EXHIBIT (5)(a)
PLEASE READ THIS CONTRACT CAREFULLY
THE DEATH BENEFIT AND CONTRACT VALUE, WHEN BASED ON THE INVESTMENT PERFORMANCE
OF THE VARIABLE ACCOUNT, MAY INCREASE OR DECREASE AND ARE NOT GUARANTEED AS TO A
FIXED DOLLAR AMOUNT. PLEASE REFER TO THE VARIABLE ACCOUNT AND DEATH BENEFIT
SECTIONS FOR ADDITIONAL INFORMATION. WE AGREE TO PAY THE BENEFITS OF THIS
CONTRACT IN ACCORDANCE WITH ITS TERMS.
RIGHT TO CANCEL
We want you to be satisfied with the contract you have purchased and we urge you
to examine it closely. If for any reason you are not satisfied, you may return
the contract to us or an authorized representative within 10 days after receipt
of the contract.
If you return the contract, it will be void from the Date of Issue, and you will
receive a refund equal to the total of:
1. the difference between any payments made, including fees or any other
charges, and the amounts allocated to the Variable Account;
2. the value of the amounts in the Variable Account on the date the
returned contract is received at our Principal Office; and
3. any fees or other charges imposed on amounts in the Variable Account.
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
Home Office: Dover, Delaware
Principal Office: 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
This is a legal contract between Allmerica Financial Life Insurance and
Annuity Company and the owner. It is issued in consideration of the payment
shown on the Specifications Page.
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
President Secretary
Modified Single Payment Variable Life Insurance Contract
Non-Participating
Form 1030-86
SPECIFICATIONS
Contract Number: Specimen
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
[First] Insured: Xxxx Xxx [First] Insured's Sex: Male
[First] Insured's Age: 35 [First] Insured's Underwriting Risk Class: Non-Smoker
------------------------------------------------------------------------------------------------------------
[ Second Insured:] [ Second Insured's Sex:]
[ Second Insured's Age:] [Second Insured's Underwriting Risk Class:]
------------------------------------------------------------------------------------------------------------
Date of Issue: 08/20/96 Contract Plan: Modified Single
Payment Variable Life
Insurance Contract
Face Amount: $318,554 Monthly Processing Date: 1st of each month
Owner(s): Xxxx Xxx Rider: Living Benefits Rider
Beneficiary at Issue: Xxxx Xxx Rider Date of Issue: 08/20/96
------------------------------------------------------------------------------------------------------------
Payment: $50,000
Maximum Payment: The greater of [$50,000] or [$4,123.06] times the current contract year.
Final Payment Date: 08/20/60
Initial Payment Allocation:
VARIABLE SUB-ACCOUNTS MANAGED BY:
--------------------- --------------
[30% Value Portfolio [GAMCO Investors, Inc.
10% Growth Portfolio Stonehill Capital Management, Inc.
10% International Growth Portfolio Bee & Associates Incorporated
10% Global Strategic Income Portfolio Xxxxxxx, Xxxxxxx, Trees & Xxxxx, Inc.
10% Global Interactive/Telecomm Portfolio GAMCO Investors, Inc.
20% Money Market Fund] Allmerica Asset Management, Inc.]
FIXED ACCOUNT
-------------
10% Initial Interest Rate: [4%]
Form 9030-96 3
SPECIFICATIONS (continued)
[First] Insured: Xxxx Xxx Contract Number: Specimen
[Second Insured:]
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Minimum Additional Payment: [$10,000]
Minimum Fixed Account Interest Rate: [4% of value not subject to Outstanding Loan]
[4% of value securing Outstanding Loan - not preferred loan]
[5 1/2% of value securing Outstanding Loan - preferred loan]
Outstanding Loan Interest Rate [6%]
Maximum Loan Amount: [90% of Contract Value less the surrender charge]
Minimum Loan Amount: [$1,000]
Minimum Balance After Withdrawal: [$25,000]
Free Withdrawal Amount: [10% of Contract Value]
Fees and Deductions: CURRENT GUARANTEED
------------------- ------- ----------
Administration Charge: [0.40%] Annually (1) [0.40%] Annually (1)
Distribution Fee (Contract Years 1 - 10): [0.30%] Annually (1) [0.30%] Annually (1)
Federal & State Payment Tax Charge (Contract Years 1 - 10): [0.40%] Annually (1) [0.40%] Annually (1)
Insurance Protection Charge: [0.50%] Annually (1) See Page 5
Mortality & Expense Risk Charge: [0.90%] Annually (2) [0.90%] Annually (2)
Monthly Maintenance Fee: [$2.50] Monthly (3) [$2.50] Monthly (3)
(1) This charge is deducted monthly from the Contract Value on a Pro Rata
basis. The monthly charge is equal to one-twelfth of this factor times the
Contract Value.
(2) This charge is deducted daily from the Variable Accounts on a pro rata
basis.
(3) This charge is deducted only when the Contract Value is less than
[$50,000.]
If you have any questions, need information about your coverage or require
assistance, please call our Principal Office. The number is [(000)000-0000].
