any time prior to
the later of:
1. the end of the 10th day following its receipt by the Owner; and
2. the end of the 10th day after we mail notice of policy issue to the
Owner; and
3. the end of the 45th day after the Applicant signed the application in
consideration of which this policy was issued.
This policy may be returned in person or by mail to us or to the agent through
whom it was bought. Upon a return we will refund any premiums paid, and the
policy will be deemed void as of its Date of Issue.
PREMIUM ALLOCATION. The Owner has the right to designate the allocation of net
premiums among the General Account and the Sub-Accounts of the Separate
Account. The initial allocation is shown in the Data Section. That portion of
the premium due on the Date of Issue which is allocated to the General Account
will be transferred to the General Account upon receipt. However, any portion
of the premium due on the Date of Issue which is allocated to a Sub-Account of
the Separate Account will be held in the Money Market Fund Sub-Account until
the later of:
1. the end of the 10th day following receipt of the policy by the Owner;
and
2. the date we receive at our Home Office a signed delivery receipt for
this policy.
It will then be transferred to any other accounts as designated by the Owner.
The allocation must be made in percentages. Each percentage must be a whole
number. No allocation need be made to the General Account or to any particular
Sub-Account. Each allocation made must be at least five percent.
The Owner may change the allocation of future premiums by notifying us in
writing at our Home Office. Any allocation made will remain in effect until
changed.
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GRACE PERIOD. A Grace Period shall start:
1. if on any Monthly Policy Date during the Policy Protection Period,
both of the following occur:
a. the amount of Cash Surrender Value is smaller than the amount
of the Monthly Deductions on that date; and
b. the sum of the Minimum Monthly Premiums in effect on this
policy for all months since the Date of Issue is greater than a sum
equal to:
i. all premiums paid; less
ii. all withdrawals made; less
iii. any debt to us on this policy.
2. if on any Monthly Policy Date on or after the end of the Policy
Protection Period, the Cash Surrender Value is smaller than the Monthly
Deductions on such date.
A Grace Period shall not be less than 61 days. During a Grace Period this
policy shall remain in force.
The premium needed to keep the policy in force beyond a Grace Period shall be
the net premium sufficient to produce a Cash Surrender Value equal to three
times the Monthly Deduction due on the date the Grace Period began.
We will mail written notice of the premium needed, at least 15 days and no more
than 45 days prior to the date when the policy values are insufficient to
prevent termination of this policy, to the last known address of the Owner. If
the premium needed is unpaid by the end of the Grace Period, this policy shall
terminate without value. This policy shall then be null and void and all
rights shall cease, except as may be provided in Reinstatement.
A Grace Period will not begin solely because payments of Planned Periodic
Premiums are discontinued. Whether or not premiums are paid, Charges Against
the Accumulated Value will be made. The Accumulated Value will be as set forth
in the POLICY VALUES section of this policy. The terms of this Grace Period
provision will determine if and when a Grace Period starts.
REINSTATEMENT. If this policy terminates after the end of a Grace Period, it
may be reinstated. It must be reinstated on a Monthly Policy Date within five
years from the start of such Grace Period.
For Reinstatement we will require:
1. an application for Reinstatement; and
2. proof to our satisfaction that the Insured is insurable; and
3. payment of a net premium which will make the Cash Surrender Value
sufficient to provide:
a. two times the Monthly Deduction due on the date the Grace
Period began; plus
b. three times the Monthly Deduction due on the date of
Reinstatement.
We will send the Owner notice of the required payment upon request.
In the event of Reinstatement:
1. the Surrender Charge in effect on the Monthly Policy Date on which the
Grace Period began shall become the Surrender Charge on the Monthly
Policy Date of Reinstatement; and
2. the schedule of Surrender Charges for the policy months following the
date the Grace Period began shall become the schedule of Surrender
Charges for the policy months following the date of Reinstatement; and
3. the Policy Protection Period is terminated.
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DEATH BENEFIT AND
POLICY CHANGES
DEATH BENEFIT. We will pay the Death Benefit to the Beneficiary when we
receive at our Home Office due proof that the Insured died while this policy
was in force. We will pay the Death Benefit in one sum unless a Payment Option
is chosen. If the Death Benefit is paid in one sum, it shall be increased by
interest from the date of the Insured's death to the date of payment. We will
set the rate of interest at not less than that credited under Payment Option 1
of this contract.
SUICIDE LIMITATION. If the Insured dies within two years of the Date of Issue
as the result of suicide, we will pay only a sum equal to:
1. the premiums paid; less
2. any debt to us on this policy; less
3. any withdrawals made.
Payment will be made to the Beneficiary.
A similar two year period shall apply to any increase in Face Amount for which
an application is required. Such period shall begin on the Effective Date of
any such increase. During such period if the Insured dies as the result of
suicide, we will pay, in lieu of any such increase in Face Amount, only a sum
equal to the Cost of Insurance Charges that we have deducted from the
Accumulated Value for such increase.
DEATH BENEFIT OPTIONS. The Owner may elect either of two Death Benefit
Options, Option A or Option B, for the period prior to the Insured's Attained
Age 99. The Death Benefit Option in effect on the Date of Issue is stated in
the Data Section made a part of this policy on that date.
OPTION A. Under Option A the Death Benefit shall be the greater of the Death
Benefit Standard or the following:
1. the Face Amount on the date of the Insured's death; less
2. the amount of any Monthly Deductions then due; less
3. any debt to us on this policy.
OPTION B. Under Option B the Death Benefit shall be the greater of the Death
Benefit Standard or the following:
1. the Face Amount on the date of the Insured's death; plus
2. the Accumulated Value of the policy on the date of the Insured's
death; less
3. the amount of any Monthly Deductions then due; less
4. any debt to us on this policy.
DEATH BENEFIT STANDARD. The Death Benefit Standard is established in
conformance with Section 7702 of the Internal Revenue Code, which defines "Life
Insurance" for Federal Income Tax purposes. The Death Benefit Standard is:
1. the Death Benefit Factor multiplied by the Accumulated Value of the
policy on the date of the Insured's death; less
2. the amount of any Monthly Deductions then due; less
3. any debt to us on this policy.
