EXHIBIT 1A(5)(a)(v)
[LOGO] SAGE
====================================
SAGE LIFE ASSURANCE OF AMERICA, INC.
Member of Sage Insurance Group. Inc.
A Stock Company
Home Office Customer Service Center
000 Xxxxxxxx Xxxxxx [P. O. Xxx 000000]
Xxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
0-000-XXX-XXXX
PLEASE READ THIS CONTRACT CAREFULLY. This group contract is a legal contract
between the Contractholder and Sage Life Assurance of America, Inc. The
Contractholder has the rights described in the Contract. The Owner and Insured
are named in each Certificate. We agree to pay the Death Proceeds to the
Beneficiary upon receipt of proof that an Insured died while coverage under this
Group Contract is in force.
RIGHT TO EXAMINE A CERTIFICATE:
Each Owner may return his or her Certificate to us or the agent who sold it to
the Owner within 10 days after receipt of it (the Free Look Period). When we
receive the returned Certificate, we will promptly refund to the Owner his or
her Account Value plus any charges shown in the Schedule that we have deducted
from such Account Value on or before the date the returned Certificate was
received by us, or if greater and required by the law of the Owner's state, the
initial purchase payment (minus any withdrawals).
The amount and duration of the death benefit and all payments and values, when
based on the investment experience of the Variable Account, may increase or
decrease, depending on a Certificate's investment results and are not guaranteed
as to dollar amount. All payments and values based on the Fixed Account may be
subject to a Market Value Adjustment, the operation of which may cause such
payments and values to increase or decrease.
/s/
Chairman
GROUP MODIFIED SINGLE PAYMENT COMBINATION FIXED AND VARIABLE LIFE INSURANCE
CONTRACT
Limited purchase payment flexibility
Death benefit payable at Insured's death while coverage under this Group
Contract is in force
Nonparticipating
TABLE OF CONTENTS
SCHEDULE...........................................................................3
TABLE OF GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE RATES PER $1,000..........8
TABLE OF GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE RATES PER $1,000..........9
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES......................................10
DEFINITIONS........................................................................11
MAKING PURCHASE PAYMENTS...........................................................13
ACCOUNT VALUE......................................................................14
VARIABLE ACCOUNT...................................................................15
FIXED ACCOUNT......................................................................17
TRANSFERS AMONG ACCOUNTS...........................................................19
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE.............................19
BORROWING PART OF THE ACCOUNT VALUE................................................20
CHARGES............................................................................20
OWNER AND BENEFICIARY..............................................................21
DEATH PROCEEDS.....................................................................21
GENERAL PROVISIONS.................................................................22
SETTLEMENT OPTIONS.................................................................25
Page 2
SCHEDULE
Group Contract No.: 123456789 Effective Date: 1/1/1999
Contractholder: ABC TRUST
Issued In: Illinois (and subject to its laws)
This Schedule sets forth additional information that relates to the provisions
in this Group Contract with the corresponding headings.
MAKING PURCHASE PAYMENTS
Additional purchase payments may be made at any time and in any amount necessary
to avoid termination of a Certificate. Other additional purchase payments may
be made at any time after the [first] Certificate Anniversary, subject to the
following conditions:
1. each additional purchase payment must be at least [$250];
2. only one purchase payment may be paid in any Certificate Year;
3. the attained age of the Insured must be less than [81]; and
4. our prior approval is required before the Owner makes a purchase
payment that causes the Account Value of all single payment or
modified single payment Certificates that the Owner maintain with us
to exceed [$1,000,000].
We reserve the right to require satisfactory evidence of insurability before we
accept any additional purchase payment that increases the death benefit by more
than it increases the Account Value.
The minimum reinstatement payment is the minimum purchase payment for which we
would then issue a Certificate based upon the Insured's attained age and risk
class as of the effective date of the reinstated Certificate.
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than [$250].
The Designated Sub-Account is the [Money Market Sub-Account].
VARIABLE ACCOUNT
The Variable Account for a Certificate is [The Sage Variable Life Account A].
[It is a unit investment trust variable account.]
FIXED ACCOUNT
The Fixed Account is [The Sage Fixed Interest Account A].
The Minimum Guaranteed Interest Rate is [3%].
The Minimum Deferral Interest Rate is [3%].
Index Rate: [The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the Index
Rate for a calendar week on the reported rate for the preceding calendar week.
We reserve the right to set it less frequently but in no event less often than
monthly.]
Page 3
TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is [$250]. However, if less remains
in a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below [$250], we will treat
the transfer request as a request to transfer the entire amount.
The transfer request must clearly state the Sub-Accounts from which and to which
transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers the
Owner may make to [one] per calendar month or [12] per Certificate Year.
Under a Settlement Option, we reserve the right to:
1. disallow transfers from the Fixed Account to the Variable Account,
or from the Variable Account to the Fixed Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts
to [1] per Certificate Year.