Form 9030-96 4
SPECIFICATIONS (continued)
[First] Insured: Xxxx Xxx Contract Number: Specimen
[Second Insured:]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY INSURANCE PROTECTION RATE TABLE
--------------------------------------------------------------------------------
[Age] [Age]
[Age Younger Insurance Protection [Age Younger Insurance Protection
Insured] Rate Per $1,000 Insured] Rate Per $1,000
--------------------------------------------------------------------------------
35 0.14 65 1.87
36 0.15 66 2.07
37 0.16 67 2.29
38 0.17 68 2.53
39 0.18 69 2.79
40 0.19 70 3.09
41 0.21 71 3.44
42 0.22 72 3.83
43 0.24 73 4.29
44 0.26 74 4.79
45 0.28 75 5.33
46 0.31 76 5.90
47 0.33 77 6.51
48 0.36 78 7.15
49 0.39 79 7.84
50 0.42 80 8.62
51 0.46 81 9.49
52 0.51 82 10.50
53 0.56 83 11.62
54 0.62 84 12.86
55 0.68 85 14.17
56 0.75 86 15.56
57 0.83 87 17.00
58 0.91 88 18.48
59 1.01 89 20.04
60 1.11 90 21.69
61 1.23 91 23.48
62 1.36 92 25.50
63 1.51 93 27.96
64 1.69 94 31.38
95 36.79
96 46.58
97 67.04
98 83.33
99 83.33
--------------------------------------------------------------------------------
[Note: Single life, Male, Age 35, Non-smoker]
[Based on 1980 CSO Age Last Birthday Table]
Form 9030-96 5
SPECIFICATIONS (continued)
[First] Insured: Xxxx Xxx Contract Number: Specimen
[Second Insured:]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GUIDELINE MINIMUM SUM INSURED TABLE
------------------------------------------------------------------------
[Age] [Age]
[Younger Insured [Younger Insured
Age] Percentage Age] Percentage
------------------------------------------------------------------------
[thru 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 thru 90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94 101%
95 and over 100%]
------------------------------------------------------------------------
SURRENDER CHARGE TABLE (PERCENT OF TOTAL PAYMENTS WITHDRAWN)
------------------------------------------------------------------------
Contract Contingent Deferred Unrecovered Total
Year* Sales Load Payment Tax Surrender Charge
------------------------------------------------------------------------
[ 1 7.5% 2.25% 9.75%
2 7.5% 2.00% 9.50%
3 6.0% 1.75% 7.75%
4 6.0% 1.25% 7.50%
5 4.5% 1.25% 5.75%
6 4.5% 1.00% 5.50%
7 3.0% 0.75% 3.75%
8 3.0% 0.50% 3.50%
9 1.5% 0.25% 1.75%
10 0% 0% 0%]
------------------------------------------------------------------------
* For a contract that lapses and is restored, see Reinstatement provisions.
Form 9030-96 6
DEFINITIONS
AGE means how old the Insured is on his/her last
birthday measured on the Date of Issue and each
contract anniversary.
APPLICATION is the form you complete to apply for this
contract. It contains your payment, payment
allocation and other information that enable us to
prepare this contract. If a medical
questionnaire or other forms are required, they
become a part of the application. It is signed by
you and the Insured and becomes a part of this
contract.
ASSIGNEE is the person to whom you have transferred your
ownership of this contract.
COMPANY means Allmerica Financial Life Insurance and
Annuity Company, also referred to as we, our, and
us.
CONTRACT CHANGE means any change in the Underwriting Risk Class or
the addition or deletion of a Rider.
CONTRACT VALUE is the sum of your values in the Variable Account
and the Fixed Account.
DATE OF ISSUE is stated on the Specifications Page. Contract
months, years and anniversaries are measured from
this date.
EARNINGS means the amount by which the Contract Value
exceeds the sum of the payments made less any
payments that were previously considered
withdrawn. Earnings are calculated on each
Monthly Processing Date.
EVIDENCE OF INSURABILITY is the information, including medical information,
that we use to decide the Underwriting Risk Class
of the Insured.
FACE AMOUNT is the amount of insurance coverage. The Face
Amount is shown on the Specifications Page of the
contract. The death benefit is based on the Face
Amount; see the Death Benefit section.
FINAL PAYMENT DATE is the contract anniversary before the insured's
(younger insured's) 100th birthday. This date is
shown on the Specifications Page. The net death
benefit after this date will equal the Contract
Value minus any Outstanding Loan.
FIXED ACCOUNT is the part of the Company's General Account to
which all or a portion of a payment or transfer
may be allocated.
FUND is a separate investment series for investment by
a Sub-Account of the Variable Account.
GENERAL ACCOUNT is the assets of the Company that are not
allocated to a Separate Account.
INSURANCE PROTECTION AMOUNT is the death benefit minus the Contract Value.
INSURED is the person or persons covered as indicated on
the Specifications Page. If more than one person
is named, all provisions of the Contract that are
based on the death of the "Insured" will be based
on the date of death of the last survivor of the
persons named.
Form 1030-96 7
MONTHLY INSURANCE is the amount of money that we deduct from the
PROTECTION CHARGE Contract Value each month to pay for the
insurance.
MONTHLY PROCESSING DATE is the date the monthly charges are deducted from
the Contract Value. This date is shown on the
Specifications Page. If the Company is not open
on this date, the Monthly Processing Date will be
the next business date.
OUTSTANDING LOAN means all unpaid contract loans plus interest due
or accrued on such loans.
PRINCIPAL OFFICE is the Company's office at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx, 00000.
PRO RATA refers to an allocation among the Sub-Accounts of
the Variable Account and the Fixed Account. A Pro
Rata allocation will be in the same proportion
that the Contract Value in each Sub-Account of the
Variable Account and the Contract Value in the
Fixed Account (other than value that is subject to
Outstanding Loan) have to the total Contract
Value.
RIDER is an optional benefit that may be added to your
contract.
SEPARATE ACCOUNT is a segregated account established by the
Company. The assets are not commingled with the
Company's general assets.
SPECIFICATIONS PAGES contain information specific to your contract and
are located after the Table of Contents.
SUB-ACCOUNTS are subdivisions of the Variable Account investing
exclusively in the shares of one or more Funds.
UNDERWRITING RISK CLASS means the insurance risk classification that we
assign to the Insured based on the information in
the Application and any other Evidence of
Insurability we obtain. The Underwriting Risk
Class affects the Monthly Insurance Protection
Charge.
VARIABLE ACCOUNT is the Company's Separate Account, consisting of
Sub-Accounts that invest in the underlying Funds.
WRITTEN REQUEST is a request you make in written form that is
satisfactory to us and filed at our Principal
Office.
YOU OR YOUR means the owner of this contract as shown in the
Application or in the latest change filed with us.
Form 1030-96 8
GENERAL TERMS
ENTIRE CONTRACT This contract, with a copy of the Application, and
any attached endorsements, is the entire contract
between you and us. The entire contract also
includes: a copy of any Application to change to
a better Underwriting Risk Class, any new
Specifications Pages, and any supplemental pages
issued.