The Death Benefit Factor depends on the Insured's Attained Age at the start of
a Policy Year as follows:
Death Death
Attained Benefit Attained Benefit
Age Factor Age Factor
------------------------------------------
40 2.50 58 1.38
41 2.43 59 1.34
42 2.36 60 1.30
43 2.29 61 1.28
44 2.22 62 1.26
45 2.15 63 1.24
46 2.09 64 1.22
47 2.03 65 1.20
48 1.97 66 1.19
49 1.91 67 1.18
50 1.85 68 1.17
51 1.78 69 1.16
52 1.71 70 1.15
53 1.64 71 1.13
54 1.57 72 1.11
55 1.50 73 1.09
56 1.46 74 1.07
57 1.42 75 1.05
The Death Benefit Factor for all Attained Ages below 40 is 2.50. The Death
Benefit Factor for all Attained Ages above 75 is 1.05.
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CHANGES IN FACE AMOUNT AND DEATH BENEFIT OPTION. The Owner may request any of
the following changes. We will make a change subject to the conditions stated.
These changes may be made only while the Insured is living, and after the
first policy anniversary. We will send the Owner a revised or additional Data
Section if any of these changes is made.
1. FACE AMOUNT INCREASES. Face Amount Increases may be made only while
the Insured is Attained Age 85 or less. We will require an application
from the Owner and proof to our satisfaction that the Insured is then
insurable. An increase in Face Amount, and an associated
redetermination of the Minimum Monthly Premium, shall be effective upon
the Monthly Policy Date on or next following our approval. Any increase
in Face Amount must be at least as large as the Minimum Increase Amount
stated in the Data Section.
2. FACE AMOUNT DECREASES. We will require a written request by the
Owner. A decrease in Face Amount shall be effective upon the Monthly
Policy Date on or next following our receipt of the request.
a. Decreases shall not be permitted which would reduce the Face
Amount to less than any of the following:
i. the minimum insurance amount for which the policy would
qualify as "Life Insurance" for Federal Income Tax purposes
under the Internal Revenue Code; or
ii. the Minimum Face Amount shown in the Data Section; or
iii. 75% of the largest Face Amount in force at any time in the
twelve policy months immediately preceding our receipt of the
request.
b. A decrease in total insurance coverage shall apply in the
following order:
i. first, to any increases in Face Amount in the reverse
order in which they were made;
ii. second, to the Face Amount on the Date of Issue.
3. DEATH BENEFIT OPTION CHANGES. The Death Benefit Option may be
changed once each Policy Year prior to the Insured's Attained Age 99. We
will require a written request from the Owner. A change will be
effective on the Monthly Policy Date on or next following our receipt of
the request. The change may be made only if after such change the policy
would qualify as "Life Insurance" for Federal Income Tax purposes under
the Internal Revenue Code.
a. Upon a change from Option A to Option B, the Face Amount shall
decrease by an amount equal to the Accumulated Value of the policy
just prior to the Effective Date of the change. However, the
change may be made only if after such change the Face Amount would
not be below the Minimum Coverage Amount shown in the Data Section.
b. Upon a change from Option B to Option A, the Face Amount shall
increase by an amount equal to the Accumulated Value just prior to
the Effective Date of the change.
MATURITY AT 99. If this policy is in force on the policy anniversary at which
the Insured is Attained Age 99, we will pay the Cash Surrender Value to the
Owner in one sum unless a Payment Option is chosen.
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INVESTMENT
Investment of the Accumulated Value of the policy may be made in the General
Account and/or in one or more of the Sub-Accounts of the National Variable Life
Insurance Account (herein called the "Separate Account"). The Accumulated
Value in the Separate Account is based on the investment experience of the
chosen Sub-Account(s) of the Separate Account, and may increase or decrease
daily. It is not guaranteed as to dollar amount.
GENERAL ACCOUNT. The General Account is composed of the admitted assets of
National Life Insurance Company other than those in the Separate Account or any
other separate account.
INTEREST RATES CREDITED TO THE ACCUMULATED VALUE IN the General Account. The
rate of interest credited on any portion of the Accumulated Value in the
General Account shall never be less than the Minimum General Account Interest
Rate shown in the Data Section. We may credit interest at a higher interest
rate. Any higher interest rate credited on Accumulated Value in the General
Account shall remain in effect for at least a one-year period.
Monies allocated to the General Account may earn interest at different rates
depending on the date of allocation. Monies allocated to the General Account
are assigned to interest crediting cells which vary according to the interest
rate environment at the time of each allocation to the General Account.
Additionally, interest at different rates may be credited to:
1. that portion which is equal to any debt to us on this policy; and
2. any portion in excess of any such debt.
Additional excess interest at a rate of 0.50% will be credited to policies in
force at least ten years. This additional excess interest reflects a reduction
in the interest margin for profit and expenses. The Minimum General Account
Interest Rate will not be comparably increased by any additional interest rate.
SEPARATE ACCOUNT. The Separate Account is composed of assets owned by National
Life Insurance Company. These assets are held separate and apart from General
Account assets. The Separate Account is devoted exclusively to the investment
of assets of variable life insurance policies. Income, gains, and losses from
assets allocated to the Separate Account, whether or not realized, are credited
to or charged against such account without regard to our other income, gains,
or losses. The portion of the assets of the Separate Account equal to the
reserves and other liabilities for these policies shall not be chargeable with
liabilities arising out of any other business which we may conduct.
We may transfer assets which exceed the reserves and other liabilities of the
Separate Account to our General Account.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940 ("the 1940
Act"). It is also governed by applicable state law. We may make certain
changes if, in our sole judgment, they would best serve the interests of the
owners of policies such as this one or would be appropriate in carrying out the
purposes of such policies. Any changes will be made only if permitted by
applicable laws and regulations. Also, when required by law, we will obtain
the approval of policyowners of the changes and the approval of any appropriate
regulatory authority.