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
[(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals including any associated surrender charge and
Market Value Adjustment incurred in that Certificate Year; and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments.]
The minimum amount that can be withdrawn is [$250]. If a withdrawal request
would reduce the Account Value remaining in a Sub-Account below [$250], we will
treat the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below [$5,000], we
reserve the right to treat the request as a withdrawal of only the excess over
[$5,000].
Unless the Owner specifies otherwise, we will make withdrawals [proportionately
from all Sub-Accounts in which the Owner are invested].
BORROWING PART OF THE OWNER'S ACCOUNT VALUE
The maximum loanable value is [90% of the Account Value less any surrender
charge less any due and unpaid Monthly Deduction Amount.]
The minimum loan amount is [$250].
The Loan Interest Rate is [6%].
The minimum loan repayment amount is [$250].
The Loan Credited Rate is a minimum of [4%]. We may credit a higher rate to
that portion of the Loan Account equal to the Free Withdrawal Amount.
Page 4
CHARGES
Surrender Charge - A surrender charge may be imposed upon surrender of a
Certificate or when an Excess Withdrawal is made. The surrender charge is
applied to each purchase payment and is a percentage of each purchase payment as
follows:
Maximum
Certificate Surrender Charge
Year Percentage
---- ----------
[1 9%
2 9%
3 8%
4 7%
5 6%
6 5%
7 3%
8+ 0%]
OR
The maximum surrender charge percentage is 0% for all Certificate Years.
Transfer Charge - We reserve the right to charge a maximum of [$25] for each
transfer after the [12th] in a Certificate Year. Each request is considered to
be one transfer regardless of the number of Sub-Accounts affected by the
transfer. The transfer charge will be deducted proportionately from all Sub-
Accounts from which transfers are made.
Administration Charge - [$40] a year. This charge is incurred at the beginning
of each Certificate Year and deducted on each Certificate Anniversary or upon
surrender. The charge will be waived:
. if the Account Value is at least [$50,000] at the time of deduction; or
. beginning on and after the [8th] Certificate Anniversary.
Page 5
Asset-Based Charges We deduct asset-based charges from the Owner's Account
Value to compensate us for assuming mortality and expense risks, certain
administrative expenses, certain distribution costs and certain state and
Federal tax expenses. Asset-based charges are calculated as a percentage of the
Account Value on the date of deduction. On the Certificate Date, and monthly
thereafter, the asset-based charges are deducted in proportion to the Sub-
Accounts in which the Owner is invested. The maximum charges are:
Asset-Based Charges Annual Charge Monthly Charge
------------------- ------------- --------------
Certificate Years 1-10 [1.80% .150000%
Certificate Years 11+ 1.30% .108333%]
We also reserve the right to deduct asset-based charges on the effective date of
any allocation of purchase payment to the Sub-Accounts, based on the amount
allocated, and based on the number of days remaining until the next date of
deduction.
[Variable Sub-Account Charges If proceeds are applied to a Settlement Option,
we will deduct the asset-based charges above from the assets in each Variable
Sub-Account supporting Variable Payments on a daily basis rather than as
described above. The maximum charges are:
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- ------------- ------------
Certificate Years 1-10 [1.80% .0049763%
Certificate Years 11+ 1.30% .0035849%]
Charge Deduction Rules Unless specified above, charges are deducted from the
Account Value [proportionately from all Sub-Accounts in which the Owner are
invested.]
SETTLEMENT OPTIONS
The minimum amount that can be applied under any Variable or Fixed Payment is
[$5,000].
The minimum payment is [$100].
We currently allow assumed investment rates of [3%] and [6%].
RIDERS
Accelerated Death Benefit Rider
The maximum Accelerated Benefit Amount is 50% of the Insurance Amount, but not
greater than $500,000.
Accidental Death Benefit Rider
The Maximum Accidental Death Benefit is [$250,000].
Change of Insured Rider
The minimum Attained Ages of the original and new Insureds as of the effective
date of change must be [25].
The maximum Attained Ages of the original and new Insureds as of the effective
date of change is [75].
The maximum Change of Insured Rider charge is [$1.50] per $1,000 of death
benefit.
Page 6
Settlement Option Tables
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below assume 3%) are available
on request. Monthly payments are shown for each $1,000 applied.