We assume that the information you and the Insured
provide in any Application is accurate and
complete to the best of your knowledge. If we
contest this contract or deny a claim, we may use
only the information you and the Insured provided
in an Application. Our representatives are not
permitted to change this contract or extend the
time for making payments. Only our President, a
Vice President or Secretary may change the
provisions of this contract, and then only in
writing.
RIGHT TO CONTEST THE A contest is any action taken by us to cancel your
CONTRACT IS LIMITED insurance or deny a claim based on untrue or
incomplete answers in your Application. We cannot
contest the Face Amount of the contract if it has
been in force for two years from the Date of Issue
and the Insured is alive at the end of this two-
year period.
If the Underwriting Risk Class is changed at your
request, we cannot contest the change after it has
been in force for two years from its effective
date and the Insured is alive.
NON-PARTICIPATING No insurance dividends will be paid on this
contract.
ADJUSTMENT OF INTEREST We determine the Fixed Account interest rates used
RATES to calculate the Contract Value, subject to the
guarantees on the Specifications Page. Any
changes in these rates will be based on changes in
our future expectations for our investment
earnings.
SUICIDE EXCLUSION If an Insured, while sane or insane, commits
suicide within two years of the Date of Issue of
this contract, we will not pay a death benefit.
The beneficiary will receive only the total amount
of payments made to us less any Outstanding Loan
and amounts withdrawn.
NOTICE OF FIRST TO DIE In the case of second-to-die insurance, upon the
death of the Insured who dies first, the owner
agrees to mail to the Principal Office, within 90
days of the date of death, or as soon thereafter
as is reasonably possible, proof of death.
MISSTATEMENT OF AGE OR On the date of death of the insured, the death
SEX benefit will be reduced or increased if the Age or
sex is misstated. The adjustment will be based
upon the ratio of the Maximum Payment for this
contract to the Maximum Payment for the contract
issued at the correct Age or sex.
PROTECTION OF BENEFITS To the extent allowed by law, the benefits
provided by this contract cannot be reached by the
beneficiary's creditors. No beneficiary may
assign, transfer, anticipate, or encumber the
Contract Value or benefit unless you give them
this right.
PERIODIC REPORT We will mail a report to you at your last known
address at least once a year. This report will
provide the following information:
- Contract Values in each Sub-Account and in the
Fixed Account;
- the value of the contract if surrendered;
Form 1030-96 9
- payments made by you and charges deducted by us
since the last report;
- the Outstanding Loan and any other information
required by law; and
- the death benefit.
Form 1030-96 10
INFORMATION ABOUT YOU AND THE BENEFICIARY
OWNER The owner of the contract is shown on the
Specifications Page. The owner may change the
ownership of this contract without the consent of
any beneficiary. However, an irrevocable
beneficiary must agree to the change in writing.
ASSIGNMENT You may change the ownership of this contract by
sending us a Written Request. An absolute
assignment will transfer ownership of the contract
from you to another person called the Assignee.
You may also assign this contract as collateral to
a collateral Assignee. The limitations on your
ownership rights while a collateral assignment is
in effect are specified in the assignment.
An assignment will take place only when the
Written Request is recorded at our Principal
Office. When recorded, it will take effect on the
date it was signed by you. Any rights created by
the assignment will be subject to any payments
made or actions taken by us before the change is
recorded. We are not responsible for assuring
that any assignment or any Assignee's interest is
valid.
BENEFICIARY You name the beneficiary to receive the net death
benefit. The beneficiary's interest will be
affected by any assignment you make. If you
assign this contract as collateral, all or a
portion of the net death benefit will first be
paid to the collateral Assignee; any money left
over from the amount due the Assignee will go to
those otherwise entitled.
Your choice of beneficiary may be revocable or
irrevocable. You may change a revocable
beneficiary at any time 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 contract. Unless you
have asked otherwise, the beneficiary will be
revocable.
Any change of the beneficiary must be made while
the Insured is living. This change will take
place on the date the request is signed, even if
the Insured is not living on the day we receive it
at the Principal Office. Any rights created by
the change will be subject to any payments made,
or actions taken, before we receive the Written
Request.
If a beneficiary dies before the Insured, his or
her interest in this contract will pass to any
surviving beneficiaries in proportion to their
share in the net death benefit, unless you have
requested otherwise. If all beneficiaries die
before the Insured, the net death benefit will
pass to you or your estate.
COMMON DISASTER OPTION The common disaster option may be elected by
Written Request. If the common disaster option is
in effect on the date of the Insured's death, the
beneficiary must be alive a certain number of days
following the Insured's date of death in order to
be entitled to receive a benefit. Otherwise, we
will pay the net death benefit as though the
beneficiary died before the Insured. The number
of days that the beneficiary must live after the
Insured's death is selected by you when you elect
the common disaster option.
Form 1030-96 11
WHAT YOU SHOULD KNOW ABOUT THE PAYMENTS
PAYMENTS This contract will not be in force until the
payment is made to us. The payment must be sent
to either our Principal Office or an authorized
representative. If you request it in writing, we
will send you a signed receipt after the payment
is received.
Additional payments under the contract will be
permitted prior to the Final Payment Date only
under the following circumstances:
1. An additional payment is required to keep the
contract in force subject to the Grace Period
provisions.
2. An additional payment is required for
reinstatement.
3. Additional payments may be made at any time
provided total payments do not exceed the
Maximum Payment shown on the Specifications
Page. The minimum amount of the additional
payment is indicated on the Specifications
Page. We may require Evidence of Insurability
if the additional payment would increase the
net death benefit. A payment received while
there is an Outstanding Loan on the contract
will be considered a loan repayment rather than
an additional payment.
GRACE PERIOD This contract will terminate 62 days after a
Monthly Processing Date on which the surrender
value is less than zero. The 62 day period is a
grace period. At least 61 days before the end of
the grace period, we will mail the owner and any
Assignee written notice of the amount of payment
that will be required to continue this contract in
force. The required payment will be no greater
than the amount required to pay the monthly
deductions for three months as of the day the
grace period began. If that payment is not paid
by the end of the grace period, the contract will
terminate without value.
The death benefit during the grace period will be
reduced by any overdue charges. The contract will
lapse if the amount shown in the notice remains
unpaid at the end of the grace period. The
contract terminates on the date of lapse.