For example, we may:
1. operate the Separate Account as a management company under the 1940
Act;
2. deregister the Separate Account under the 1940 Act if registration is
no longer required; and
3. combine or substitute separate accounts; and
4. transfer all or part of the assets of the Separate Account to another
separate account or to the General Account; and
5. make any changes necessary to comply with, or obtain and continue any
exemptions from the 1940 Act; and
6. make any other necessary technical changes in this policy to conform
with any action this provision permits us to take.
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SUB-ACCOUNTS. The Separate Account has several Sub-Accounts. Each Sub-Account
will buy shares of an investment fund. Each investment fund represents a
separate investment portfolio.
If, in our judgment, an investment fund no longer suits the investment goals of
the policy, or tax or marketing conditions so warrant, we may substitute shares
of another investment fund or shares of another investment company. If the
Owner has an interest in the Sub-Account affected, we will notify the Owner
before doing so and, to the extent required by law, we will get prior approval
from the Securities and Exchange Commission. We also will secure any other
required approvals. If this policy has Accumulated Value in a Sub-Account
affected by any such change, and if the Owner wishes, we will transfer that
value at the Owner's written direction from that Sub-Account, without charge,
to the General Account or another Sub-Account.
We may also eliminate, combine, or substitute Sub-Accounts and establish new
Sub-Accounts if in our judgment marketing needs, tax considerations, or
investment conditions warrant. Any new Sub-Accounts may be made available to
existing policies on a basis to be determined by us. We also may transfer
assets from a Sub-Account to another Sub-Account or separate account if the
transfer in our judgment would best serve the interests of the owners of
policies such as this one or would be appropriate in carrying out the purposes
of such policies, but only if permitted by applicable laws or regulations. If
any of these changes is made, we will receive all necessary prior approvals and
we may by appropriate endorsement change the policy to reflect the change.
If the Owner has Accumulated Value in a Sub-Account that will be eliminated, we
will notify the Owner at least 30 days before the elimination, and will request
that the Owner designate the account(s) to which the Accumulated Value in the
Sub-Account to be eliminated should be transferred. Upon the elimination of
such a Sub-Account, the Accumulated Value in that Sub-Account will be
transferred to the General Account and/or Sub-Account(s) in accordance with the
designation received by us from the Owner or, if such a designation is not
received prior to the liquidation date, to the Money Market Fund Sub-Account.
A transfer charge will not be imposed for transfers made upon elimination of a
Sub-Account.
Income and realized and unrealized gains or losses from the assets of each
Sub-Account of the Separate Account are credited to or charged against that
Sub-Account without regard to income, gains, or losses in the other
Sub-Accounts of the Separate Account, the General Account, or any other
separate accounts. Subject to all necessary approvals, we reserve the right to
credit or charge a Sub-Account in a different manner if required, or made
appropriate, by reason of a change in the law. We maintain records of all
purchases and redemptions of investment fund shares by each of the Sub-Accounts.
VALUATION. We will value the assets of each Sub-Account of the Separate
Account on each Valuation Date.
TRANSFERS. Subject to any applicable Transfer Charges, the Owner may transfer
Accumulated Value among the Sub-Accounts or to the General Account without
limitation. However, only one transfer from the General Account to the
Separate Account may be made during any Policy Year. The Accumulated Value
transferred from the General Account in any Policy Year may not exceed the
greater of:
1. 25% of the unloaned portion of the Accumulated Value in the General
Account immediately prior to the transfer; and
2. $1,000.
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POLICY VALUES
ACCUMULATED VALUE OF THE POLICY. The Accumulated Value of the policy is equal
to the sum of the Accumulated Value in the General Account and the Accumulated
Value in the Separate Account.
ACCUMULATED VALUE IN THE GENERAL ACCOUNT. The Accumulated Value in the General
Account on any day is:
1. the Accumulated Value in the General Account on the just prior
Monthly Policy Date, if any; plus
2. interest on the Accumulated Value in the General Account on the just
prior Monthly Policy Date from the just prior Monthly Policy Date to
such day; plus
3. the amount of all net premiums accepted since the just prior Monthly
Policy Date which are allocated to the General Account; plus
4. interest on item (3) from the date of net premium allocation to the
General Account to such day; plus
5. the amount of all Accumulated Values transferred to the General
Account from a Sub-Account of the Separate Account since the just prior
Monthly Policy Date; plus
6. interest on item (5) from the date of the transfer to such day; less
7. the amount of all Accumulated Values transferred from the General
Account to a Sub-Account of the Separate Account since the just prior
Monthly Policy Date; less
8. interest on item (7) from the date of transfer to such day; less
9. the amount of all Accumulated Values withdrawn from the General
Account since the just prior Monthly Policy Date; less
10. interest on item (9) from the date of withdrawal to such day; less
11. any Monthly Deduction allocated to the General Account for the month
next following the Monthly Policy Date which is due on such day.
ACCUMULATED VALUE IN THE SEPARATE ACCOUNT. The Accumulated Value in the
Separate Account is the sum of the Accumulated Values in each Sub-Account of
the Separate Account.
ACCUMULATED VALUE IN A SUB-ACCOUNT. On the later of the Date of Issue of the
policy or the date at least the Minimum Initial Premium is received by us, that
portion of the net premium allocated to any Sub-Account of the Separate Account
will be credited to the Money Market Fund Sub-Account. The Accumulated Value
in the Money Market Fund Sub-Account on that date is that portion of the net
premium less the Monthly Deductions assessed since the Date of Issue.
On any later day which is a Valuation Date, the policy's Accumulated Value in
each Sub-Account is the number of units in the Sub-Account multiplied by the
Unit Value on that date.
UNITS IN A SUB-ACCOUNT. Amounts allocated, transferred, or added to a
Sub-Account are used to purchase units in that Sub-Account. Units are redeemed
when amounts are deducted, transferred, or withdrawn. The number of units in
any given Sub-Account attributable to this policy on any given date equals the
number of units purchased by funds attributable to this policy minus the number
of units redeemed under this policy up to such date. For each Sub-Account, the
number of units purchased or redeemed in connection with a particular
transaction is determined by dividing the dollar amount of the transaction by
the Unit Value on the day the transaction is performed.