Settlement Option Table for a Fixed Period
Fixed Period Monthly Fixed Period Monthly Fixed Period Monthly
of Years Payment of Years Payment of Years Payment
-------- ------- -------- ------- -------- -------
11 $8.88 21 $5.33
12 8.26 22 5.16
13 7.73 23 5.00
14 7.28 24 4.85
5 $17.95 15 6.89 25 4.72
6 15.18 16 6.54 26 4.60
7 13.20 17 6.24 27 4.49
8 11.71 18 5.98 28 4.38
9 10.56 19 5.74 29 4.28
10 9.64 20 5.53 30 4.19
Settlement Option Table for Life
Male/Female Male/Female Male/Female
Age Life Only 10 Years Guaranteed 20 Years Guaranteed
--- --------- ------------------- -------------------
50 $4.28 / 3.92 $4.24 / 3.90 $4.10 / 3.84
55 4.72 / 4.27 4.64 / 4.24 4.40 / 4.12
60 5.31 / 4.74 5.17 / 4.68 4.73 / 4.45
65 6.13 / 5.38 5.84 / 5.25 5.04 / 4.81
70 7.28 / 6.29 6.65 / 6.00 5.29 / 5.14
75 8.90 / 7.62 7.53 / 6.92 5.43 / 5.37
80 11.19 / 9.62 8.37 / 7.93 5.50 / 5.48
85 14.36 / 12.63 9.00 / 8.77 5.52 / 5.52
Page 7
TABLE OF GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE RATES
PER $1,000
MALE - STANDARD RISK CLASS
Attained Monthly Attained Monthly Attained Monthly Attained Monthly
Age Rate Age Rate Age Rate Age Rate
--- --- --- ---- --- ---- --- ----
0 0.2194 25 0.1460 50 0.5852 75 5.7847
1 0.0859 26 0.1434 51 0.6381 76 6.3595
2 0.0825 27 0.1426 52 0.6968 77 6.9577
3 0.0809 28 0.1418 53 0.7640 78 7.5852
4 0.0775 29 0.1434 54 0.8380 79 8.2619
5 0.0734 30 0.1460 55 0.9180 80 9.0119
6 0.0692 31 0.1501 56 1.0030 81 9.8582
7 0.0650 32 0.1560 57 1.0932 82 10.8223
8 0.0625 33 0.1626 58 1.1894 83 11.9024
9 0.0617 34 0.1710 59 1.2942 84 13.0775
10 0.0625 35 0.1810 60 1.4109 85 14.3247
11 0.0675 36 0.1935 61 1.5430 86 15.6263
12 0.0767 37 0.2077 62 1.6923 87 16.9762
13 0.0892 38 0.2236 63 1.8597 88 18.3754
14 0.1034 39 0.2420 64 2.0454 89 19.8343
15 0.1184 40 0.2629 65 2.2459 90 21.3788
16 0.1326 41 0.2854 66 2.4605 91 23.0518
17 0.1434 42 0.3097 67 2.6886 92 24.9371
18 0.1518 43 0.3365 68 2.9344 93 27.2442
19 0.1568 44 0.3649 69 3.2068 94 30.4453
20 0.1585 45 0.3950 70 3.5147 95 35.4922
21 0.1585 46 0.4277 71 3.8670 96 44.5151
22 0.1568 47 0.4620 72 4.2723 97 62.8314
23 0.1535 48 0.4989 73 4.7329 98 83.3333
24 0.1501 49 0.5399 74 5.2401 99 83.3333
100+ 83.3333
Rates shown are based on the Commissioner's Male 1980 Standard Ordinary
Mortality Table, Age Last Birthday. These rates are based on the Insured's
attained age as of each Certificate Anniversary and do not change during a
Certificate Year.
Page 8
TABLE OF GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE RATES PER $1,000
FEMALE - STANDARD RISK CLASS
Attained Monthly Attained Monthly Attained Monthly Attained Monthly
Age Rate Age Rate Age Rate Age Rate
--- ---- --- ---- --- ---- --- ----
0 0.1568 25 0.0976 50 0.4285 75 3.4445
1 0.0700 26 0.1001 51 0.4595 76 3.8688
2 0.0667 27 0.1034 52 0.4947 77 4.3247
3 0.0650 28 0.1067 53 0.5332 78 4.8190
4 0.0642 29 0.1101 54 0.5726 79 5.3700
5 0.0625 30 0.1142 55 0.6129 80 5.9999
6 0.0609 31 0.1184 56 0.6523 81 6.7294
7 0.0592 32 0.1226 57 0.6901 82 7.5789
8 0.0584 33 0.1284 58 0.7279 83 8.5491
9 0.0575 34 0.1343 59 0.7699 84 9.6289
10 0.0567 35 0.1418 60 0.8204 85 10.8111
11 0.0584 36 0.1518 61 0.8826 86 12.0908
12 0.0609 37 0.1635 62 0.9626 87 13.4694
13 0.0642 38 0.1777 63 1.0586 88 14.9520
14 0.0684 39 0.1935 64 1.1675 89 16.5557
15 0.0725 40 0.2111 65 1.2832 90 18.3060
16 0.0767 41 0.2295 66 1.4033 91 20.2498
17 0.0800 42 0.2487 67 1.5235 92 22.4699
18 0.0834 43 0.2671 68 1.6473 93 25.1552
19 0.0859 44 0.2871 69 1.7866 94 28.7360
20 0.0884 45 0.3072 70 1.9508 95 34.1581
21 0.0900 46 0.3273 71 2.1528 96 43.5428
22 0.0917 47 0.3498 72 2.4040 97 62.1940
23 0.0934 48 0.3741 73 2.7057 98 83.3333
24 0.0959 49 0.4000 74 3.0550 99 83.3333
Rates shown are based on the Commissioner's Female 1980 Standard Ordinary
Mortality Table, Age Last Birthday. These rates are based on the Insured's
attained age as of each Certificate Anniversary and do not change during a
Certificate Year.