REINSTATEMENT If this contract has lapsed or foreclosed for
failure to pay loan interest and has not been
surrendered, it may be restored (called
"reinstated" in this contract) within three years
after the date of default or foreclosure. We will
reinstate the contract on the Monthly Processing
Date following the day we receive all of the
following items:
- a written Application for reinstatement;
- Evidence of Insurability showing the Insured is
insurable according to our underwriting rules at
that time;
- a payment sufficient to cover the cost of all
contract charges that were due and unpaid during
the grace period;
- a payment large enough to keep the contract in
force for three months; and
- a payment or reinstatement of any loans against
the contract that existed at the end of the
grace period.
Form 1030-96 12
Your reinstatement payment will be allocated to
the Fixed Account until we approve your
Application. At that time, we will transfer the
reinstatement payment, plus accrued interest, as
you directed in your last payment allocation
request.
The Contract Value on the reinstatement date is:
- the payment to reinstate the contract, including
the interest earned from the date we received
your payment; plus
- an amount equal to the Contract Value less any
Outstanding Loan on the default date; less
- the monthly deductions due on the reinstatement
date.
For the purpose of measuring the surrender charge
period, the contract will be reinstated as of the
date of default. The surrender charge on the
reinstatement date is the charge that was in
effect on the date of default.
Form 1030-96 13
WHAT YOU SHOULD KNOW ABOUT YOUR CONTRACT VALUE
Your Contract Value is the sum of the Variable
Account value and the Fixed Account value.
ALLOCATION OF INITIAL If you make a payment with your Application or at
PAYMENTS any time before your right to examine the contract
expires, we may put that payment into the Money
Market Fund Sub-Account on the date it is received
at our Principal Office or the Date of Issue, if
later. We will transfer the Contract Value as you
directed in your Application, or by later request,
no later than the expiration of the period during
which you may exercise your right to cancel the
contract.
MONTHLY DEDUCTION Beginning on the date this contract is issued and
on every Monthly Processing Date until the Final
Payment Date, we will deduct the following monthly
charges Pro Rata from the Contract Value:
- the Administration Charge;
- the Distribution Fee;
- the Federal & State Payment Tax Charge;
- the Insurance Protection Charge; and
- the Monthly Maintenance Fee.
These amounts are shown on the Specifications
Page.
Charges allocated to the Fixed Account will be
deducted on a last-in, first-out basis. This
means that we use the most recent payments to pay
the fees.
ADMINISTRATION CHARGE The Administration Charge compensates us for the
cost of providing administrative services
attributable to this Contract.
DISTRIBUTION FEE The Distribution Fee compensates us for
distribution expenses.
FEDERAL & STATE PAYMENT This charge compensates us for federal, state and
TAX CHARGE local taxes we must pay.
INSURANCE PROTECTION The Insurance Protection Charge compensates us for
CHARGE the cost of providing a death benefit in excess of
the Contract Value. This charge will not exceed
the guaranteed maximum Insurance Protection
Charge. The guaranteed maximum Insurance
Protection Charge for any contract month is equal
to (a) times (b), where;
(a) is the rate shown in the Guaranteed Maximum
Monthly Insurance Protection Table shown on
the Specifications Page, and
(b) is the Insurance Protection Amount.
The insurance protection rates actually charged
will usually be lower than, and never will be
higher than, the guaranteed rates. We may change
the monthly insurance protection rate from time to
time based on our expectations as to future
experience for mortality, expenses, taxes, or
persistency. Any change in insurance protection
rates will apply to all individuals in the same
Underwriting Risk Class as the Insured. We will
review the actual insurance protection rates for
this contract
Form 1030-96 14
whenever we change these rates for new contracts.
In any event, rates will be reviewed no more often
than once each year, but not less than once in a
five-year period.
MONTHLY MAINTENANCE The Monthly Maintenance Fee shown on the
FEE Specifications Page will be deducted on each
Monthly Processing Date.
Form 1030-96 15
WHAT YOU SHOULD KNOW ABOUT THE VARIABLE ACCOUNT
VARIABLE ACCOUNT The value of your contract will vary if it is
funded through investments in the Sub-Accounts of
the Variable Account. This account is separate
from our Fixed Account. We have exclusive and
absolute ownership and control of all assets,
including those in the Variable Account. However,
the portion of assets in the Variable Account
equal to the reserves and liabilities of the
contracts that are supported by this account will
not be charged with liabilities that arise out of
any other business we conduct.
This account, established to support variable life
insurance contracts, is registered with the
Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act
of 1940. It is also governed by the laws of the
State of Delaware.
This account has several Sub-Accounts. Each Sub-
Account invests its assets in a separate series of
a registered investment company (called a "Fund").
We reserve the right, when the law allows, to
change the name of the Variable Account or any of
its Sub-Accounts. A list of the available Sub-
Accounts in which you may choose to invest is on
the Application.
VARIABLE ACCOUNT The portion of the payment you make to us which is
CONTRACT VALUE not allocated to the Fixed Account will be
allocated to the Money Market Fund Sub-Account on
the date we receive the payment or the Date of
Issue, if it occurs after the date we receive the
payment. This value will be transferred to the
Sub-Accounts in accordance with your payment
allocation no later than the expiration of the
period during which you may exercise your right to
cancel the contract. Payments made thereafter
that are allocated to the Sub-Accounts will
purchase additional units of the Sub-Accounts.
The number of units purchased in each Sub-Account
is equal to the portion of the payment allocated
to the Sub-Account, divided by the value of the
applicable unit as of the valuation date the
payment is received at our Principal Office, or on
the valuation date that value is transferred to
the Sub-Account from another Sub-Account or the
Fixed Account.
The number of units will remain fixed unless (1)
changed by a subsequent split of unit value, or
(2) reduced because of a transfer, contract loan,
partial withdrawal, partial withdrawal transaction
charge, monthly deductions, surrender or surrender
charge allocated to the Sub-Account. Any
transaction described in (2) will result in the
cancellation of an appropriate number of units.
On each valuation date, we will value the assets
of each Sub-Account where activity has occurred.