UNIT VALUE. The Unit Value in a Sub-Account on any Valuation Date is equal to
that Unit Value on the immediately preceding Valuation Date multiplied by the
Net Investment Factor for that Sub-Account on that Valuation Date.
PURCHASE AND CANCELLATION OF UNITS - PREMIUMS. On the later of the Date of
Issue of the policy or the date at least the Minimum Initial Premium is
received by us, that portion of the net initial premium allocated to the
General Account will be transferred to the General Account.
On that same date, any portion of the net initial premium allocated to any
Sub-Account of the Separate Account will be credited to the Money Market Fund
Sub-Account. This portion of the net initial premium will be used to purchase
units of the Money Market Fund Sub-Account based on the Unit Value in effect on
that date.
On the later of:
1. the end of the l0th day following receipt of the policy by the Owner;
and
2. the date we receive at our Home Office a signed delivery receipt for
the policy;
the Accumulated Value in the Money Market Fund Sub-Account, determined
according to the Unit Value for that account on that date, will be transferred
to the other Sub-Accounts in proportion to the premium allocations designated
by the Owner. The number of units allocated to each Sub-Account will be
determined according to the Unit Values of the Sub-Accounts on that date.
All subsequent premiums allocated to the Sub-Accounts will purchase units in
these Sub-Accounts according to the Unit Value of each Sub-Account on the date
we receive the premiums at our Home Office.
PURCHASE AND CANCELLATION OF UNITS - MONTHLY DEDUCTIONS. Any Monthly Deduction
allocated to a Sub-Account causes a redemption of units in that Sub-Account
according to the Unit Value of that Sub-Account on the Monthly Policy Date on
which the Monthly Deduction is assessed.
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PURCHASE AND CANCELLATION OF UNITS - WITHDRAWALS. Withdrawals from a
Sub-Account will be effected on the date we receive at our Home Office written
request for the withdrawal or, if the instructions of the Owner are not
executable, on the date we receive executable instructions. The redemption of
units in that Sub-Account will be made according to the Unit Value of that
Sub-Account on the date of the withdrawal.
PURCHASE AND CANCELLATION OF UNITS - LOANS. The capitalization of any interest
owed on policy loans against this policy will be made on the Monthly Policy
Date next following the date the loan interest is due. This will cause a
redemption of units in the impacted Sub-Accounts according to the Unit Values
of those Sub-Accounts on that Monthly Policy Date.
Monies received in repayment of policy loans against this policy will be
assigned to the Separate Account on the date we receive said monies at our Home
Office. These monies will purchase units in the Separate Account according to
the Unit Values in effect on that date.
PURCHASE AND CANCELLATION OF UNITS - TRANSFERS. Transfers made in to and out
of any Sub-Account are effected on the date we receive the request for an
executable transfer, and will be made in accordance with the Unit Values in
each Sub-Account on that date.
NET INVESTMENT FACTOR. Each Sub-Account of the Separate Account has its own
Net Investment Factor. The Net Investment Factor measures the performance of
the Sub-Account for individual Valuation Periods. The Net Investment Factor is
calculated as follows:
1. Take the net asset value per share of the corresponding investment
fund on the current Valuation Date.
2. Add the per share capital gain or loss and dividend distribution of
the investment fund during the current Valuation Period.
3. Divide the result of item (2) by the net asset value per share of the
corresponding investment fund on the just prior Valuation Date.
4. Subtract from the result of item (3) any Tax Charge during the
current Valuation Period.
5. Subtract from the result of item (4) the Mortality and Expense Risk
Charge shown in the Data Section multiplied by the number of days in the
Valuation Period.
The result of item (5) is the Net Investment Factor on the current Valuation
Date.
On any date after the Date of Issue other than a Valuation Date, the
Accumulated Value in a Sub-Account is the Accumulated Value of such Sub-Account
on the next following Valuation Date.
ACCUMULATED VALUE UPON REINSTATEMENT. If this policy is reinstated, the
Accumulated Value on the date of Reinstatement shall be:
1. the Accumulated Value on the date the Grace Period began; less
2. two times the Monthly Deduction due on the date the Grace Period
began; plus
3. the net premium paid to reinstate the policy; less
4. the Monthly Deduction due on such date.
CASH SURRENDER VALUE. The Owner may, by written request to us, surrender this
policy while the Insured is living for its Cash Surrender Value. We may
require that the policy be returned to us. When this policy has been
surrendered, it shall be null and void and all rights shall cease. Proceeds
shall be paid in one lump sum unless a Payment Option is chosen.
The Cash Surrender Value on any day shall be equal to:
1. the Accumulated Value on such day; less
2. any debt to us on this policy; less
3. any Surrender Charges which apply on such day.
SURRENDER CHARGES. Surrender Charges apply during the first 180 Policy Months.
The total Surrender Charge is the sum of the Deferred Administrative Charge
and the Deferred Sales Charge shown in the Data Section.
REDUCED PAID-UP BENEFIT. The Owner may, by written request to us, elect to
continue this policy in force as paid-up General Account life insurance
coverage. All or a portion of the Cash Surrender Value of this policy will be
applied to paid-up life insurance coverage. Any amount of the Cash Surrender
Value of this policy that is not applied towards paid-up life insurance
coverage will be paid as a Cash Payment in one lump sum to the Owner.
The amount of this Cash Payment will be determined according to the following
procedure:
a. Divide the sum of the Death Benefit and any debt on this policy by
the Cost of Insurance Divisor stated in the Data Section; and
b. subtract from (a), above, the Accumulated Value of this policy, and
c. multiply (b), above, by the Net Single Premium at the then Attained
Age of the Insured; and
d. divide (c), above, by 1 minus the Net Single Premium at the then
Attained Age of the Insured; and
e. subtract (d), above, from the Cash Surrender Value of this policy.
The amount of the Cash Payment will be the greater of zero and the value of
(e), above.