The Contract Value in a Sub-Account at any time is
equal to the number of units this contract then
has in that Sub-Account multiplied by the Sub-
Account's unit value. The value of a unit for any
Sub-Account for any valuation period is determined
by multiplying that Sub-Account's unit value for
the immediately preceding valuation period by the
net investment factor for the valuation period for
which the unit value is being calculated. The
unit value will reflect the investment advisory
fee and other expenses incurred by the registered
investment companies.
NET INVESTMENT FACTOR This measures the investment performance of a Sub-
Account during the valuation period that has just
ended. The net investment factor is the result of
(a) plus (b), divided by (c), minus (d) where:
(a) is the net asset value per share of a Fund
share held in the Sub-Account determined at
the end of the current valuation period, plus
Form 1030-96 16
(b) is the per share amount of any dividend or
capital gain distributions made by the Fund
on shares held in the Sub-Account if the "ex-
dividend " date occurs during the current
valuation period.
(c) is the net asset value per share of a Fund
share held in the Sub-Account determined as
of the end of the immediately preceding
valuation period.
(d) is a charge for mortality and expense risks
in the valuation period. The current
mortality and expense risk charge is shown on
the Specifications Page. This charge may be
increased or decreased, but will never exceed
the maximum mortality and expense risk charge
shown on the Specifications Page. Expense
and mortality results may not adversely
affect this maximum charge.
Since the net investment factor may be more or
less than one, the unit value may increase or
decrease. You bear the investment risk. We
reserve the right, subject to any required
regulatory approvals, to change the method we use
to determine the net investment factor.
VALUATION DATES AND A valuation date is each day that the New York
PERIODS Stock Exchange (NYSE) is open for business and any
other day that there is enough trading in the
Variable Account's underlying portfolio securities
to materially affect the value of the Variable
Account. A valuation period is the period between
valuation dates.
ADDITION, DELETION OR We may not change the investment policy of the
SUBSTITUTION OF Variable Account without the approval of the
INVESTMENTS Insurance Commissioner of Delaware. This approval
process is on file with the Commissioner of your
state.
We reserve the right, subject to compliance with
applicable law, to add, delete, or substitute the
shares of a Fund that are held by the Variable
Account or that the Variable Account may purchase.
We also reserve the right to eliminate the shares
of any Fund if they are no longer available for
investment, or if we believe investing more in any
Fund is no longer appropriate for the purposes of
the Variable Account.
We will notify you before we substitute any of
your shares in the Variable Account. This will
not, however, prevent the Variable Account from
buying other shares of underlying securities for
other series or classes of policies, or from
permitting a conversion between series or classes
of policies or contracts when requested by the
contract owner.
We reserve the right to establish other Sub-
Accounts, and to make them available to any class
or series of policies as we think appropriate.
Each new Sub-Account would invest in a new
investment company or in shares of another
open-end investment company. We also reserve the
right to eliminate or combine existing
Sub-Accounts of the Variable Account and to
transfer the assets between Sub-Accounts, when
allowed by law.
If we make any substitutions or changes that we
believe are necessary or appropriate, we may make
changes in this contract by written notice to
reflect the substitution or change. If we think
it is in the best interests of our contract
owners, we may operate the Variable Account as a
management company under the Investment Company
Act of 1940, or we may de-register it under that
Act if registration is no longer required. We may
also combine it with other Separate Accounts.
Form 1030-96 17
FEDERAL TAXES If we must pay taxes on the Variable Account, we
will charge you for that tax. Although the
Variable Account is currently not taxable, we
reserve the right to charge for taxes if it
becomes taxable.
SPLITTING OF UNITS We reserve the right to split the value of a unit,
to either increase or decrease the number of
units. Any splitting of units will have no
material effect on contract benefits.
18
WHAT YOU SHOULD KNOW ABOUT THE FIXED ACCOUNT
FIXED ACCOUNT The Fixed Account is a part of our General
Account. The General Account consists of all
assets owned by us, other than those in the
Variable Account and other Separate Accounts.
Except as limited by law, we have sole control
over the investment of these General Account
assets. You do not share directly in the
investment experience of the General Account,
but are allowed to allocate and transfer funds
into the Fixed Account.
FIXED ACCOUNT INTEREST The interest rate credited to Contract Value in
RATES the Fixed Account is set by us. We will review
this interest rate from time to time, at least
once a year. The following guarantees apply to
money in the Fixed Account:
- The interest rate in effect on the Date of Issue
is guaranteed until the next contract
anniversary, unless you borrow money from that
Contract Value.
- The interest rate in effect on the day funds are
transferred from a Sub-Account of the Variable
Account to the Fixed Account is guaranteed until
the next contract anniversary, unless you borrow
from that Contract Value.
- The interest rate in effect on a contract
anniversary is guaranteed for one year for those
Contract Values in the Fixed Account on the
contract anniversary as long as those values
remain in the Fixed Account and are not
borrowed.
- The interest rate(s) we use for that portion of
the Contract Value that equals the Outstanding
Loan will be at least the minimum rates shown on
the Specifications Page. One of the rates shown
is the Preferred Loan Rate which applies only to
the portion of the Outstanding Loan that is
secured by Earnings.
FIXED ACCOUNT CONTRACT On each Monthly Processing Date, the Contract
VALUE Value of the Fixed Account is equal to:
- the Contract Value in this account on the
preceding Monthly Processing Date increased by
one month's interest, plus
- payments received since the last Monthly
Processing Date that are allocated to the Fixed
Account plus the interest accrued from the date
the payments are received by us, plus
- Variable Account Contract Value transferred to
the Fixed Account from any Sub-Accounts since
the preceding Monthly Processing Date, increased
by interest from the date the Contract Value is
transferred, minus
- Contract Value transferred from the Fixed
Account to a Sub-Account since the preceding
Monthly Processing Date and interest accrued on
these transfers from the transfer date to the
Monthly Processing Date, minus
- partial withdrawals from the Fixed Account,
partial withdrawal transaction charges and
surrender charges since the last Monthly
Processing Date, interest accrued on these
withdrawals, and charges from the withdrawal
date to the Monthly Processing Date, minus
- the portion of the Monthly Deductions allocated
to the Contract Value in the Fixed Account.
19
During any contract month the Fixed Account
Contract Value will be calculated on a consistent
basis.
BASIS OF VALUE OF THE We base the minimum surrender value in the Fixed
FIXED ACCOUNT Account on the minimum Fixed Account interest
rates and mortality table shown on the
Specifications Page. Actual Contract Values are
based on interest and insurance protection rates
that we set. We have filed a detailed description
of the way we determine this value with the State
Insurance Department. All values equal or exceed
the minimums required by law in the state in which
this contract is delivered.
20
WHAT YOU SHOULD KNOW ABOUT TRANSFERS
While the contract is in force, you may transfer
amounts between the Fixed Account and the Sub-
Accounts or among Sub-Accounts on request.
You may transfer, without charge, all of the
Contract Value in the Variable Account to the
Fixed Account once during the first 24 months
after the contract is issued in order to convert
to a fixed-only product. If you do so, future
payments will be allocated to the Fixed Account
unless you specify otherwise. All other transfers
are subject to the following rules and will be
permitted with our approval.
We will determine the minimum and maximum amounts
that may be transferred according to the rules
that are in effect at the time of the transfer.
We also reserve the right to limit the number of
transfers that can be made in each contract year
and set other reasonable rules controlling
transfers.
If a transfer would reduce the Contract Value in a
Sub-Account to less than the current minimum
balance required for such accounts, we reserve the
right to include the remaining value in the amount
transferred.
You will not be charged for the first twelve
transfers in a contract year, but a transfer
charge of up to $25 may be made on each additional
transfer. Any transfer charge will be deducted
from the amount that is transferred. There is no
charge for transfers that result from a contract
loan or repayment of a loan.
21
WHAT YOU SHOULD KNOW ABOUT BORROWING FROM YOUR
CONTRACT
To borrow from this contract, the only collateral
you will need is the contract itself.
AMOUNT YOU MAY BORROW The maximum loan amount is 90% of the Contract
Value less the surrender charge. You may borrow
an amount subject to the minimum shown on the
Specifications Page, up to the maximum loan amount
minus any Outstanding Loan.
If you do not specify from which accounts you want
to borrow, we will allocate the loan Pro Rata. In
order to secure the Outstanding Loan, we will
transfer the Contract Value in each Sub-Account
equal to the contract loan allocated to each Sub-
Account to the Fixed Account.
LOAN INTEREST You will pay interest on your loan at an annual
rate indicated on the Specifications Page.
Interest accrues daily and is payable at the end
of each contract year. Any interest that is not
paid on time will be added to the loan principal
and bear interest at the same rate. If this makes
the principal higher than the Contract Value in
the Fixed Account, we will offset this shortfall
by transferring funds from the Sub-Accounts to the
Fixed Account. We will allocate the transferred
amount among the Sub-Accounts in the same
proportion that the value in each Sub-Account has
to the total value in all of them.
REPAYING THE You may repay the Outstanding Loan at any time
OUTSTANDING LOAN before this contract lapses. When you repay it,
we will transfer the Contract Value that is
securing the loan in the Fixed Account to the
various Sub-Accounts and increase the value in
them. You may tell us how to allocate
repayments. Otherwise, we may allocate them
according to the most recent payment allocation
choices you have made. Loan repayments made to
the Variable Account cannot be higher than the
amounts you transferred to secure the
Outstanding Loan.
FORECLOSURE If at any time the amount of the Outstanding
Loan is higher than the Contract Value minus
the surrender charge, we will terminate the
contract. We will mail a notice of this
termination to the last known address of you
and any Assignee. If the excess Outstanding
Loan is not paid within 62 days after this
notice is mailed, the contract will terminate
with no value. You may reinstate this contract
according to the Reinstatement provision.
22
WHAT YOU SHOULD KNOW ABOUT SURRENDERS AND PARTIAL
WITHDRAWALS
SURRENDER You may cancel this contract and receive its
surrender value as long as the Insured is living
on the date we receive your Written Request at our
Principal Office. The contract will be canceled
on that day. You may choose to receive the
surrender value in a lump sum or under a benefit
option.
SURRENDER VALUE The surrender value equals the Contract Value
minus the Outstanding Loan and surrender charge.
You will find the surrender charge on the
Specifications Page.
PARTIAL WITHDRAWALS You may withdraw part of the surrender value on
Written Request. Each withdrawal must be at least
$1,000. We will deduct a 2% withdrawal
transaction charge (maximum $25) from the Contract
Value each time you make a partial withdrawal.
We will not permit a partial withdrawal if it
reduces the Contract Value amount to less than the
minimum amount shown on the Specifications Page.
The Face Amount will be reduced proportionately
based on the ratio of the amount of the partial
withdrawal and charges to the Contract Value on
the date of withdrawal. The Contract Value will
be reduced by the amount of the partial
withdrawal, the partial withdrawal transaction
charge and any applicable surrender charges.
If you do not allocate a partial withdrawal and
its charges between the Fixed Account and each
Sub-Account, we will automatically allocate them
Pro Rata.
FREE WITHDRAWAL AMOUNT The free withdrawal amount will not be subject to
the surrender charge as described on the
Specifications Page. This amount equals (a) minus
(b), where:
(a) is the free withdrawal amount shown on the
Specifications Page, and
(b) is the total of the withdrawals (or portions
of them) made in the same contract year that
were exempt from the surrender charge.
The free withdrawal amount is first deducted from
Earnings. Withdrawals in excess of the free
withdrawal amount are deducted from payments not
previously considered withdrawn on a last-in,
first-out basis. Surrender charges applicable to
the excess withdrawal are described on the
Specifications Page.
POSTPONEMENT OF We may postpone any transfer from the Variable
PAYMENT Account, or payment of any amount payable on:
- surrender
- partial withdrawal
- transfer
- contract loan
- death of the Insured
The postponement will continue during any period
when:
- trading on the New York Stock Exchange is
restricted as determined by the Securities and
Exchange Commission, or the New York Stock
Exchange is closed for days other than weekends
and holidays, or
23
- the Securities and Exchange Commission by order
has permitted such suspension, or
- the Securities and Exchange Commission has
determined that such an emergency exists that
disposal of portfolio securities or valuation of
assets is not reasonably practical.