The amount of paid-up General Account life insurance will then be the
difference of the Cash Surrender Value of this policy less the Cash Payment
calculated above, divided by the Net Single Premium at the then Attained Age of
the Insured.
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The Net Single Premium used in these calculations uses continuous functions,
with compound interest at the Minimum General Account Interest Rate and the
Mortality Table stated in the Data Section.
The Owner may, by written request to us, surrender the paid-up General Account
life insurance at any time for its value. The value of this paid-up life
insurance will be its amount times the Net Single Premium at the then Attained
Age of the Insured.
DIVIDENDS. We may credit this policy with shares, called dividends, from our
divisible surplus. However, it is expected that no dividends will be credited
to this policy. Any dividends shall be set by us and shall be credited on the
policy anniversary. Any dividends credited will purchase dividend additions
or, at the direction of the Owner, may be taken in cash or may be left with us
to accumulate at interest.
DOLLAR COST AVERAGING. If this feature is then available, the Owner may elect
in writing to have Accumulated Value transferred from the Money Market Fund
Sub-Account of the Separate Account into another designated Sub-Account or
Sub-Accounts through an automatic monthly transfer of funds called Dollar Cost
Averaging. These monthly transfers will occur on successive Monthly Policy
Dates beginning on the first Monthly Policy Date following election on which
Accumulated Value may be transferred from the Money Market Fund Sub-Account.
No Transfer Charges will be assessed for transactions made as part of this
feature, nor will these transfers count against the twelve free transfers
allowed each Policy Year.
The amount transferred each month may not be less than $100, except on any
Monthly Policy Date on which the amount of Accumulated Value in the Money
Market Fund Sub-Account is less than $100.
Dollar Cost Averaging on this policy will be discontinued:
1. when the Accumulated Value in the Money Market Fund Sub-Account is
depleted; or
2. upon written request by the Owner received at our Home Office; or
3. upon 60 days written notice provided to the Owner by the Company.
The Company may at any time stop offering the Dollar Cost Averaging feature
altogether, upon 60 days written notice to all policyholders then utilizing
this feature.
PORTFOLIO REBALANCING. If this feature is then available, the Owner may elect
in writing to have the Accumulated Value automatically redistributed on a
periodic basis according to the Premium Allocation percentages then in effect
on this policy.
If Portfolio Rebalancing is elected at issue, the first automatic transfer of
Accumulated Value will take place on the Monthly Policy Date falling six months
after the Date of Issue. Subsequent automatic transfers will occur on Monthly
Policy Dates falling at six month intervals.
If Portfolio Rebalancing is requested after the Date of Issue, the first
automatic transfer of Accumulated Value will take place on the Monthly Policy
Date on or next following the date the written election is received by us at
our Home Office. Subsequent automatic transfers will occur on Monthly Policy
Dates falling at six month intervals.
No Transfer Charges will be assessed for transactions made as part of this
feature, nor will these transfers count against the twelve free transfers
allowed each Policy Year.
Portfolio Rebalancing on this policy will be discontinued:
1. when the premium allocation percentages are changed; or
2. upon written request by the Owner received at our Home Office; or
3. upon 60 days written notice provided to the Owner by the Company.
The Company may at any time stop offering the Portfolio Rebalancing feature
altogether, upon 60 days written notice to all policyholders then utilizing
this feature.
CHARGES AGAINST THE
ACCUMULATED VALUE
MORTALITY AND EXPENSE RISK CHARGE. We will deduct the Mortality and Expense
Risk Charge shown in the Data Section from the Accumulated Value in each
Sub-Account of the Separate Account on each day that the policy is in force to
cover mortality and expense risk. The Mortality and Expense Risk Charge is not
deducted from funds held in the General Account.
TAX CHARGE. We reserve the right to deduct any charge for taxes or amounts set
aside as a reserve for taxes in determining the value of an Accumulated Value
Unit for each of the Sub-Accounts in the event that such a tax is levied on
that Sub-Account in the future.
MONTHLY DEDUCTION. The Monthly Deduction is the sum of the Cost of Insurance
Charge and the Monthly Administrative Charge. The Monthly Deduction shall be
deducted from the Accumulated Value of the policy on the Monthly Policy Date.
1. The Owner may elect to allocate the Monthly Deduction entirely to
the Money Market Fund Sub-Account, by notifying us in writing. If the
Accumulated Value in the Money Market Fund Sub-Account is not sufficient
to provide for the entire Monthly Deduction on a Monthly Policy Date,
the Monthly Deduction will be taken from the Money Market Fund
Sub-Account until that account is exhausted, and any additional amount
necessary to fund the full Monthly Deduction shall be allocated among
and deducted from the General Account and the other Sub-Accounts in
proportion to the respective Accumulated Values held in those accounts
on the Monthly Policy Date.
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2. If the Owner does not elect 1, above, the Monthly Deduction shall be
allocated among and deducted from the General Account and the
Sub-Accounts in proportion to the respective Accumulated Values held in
those accounts on the Monthly Policy Date.
SEPARATE ACCOUNT ENHANCEMENT. An enhancement equal to one-twelfth of one-half
of one percent of the Accumulated Value in the Separate Account on the
immediately preceding Monthly Policy Date will be credited on each Monthly
Policy Date falling after the tenth Policy Anniversary. This enhancement,
which reflects a reduction in the interest margin for profit and expenses, is
guaranteed. The Separate Account Enhancement will be credited to those
accounts from which Monthly Deductions are taken on that Monthly Policy Date,
distributed according to the allocation of the Monthly Deduction among the
accounts.
COST OF INSURANCE CHARGE. The Cost of Insurance rate on any day shall be based
on the size and duration of this policy, the Insured's then Attained Age, the
rate class of the Face Amount on the Date of Issue, and the rate class of each
increase in Face Amount.
On any Monthly Policy Date, the Cost of Insurance Charge of the policy shall be
the Cost of Insurance rate on such date multiplied by the excess of:
1. the Death Benefit of the policy plus any debt to us on the policy
divided by the Cost of Insurance Divisor; over
2. the Accumulated Value of the policy on such date before the Cost of
Insurance Charge is deducted.
A portion of the Cost of Insurance Charge in the early Policy Years serves to
recover acquisition expenses associated with the issuance of this policy.
We may change the Cost of Insurance rates from time to time based on our
expectations of future mortality and expenses. Any change in the Cost of
Insurance rates shall apply to all policies of the same size and duration,
insuring persons of the same sex, Attained Age and rate class as the Insured.
The procedure by which we establish changes in the Cost of Insurance Rates is
approved by the Board of Directors of National Life Insurance Company.
The Cost of Insurance rates shall not be greater than the rates set forth in
the Table of Guaranteed Maximum Cost of Insurance rates shown in the Data
Section. These rates are based on the Mortality Table named in the Data
Section.
Any change in the Cost of Insurance rates shall be made in accordance with
procedures and standards on file with the Superintendent of Insurance. The
rates will be reviewed whenever the rates change for new issues, but in any
event at least once every five policy years.
The rate class of the Insured at the time of an increase in Face Amount for
which an application is required may differ from the rate class on the Date of
Issue. For determining the Cost of Insurance Charge:
1. the Accumulated Value is first considered part of the Face Amount
on the Date of Issue; and
2. then, if the Accumulated Value is more than the Face Amount on the
Date of Issue, the excess is considered, part of the increases in Face
Amount in the order of occurrence of such increases; and
3. if the Death Benefit is the Death Benefit Standard, the excess of the
Death Benefit over the total Face Amount is assigned the rate class of
the Face Amount in effect on the Date of Issue.
MONTHLY ADMINISTRATIVE CHARGE. The Monthly Administrative Charge will not
exceed the Guaranteed Maximum Monthly Administrative Charge stated in the Data
Section.
TRANSFER CHARGE. We may charge a Transfer Charge for the thirteenth and each
subsequent requested transfer of Accumulated Value between and among the
General Account and the Sub-Accounts occurring during any Policy Year.
Transfers to or from more than one account at the same time shall be treated as
one transfer. The Transfer Charge may not exceed the Maximum Transfer Charge
stated in the Data Section. Transfer Charges shall be allocated among and
deducted from the General Account and the Sub-Accounts in proportion to the
Accumulated Values to be transferred from such accounts.
No Transfer Charge will be imposed for the following transactions, nor will any
of the following transactions be counted against the twelve free transfers
allowed each Policy Year:
1. the transfer of all Accumulated Value to the General Account if
during the first two Policy Years and in one transaction; and
2. the transfer of Accumulated Value from a Sub-Account of the Separate
Account to another Sub-Account or to the General Account, if there has
been a material change in the investment policy of the fund in which the
funds of that Sub-Account are invested within the 60 days immediately
preceding the transfer; and
3. the initial allocation of the premium due on the Date of Issue from
the Money Market Fund Sub-Account; and
4. transfers of Accumulated Value from the Separate Account into the
General Account pursuant to the taking of a Policy Loan; and
5. allocation of the payment of any debt to us on this policy; and
6. transfers made through operation of the Dollar Cost Averaging and
Portfolio Rebalancing features of this policy.
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WITHDRAWALS
After the first policy anniversary, the Owner may make withdrawals by written
request to us. Withdrawals shall be subject to all of the following terms.
1. The amount withdrawn may not be less than the Minimum Withdrawal
Amount stated in the Data Section.
2. The amount withdrawn may not exceed the Cash Surrender Value on the
date of withdrawal less three times the Monthly Deduction for the
next Monthly Policy Date.
3. The amount withdrawn may not be such that it reduces the Face Amount
below the Minimum Face Amount stated in the Data Section.
WITHDRAWAL CHARGE. We will assess a Withdrawal Charge equal to the lesser of:
1. 2% of the amount withdrawn; and
2. $25.
This Withdrawal Charge will be deducted from the amount withdrawn.
ALLOCATION OF WITHDRAWALS. The amount withdrawn shall be allocated among and
deducted from the Accumulated Values held in each account according to the
following prioritization:
1. first, from the Accumulated Value held in specific Sub-Accounts as
specified by the Owner, if the Owner so specifies; and
2. second, from the Accumulated Value in proportion to the Accumulated
Values held in the Sub-Accounts on the day the withdrawal is made; and
3. finally, from the non-loaned Accumulated Value held in the General
Account.
If the Accumulated Value in any Sub-Account from which the Owner has requested
that withdrawals be allocated and deducted is insufficient to cover the amount
of the withdrawal, the withdrawal will not be processed until further
instructions are received by us from the Owner.
If Death Benefit Option A is in effect on the date of the withdrawal and if the
Face Amount divided by the Death Benefit Factor at the Insured's Attained Age
on the date of the withdrawal exceeds the Accumulated Value of the policy just
after the withdrawal, the Face Amount shall also be decreased. The decrease in
Face Amount shall equal the lesser of such excess or the amount of the
withdrawal. A decrease in total insurance coverage shall apply first to any
increases in Face Amount in the reverse order in which they were made, and then
to the Face Amount on the Date of Issue.
If Death Benefit Option B is in effect on the date of the withdrawal, there
shall be no decrease in the Face Amount.
POLICY LOANS
We will loan an amount up to the Loan Value of the policy less the amount of
any outstanding debt, at any time after the first Policy Year. At the time of
the loan the policy must be in force. The policy shall be the sole security
for the loan and must be duly assigned to us.
LOAN VALUE. The Loan Value on any day is equal to:
1. the Accumulated Value on such day, less
2. the Surrender Charges on such day, less
3. three times the Monthly Deduction for the next Monthly Policy Date.
LOAN INTEREST RATE. Any loan shall bear interest from the date the loan is
made. The Loan Interest Rate is shown in the Data Section.
PREFERRED POLICY LOANS. Preferred Policy Loans are comparable to other policy
loans on this policy except that the associated Interest Earned on Loan
Collateral in the General Account is credited at a higher rate.
If the Company is then making Preferred Policy Loans available, they will
become available for this policy on the later of:
1. the Insured's Attained Age 65; and
2. the beginning of Policy Year 21.