We also may postpone any transfer from the Fixed
Account or payment of any portion of the amount
payable on a surrender, partial withdrawal or
contract loan from the Fixed Account for not more
than six months from the day we receive your
Written Request and your contract, if it is
required. If we postpone those payments for 30
days or more, the amount postponed will earn
interest during that period of not less than 3%
per year or such higher rate as required by law.
We will not postpone payments to make payments on
our policies.
24
WHAT YOU SHOULD KNOW ABOUT THE DEATH BENEFIT
NET DEATH BENEFIT If the Insured dies before the Final Payment Date,
we will pay the net death benefit upon receipt at
the Principal Office of proof of the Insured's
death. The net death benefit is the Face Amount
at the time of death or the guideline minimum sum
insured, if greater, reduced by any Outstanding
Loan, rider charges and monthly deductions due and
unpaid through the contract month in which the
Insured dies, as well as any partial withdrawals
and surrender charges. We will pay interest from
the date of death to the date the net death
benefit is paid. If the Insured dies after the
Final benefit Payment Date, we will pay the
Contract Value minus any Outstanding Loans. We
will pay interest from the date we receive the
death certificate. If you choose a lump sum
payment, the interest rate will be at least 3% a
year, or the minimum rate set by law, if greater.
REQUIRED MINIMUM In order to qualify as "life insurance" under the
AMOUNT OF DEATH BENEFIT federal tax law, this contract must provide a
minimum death benefit. This is called the
"guideline minimum sum insured" in the tax code.
This is calculated by multiplying the Contract
Value by the percentages shown on the
Specifications Page. The guideline minimum sum
insured varies by Age. The amounts shown in the
Table are determined according to federal tax law,
and will be adjusted according to any changes in
that law.
Form 1030-96 25
WHAT YOU SHOULD KNOW ABOUT THE BENEFIT OPTIONS
BENEFIT OPTIONS You may choose one of the following options for
receiving the surrender value or the net death
benefit. We will give the payee a certificate
describing the benefit option you selected. If you
make no choice, we will pay the benefits in a
single, lump sum.
We will pay all benefits from the Fixed Account.
Benefits may not be allocated to the Variable
Account. The amounts payable under these options,
for each $1,000 applied, will be:
(a) the rate per $1,000 of benefit based on our non-
guaranteed current benefit option rates for this
class of contracts, or
(b) the rate in this contract for the applicable
benefit option, whichever is greater.
If you choose a benefit option, the beneficiary
may, when filing a proof of claim, pay us any
amount that otherwise would be deducted from the
proceeds.
OPTION A: BENEFITS FOR A We will make equal payments for any selected number
SPECIFIED NUMBER OF of years up to 30 years. These payments may be
YEARS (TABLE A) made annually, semi-annually, quarterly or monthly,
whichever you choose.
OPTION B: LIFETIME Benefits are based on the age of the person who
MONTHLY BENEFIT (TABLE receives the money (called the payee) on the date
B) the first payment will be made. You may choose one
of the three following options to specify when
benefits will cease:
- when the payee dies with no further benefits due
(Life Annuity);
- when the payee dies but not before the total
benefit payments made by us equals the amount
applied under this option (Life Annuity with
Installment Refund); or
- when the payee dies but not before 10 years have
elapsed from the date of the first payment (Life
Annuity with Payments Guaranteed for 10 years).
OPTION C: INTEREST We will pay interest at a rate we determine
BENEFITS each year. It will not be less than 3% per
year. We will make payments annually,
semi-annually, quarterly, or monthly, whichever
is preferred. These benefits will stop when
the amount left has been withdrawn. If the
payee dies, any unpaid balance plus accrued
interest will be paid in a lump sum.
OPTION D: BENEFITS FOR A
SPECIFIED AMOUNT Interest will be credited to the unpaid balance and
we will make payments until the unpaid balance is
gone. We will credit interest at a rate we
determine each year, but not less than 3%. We will
make payments annually, semi-annually, quarterly,
or monthly, whichever is preferred. The benefit
level chosen must provide for an annual benefit of
at least 8% of the amount applied.
OPTION E: LIFETIME We will pay a benefit jointly to two payees during
MONTHLY BENEFITS FOR TWO their joint lifetime.
PAYEES (TABLE E)
After one payee dies, the benefits to the survivor
will be:
- the same as the original amount, or
- in an amount equal to 2/3 of the original amount.
Form 1030-96 26
Benefits are based on the payees' ages on the date
the first payment is due. Benefits will end when
the second payee dies.
SELECTING BENEFIT The amount we apply under any one option for any
OPTIONS one payee must be at least $5,000, and the periodic
payment for any one payee must be at least $50.
You may change any option you select before the net
death benefit is paid, subject to the Owner and
Beneficiary provisions. If you make no selection,
the beneficiary may choose an option when the
benefits become payable.
If the amount of monthly income benefits under
Option B for the age of the payee is the same for
different periods certain, the payee will be
entitled to the longest period certain for the
payee's age.
You may give the beneficiary the right to change
from Option C or D to any other option at any time.
If Option C or D is chosen by the payee when this
contract becomes a claim, the payee may reserve the
right to change to any other option. The payee who
elects to change options must be the payee under
the option selected.
ADDITIONAL DEPOSITS An additional deposit may be added to any proceeds
when they are applied under Option B and E. We
reserve the right to limit the amount of any
additional deposit. We may levy a charge of no more
than 3% on any additional deposits.
RIGHTS AND LIMITATIONS A payee has no right to assign any amount payable
under any option, nor to demand a lump sum benefit
in place of any amount payable under Options B or
E. A payee will have the right to receive a lump
sum in place of installments under Option A. The
payee must provide us with a Written Request to
reserve this right. If the right to receive a lump
sum is exercised, we will determine the lump sum
benefit at the same interest rates used to
calculate the installments. The amount left under
Option C and any unpaid balance under Option D, may
be withdrawn only as noted in the Written Request
selecting the option.
A corporate or fiduciary payee may select only
Option A, C or D, subject to our approval.