New Preferred Policy Loans in any policy year may not exceed 5% of the
Accumulated Value at the time of the loan. The total of all Preferred Policy
Loans may not exceed 50% of the Accumulated Value.
We may discontinue the availability of Preferred Policy Loans at any time.
GENERAL LOAN TERMS. After the loan is made, loan interest shall be due on the
next and all later Policy Anniversaries. If any interest is not paid when due,
it shall be added to the loan and bear interest on the same terms. Any policy
loan that is not repaid will eventually cause the policy to enter a Grace
Period.
The debt secured by this policy includes loans, unpaid loan interest, and
accrued loan interest not otherwise due.
All or any part of the debt may be paid to us at any time prior to:
1. the death of the Insured; and
2. surrender of the policy.
Unless the Owner specifies, any payment to us shall be deemed a premium payment
and not a payment of the debt. Any payment of debt shall first be applied to
debt other than Preferred Policy Loans, to the extent possible. At the death
of the Insured or upon the surrender of the policy, all debt shall become due
at once. It shall be paid from the policy values.
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ALLOCATION OF POLICY LOANS. The loaned amounts allocated to the Sub-Accounts
shall be transferred from the Sub-Accounts and placed into the General Account.
Policy Loans shall be allocated among and transferred from the Accumulated
Values held in each account according to the following prioritization:
1. first, from the Accumulated Value held in specific Sub-Accounts as
specified by the Owner, if the Owner so specifies; and
2. second, from the Accumulated Value in proportion to the Accumulated
Values held in the Sub-Accounts on the day the loan is made; and
3. finally, from the non-loaned Accumulated Value held in the General
Account.
If the Accumulated Value in any Sub-Account from which the Owner has requested
that loaned amounts be transferred is insufficient to cover the amount of the
loan, the loan will not be processed until further instructions are received by
us from the Owner.
Loan repayments shall be allocated among the General Account and the
Sub-Accounts in proportion to the Premium Allocation percentages assigned by
the Owner.
Any loan interest due and not paid shall be allocated among and transferred, on
the date the interest is due, from the Accumulated Values held in each account:
1. first,in proportion to the Accumulated Values held in the
Sub-Accounts of the Separate Account until those accounts are exhausted;
and
2. then from the non-loaned Accumulated Value held in the General
Account.
These amounts shall be placed in, or segmented within, the General Account.
INTEREST EARNED ON LOAN COLLATERAL. The rate of interest credited on that
portion of the Accumulated Value in the General Account which is equal to any
Perferred Policy Loan or this policy will be equal to the Loan Interest Rate.
The rate of interest credited on that portion of the Accumulated Value in the
General Account which is equal to any additional debt to us on this policy will
be established on a calendar year basis. It will equal the Loan Interest Rate
on this policy minus a spread, such spread not to exceed 2.00%. The spread will
be reduced by 0.50% during all Policy Years following the tenth Policy Year.
PAYMENT OPTIONS
In lieu of a lump sum settlement, all or part of the proceeds of this contract
may be applied under a Payment Option. When proceeds are applied under a
Payment Option, all other rights and benefits under this contract shall cease.
In addition to the following options, other payment options may be available.
OPTION EFFECTIVE DATE. The Option Effective Date is the date the proceeds
become payable.
GENERAL PAYMENT OPTION TERMS. If the proceeds to be placed under a Payment
Option are less than $2,000, we may pay them in one sum to the payee who
otherwise would receive the first payment under the option. If any payments
would be less than $20, we will change the frequency to provide payments of at
least $20.
If the proceeds are assigned on the Option Effective Date, we will pay the
assignee's share in one sum and place only the balance under the option. After
the Option Effective Date neither the payments nor the remaining value may be
assigned or encumbered. To the extent the law permits, they are not subject to
any claims against the payee.
We may require proof to our satisfaction that any payee is alive on the date
any payment is due.
CHOICE OF OPTION. Choice of an option may be made:
1. by the Owner if the Insured is living; or
2. by the Beneficiary if the Insured is not living and if no option is
in effect.
Equivalent payments for 12-, 6-, 3-, or 1-month intervals may be chosen. The
options are described in terms of monthly payments. We will quote the amount
of the other payments on request.
We may issue a document stating the terms of the option.
CHANGE OF PAYMENT OPTION. The right to change Payment Options exists under
Options 1, 2, or 4. At the time of change the remaining value under the old
option shall become the proceeds to be placed under the new option.
LUMP SUM REMOVAL OF PROCEEDS APPLIED UNDER A PAYMENT OPTION. Lump sum payments
may be taken from the remaining proceeds placed under Payment Options 1, 2, or
4.
1. Under Options 1 and 4 all or any part of the remaining value may be
taken at any time, though no more than four transactions may be made
during any calendar year.
2. Under Option 2 the entire remaining value may be taken at any time.
No lump sum removal of proceeds may be made under Option 3, 5, 6, or 7.
OPTION I - PAYMENTS OF INTEREST ONLY. Interest at a rate of 3 1/2% per year
shall be paid either for:
1. the life of a chosen human being; or
2. a chosen period.
We may pay more interest in any year. Upon the earlier of the death of the
chosen human being or the end of the chosen period, any remaining value will be
paid. The first payment shall be made one month after the Option Effective
Date. If the payee is not a human being, payments may not continue for more
than 30 years.
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OPTION 2 -PAYMENTS FOR A STATED TIME. Equal monthly payments shall be made for
a stated number of years. The first payment shall be made on the Option
Effective Date. The amount of each monthly payment is shown in the table. The
monthly payments are based on an interest rate of 3 1/2% per year. We may pay
more interest in any year.
OPTION 2 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
Stated No. of Years Monthly Payments
----------------------------------------
1 $84.65
2 43.05
3 29.19
4 22.27
5 18.12
6 15.35
7 13.38
8 11.90
9 10.75
10 9.83
11 9.09
12 8.46
13 7.94
14 7.49
15 7.10
16 6.76
17 6.47
18 6.20
19 5.97
20 5.75
21 5.56
22 5.39
23 5.24
24 5.09
25 4.96
26 4.84
27 4.73
28 4.63
29 4.53
30 4.45
OPTION 3 - PAYMENTS FOR LIFE. Equal monthly payments shall be made for any
guaranteed period chosen and thereafter during the life of a chosen human
being. The first payment shall be made on the Option Effective Date. The
amount of each monthly payment depends on the age of the chosen human being on
the Option Effective Date and on any guaranteed period chosen. We may require
proof to our satisfaction of such age. We may require like proof that such
human being is alive on the date any payment is due. The guaranteed period may
be five or ten years or a Refund period. A Refund period extends until the sum
of the payments is equal to the proceeds placed under the option. The monthly
payments are based on an interest rate of 3 1/2 % per year. We may pay more
interest in any year during the guaranteed period. We will quote the amount of
monthly payments for lower ages and guaranteed periods not shown in the Option
3 Table on request.
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OPTION 3 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
(Amounts shown are for the age nearest birthday on the
Effective Date)
-------------------------------------------------------
Guaranteed Period
-----------------------------------------------
10
Age None Years Refund
-------------------------------------------------------
50 $4.27 $4.24 $4.16
51 4.33 4.30 4.21
52 4.40 4.36 4.27
53 4.47 4.43 4.33
54 4.54 4.50 4.39
55 4.62 4.58 4.45
56 4.71 4.66 4.52
57 4.80 4.74 4.60
58 4.89 4.83 4.67
59 4.99 4.92 4.75
60 5.10 5.01 4.84
61 5.21 5.12 4.93
62 5.33 5.23 5.02
63 5.47 5.34 5.12
64 5.60 5.46 5.23
65 5.75 5.58 5.33
66 5.91 5.72 5.45
67 6.08 5.85 5.57
68 6.26 6.00 5.70
69 6.46 6.15 5.84
70 6.67 6.31 5.99
71 6.89 6.47 6.14
72 7.13 6.64 6.30
73 7.39 6.82 6.47
74 7.67 6.99 6.65
75 7.97 7.18 6.83
76 8.30 7.36 7.05
77 8.64 7.55 7.26
78 9.02 7.74 7.48
79 9.43 7.92 7.72
80 9.86 8.10 7.96
81 10.33 8.28 8.23
82 10.84 8.45 8.51
83 11.39 8.61 8.80
84 11.97 8.76 9.12
85+ 12.60 8.90 9.45
+ Higher ages the same
OPTION 4 - PAYMENTS OF A STATED AMOUNT. Equal monthly payments of a stated
amount shall be made until the proceeds, with interest at 3 1/2% per year on the
unpaid balance, are used up. The first payment shall be made on the Option
Effective Date. The amount chosen must be at least $10 per month for each
$1,000 of proceeds placed under this option. We may add more interest to the
unpaid balance in any year, which will extend the number of payments. The last
payment will be for the balance only.
OPTION 5 - LIFE ANNUITY. Equal monthly payments shall be made in the same
manner as Option 3 except:
1. the amount of each payment shall be based on our current settlement
rates on the Option Effective Date; and
2. no additional interest shall be paid.
OPTION 6 - JOINT AND TWO-THIRDS ANNUITY. Equal monthly payments shall be made
while two chosen human beings are both living. Upon the death of either,
two-thirds of the amount of such payments shall continue during the life of the
survivor. The first payment shall be made on the Option Effective Date. The
amount of each monthly payment depends on the ages of the chosen human beings
on the Option Effective Date. We may require proof to our satisfaction of
their ages. We may require like proof that any chosen human being is alive on
the date any payment conditioned on the life of such human being is due. The
initial amount of each monthly payment is shown in the table. We will quote
the amount of monthly payments for any other age combination on request. The
monthly payments are based on an interest rate of 3 1/2% per year. No
additional interest shall be paid.
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OPTION 6 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
(Amounts shown are for the age nearest birthday on
the Effective Date)
Ages Initial Ages Initial
of Monthly of Monthly
Both Payment Both Payment
-------------------------------------------------------------
50 $4.11 68 $5.86
51 4.17 69 6.03
52 4.23 70 6.21
53 4.29 71 6.41
54 4.36 72 6.62
55 4.43 73 6.84
56 4.50 74 7.09
57 4.58 75 7.35
58 4.66 76 7.63
59 4.75 77 7.93
60 4.85 78 8.25
61 4.95 79 8.60
62 5.05 80 8.98
63 5.17 81 9.38
64 5.29 82 9.82
65 5.42 83 10.29
66 5.56 84 10.79
67 5.71 85+ 11.33
+ Higher ages the same
OPTION 7 - 50% SURVIVOR ANNUITY. Equal monthly payments shall be made during
the life of the chosen primary human being. Upon the death of the chosen
primary human being, 50% of the amount of such payments shall continue during
the life of the chosen secondary human being. The first payment shall be made
on the Option Effective Date. The amount of each monthly payment depends on
the ages of the chosen human beings on the Option Effective Date. We may
require proof to our satisfaction of their ages. We may require like proof
that any chosen human being is alive on the date any payment conditioned on the
life of such human being is due. The initial amount of each monthly payment
is shown in the table. We will quote the amount of monthly payments for any
other age combination on request. The monthly payments are based on an
interest rate of 3 1/2% per year. No additional interest shall be paid.
OPTION 7 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
(Amounts shown are for the age
nearest birthday on
the Effective Date)
Ages Initial Ages Initial
of Monthly of Monthly
Both Payment Both Payment
-------------------------------------------------------------
50 $4.04 68 $5.68
51 4.09 69 5.84
52 4.15 70 6.01
53 4.21 71 6.19
54 4.27 72 6.39
55 4.34 73 6.60
56 4.41 74 6.83
57 4.48 75 7.07
58 4.56 76 7.33
59 4.64 77 7.61
60 4.73 78 7.92
61 4.82 79 8.24
62 4.92 80 8.59
63 5.03 81 8.97
64 5.15 82 9.38
65 5.27 83 9.81
66 5.40 84 10.28
67 5.54 85+ 10.79
+ Higher ages the same
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