BENEFIT DATES The first payment under any option, except Option
C, will be due on the date this contract matures,
by death or otherwise, unless another date is
designated. Benefits under Option C begin at the
end of the first benefit period.
The last payment under any option will be made as
stated in the option's description. However, if a
payee under Options B or E dies before the due date
of the second monthly payment, the amount applied,
minus the first monthly payment, will be paid in a
lump sum or under any option other than Option E.
This payment will be made to the surviving payee
under Option E or the succeeding payee under Option
B.
BENEFIT RATES The Benefit Option Tables show benefit amounts for
Option A, B and E. If you choose one of these
options, either within five years of the date of
surrender or the date the proceeds are otherwise
payable, we will apply either the benefit rates
listed in the Tables, or the rates we use on the
date the proceeds are paid, whichever is more
favorable. Benefits that begin more than five
years after that date, or as a result of additional
deposits, will be based on the rates we use on the
date the first benefit is due.
Form 1030-96 27
BENEFIT OPTIONS
TABLE A
BENEFITS FOR SPECIFIED NUMBER OF YEARS
PAYMENT FOR EACH $1,000 OF CONTRACT VALUE APPLIED
[These tables are based on an annual interest rate of 3 1/2%.]
--------------------------------------------------------------
--------------------------------------------------------------
SEMI- QUAR-
YEARS ANNUAL ANNUAL TERLY MONTHLY
--------------------------------------------------------------
[1 1000.00 504.30 253.23 84.65
2 508.60 256.49 128.79 43.05
3 344.86 173.91 87.33 29.19
4 263.04 132.65 66.61 22.27
5 213.99 107.92 54.19 18.12
6 181.32 91.44 43.92 15.35
7 158.01 79.69 40.01 13.38
8 140.56 70.88 35.59 11.90
9 127.00 64.05 32.16 10.75
10 116.18 58.59 29.42 9.83
11 107.34 54.13 27.18 9.09
12 99.98 50.42 25.32 8.46
13 93.78 47.29 23.75 7.94
14 88.47 44.62 22.40 7.49
15 83.89 42.31 21.24 7.10
16 79.89 40.29 20.23 6.76
17 76.37 38.51 19.34 6.47
18 73.25 36.94 18.55 6.20
19 70.47 35.54 17.85 5.97
20 67.98 34.28 17.22 5.75
21 65.74 33.15 16.65 5.56
22 63.70 32.13 16.13 5.39
23 61.85 31.19 15.66 5.24
24 60.17 30.34 15.24 5.09
25 58.62 29.56 14.85 4.96
26 57.20 28.85 14.49 4.84
27 55.90 28.19 14.15 4.73
28 54.69 27.58 13.85 4.63
29 53.57 27.02 13.57 4.53
30 52.53 26.49 13.3 4.45]
--------------------------------------------------------------
--------------------------------------------------------------
Form 1030-96 28
BENEFIT OPTIONS (CONTINUED)
LIFE INCOME OPTION TABLES
MONTHLY ANNUITY BENEFIT PAYMENT
FOR EACH $1,000 OF CONTRACT VALUE APPLIED
TABLE B
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
AGE LIFE ANNUITY WITH LIFE LIFE ANNUITY
NEAREST PAYMENTS GUARANTEED ANNUITY WITH INSTALLMENT
BIRTHDAY FOR 10 YEARS REFUND
-------------------------------------------------------------------------------
[50 4.22 4.24 4.14
51 4.28 4.31 4.19
52 4.34 4.37 4.25
53 4.41 4.44 4.31
54 4.48 4.52 4.37
55 4.55 4.59 4.43
56 4.63 4.68 4.50
57 4.71 4.76 4.57
58 4.80 4.86 4.65
59 4.89 4.96 4.73
60 4.98 5.06 4.82
61 5.08 5.18 4.90
62 5.19 5.30 5.00
63 5.30 5.43 5.10
64 5.42 5.56 5.20
65 5.55 5.71 5.31
66 5.68 5.87 5.43
67 5.81 6.04 5.55
68 5.96 6.22 5.68
69 6.11 6.41 5.81
70 6.26 6.62 5.96
71 6.43 6.84 6.11
72 6.60 7.08 6.27
73 6.77 7.34 6.44
74 6.95 7.62 6.62
75 7.13 7.91 6.81]
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
[ These tables are based on an annual interest rate of 3 1/2% and the 1983(a)
Individual Mortality Table using a blend reflecting 40% of the male rate and 60%
of the female rate. ]
Form 1030-96 29
BENEFIT OPTIONS (CONTINUED)
MONTHLY ANNUITY BENEFIT PAYMENT
FOR EACH $1,000 OF CONTRACT VALUE APPLIED
TABLE E1 TABLE E2
----------------------------------------------------------------- ------------------------------------------------------
----------------------------------------------------------------- ------------------------------------------------------
Joint and Survivor Life Annuity Joint and Two-Thirds Survivor Life Annuity
Older Age Older Age
-------------------------------------------------- ------------------------------------------------------
50 55 60 65 70 75 80 50 55 60 65 70 75 80
----------------------------------------------------------------- ------------------------------------------------------
Y [50 3.91 3.97 4.02 4.05 4.07 4.09 4.10 4.25 4.40 4.57 4.76 4.96 5.18 5.39
O ----
U 55 4.18 4.26 4.32 4.36 4.39 4.41 4.60 4.80 5.02 5.26 5.50 5.75
N ----
G 60 4.54 4.65 4.73 4.78 4.81 5.08 5.35 5.63 5.92 6.21
E ----
R 65 5.04 5.19 5.29 5.35 5.74 6.10 6.46 6.82
----
70 5.75 5.95 6.08 6.67 7.15 7.62
----
A 75 6.77 7.06 8.04 8.69
G ---- 75
E 80 8.29 10.05]
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
[These tables are based on an annual interest rate of 3 1/2%
and the 1983(a) Individual Mortality Table using a proportional blend of
50% male and 50% female.]
MODIFIED SINGLE PAYMENT VARIABLE LIFE INSURANCE CONTRACT
NON-PARTICIPATING
Form 1030-96 30