Page 9
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
Minimum Death Minimum Death Minimum Death
Attained Benefit Attained Benefit Attained Benefit
Age Percentage Age Percentage Age Percentage
--- ---------- --- ---------- --- -----------
0-40 250% 60 130% 80 105%
41 243% 61 128% 81 105%
42 236% 62 126% 82 105%
43 229% 63 124% 83 105%
44 222% 64 122% 84 105%
45 215% 65 120% 85 105%
46 209% 66 119% 86 105%
47 203% 67 118% 87 105%
48 197% 68 117% 88 105%
49 191% 69 116% 89 105%
50 185% 70 115% 90 105%
51 178% 71 113% 91 104%
52 171% 72 111% 92 103%
53 164% 73 109% 93 102%
54 157% 74 107% 94 101%
55 150% 75 105% 95 101%
56 146% 76 105% 96 101%
57 142% 77 105% 97 101%
58 138% 78 105% 98 101%
59 134% 79 105% 99 101%
100+ 100%
Page 10
DEFINITIONS
--------------------------------------------------------------------------------
"Account Value" is the entire amount we hold under a Certificate for the Owner
while his or her Certificate is in force. It is equal to the sum of the Variable
Account Value, the Fixed Account Value and the Loan Account Value.
"Accumulation Unit" is the unit of measure we use to keep track of the value of
each Variable Sub-Account.
"Attained Age" is the Issue Age plus the number of full years since the
Certificate Date.
"Beneficiary" is the person or persons to whom we pay the Death Proceeds when
the Insured dies.
"Certificate Date" is the date from which Certificate Anniversaries and
Certificate Years are measured. The Certificate Date may or may not be the same
as the Issue Date and is shown in the Certificate Schedule. While the
Certificate is in force, every anniversary of the Certificate Date is a
Certificate Anniversary, and each and every consecutive twelve-month period
beginning on the Certificate Date and each Certificate Anniversary is a
Certificate Year.
"Contingent Beneficiary" is the person that becomes the Beneficiary if the named
Beneficiary dies before the Insured.
"Contingent Owner" is the person that becomes the Owner if the named Owner dies
before the Insured.
"Customer Service Center" is where we provide service to the Owner. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of the Certificate.
"Death Proceeds" is the amount of money that we will pay the Beneficiary if the
Insured dies while the Certificate is in force.
"Debt" is the sum of all outstanding loans plus accrued interest under a
Certificate.
"Excess Withdrawal" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"Expiry Date" is the last day in a Guarantee Period.
"Fixed Account" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred.
"Fixed Account Value" is the sum of the value of each Fixed Sub-Account on any
particular day.
A "Fixed Sub-Account" is established when purchase payments are invested or
amounts are transferred to the Fixed Account. The value of each Fixed
Sub-Account is equal to the amount invested, increased by interest and reduced
by any withdrawals, loans or transfers from, or charges assessed against the
Fixed Sub-Account.
"Free Withdrawal Amount" is the maximum amount that can be withdrawn in a
Certificate Year without being subject to a surrender charge. This amount is
described in the Schedule.
"General Account" consists of all our assets other than those held in any
separate investment accounts.
"Guaranteed Interest Rate" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
Page 11
"Guarantee Period" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to yield
the declared annual Guaranteed Interest Rate.
"Home Office" is our main office. The mailing address is shown on the first page
of the Certificate.
"Income Unit" is the unit of measure we use to calculate the amount of payments
under the Variable Payment Settlement Option.
"Insurance Amount" is a dollar amount used to determine the death benefit of a
Certificate. It is shown in the Certificate Schedule.
"Insured" is the person named in a Certificate application whose life is covered
under the Group Contract. The Insured is shown in the Certificate Schedule.
"Issue Age" is the Insured's age on the last birthday on or before the
Certificate Date. It is shown in the Certificate Schedule.
"Issue Date" is the date a Certificate is issued at our Customer Service Center.
It is shown in the Certificate Schedule.
"Loan Account" is an account in our General Account, established for any amounts
transferred from the Sub-Accounts as a result of a loan. The Loan Account
credits a fixed rate of interest, the Loan Credited Rate, that is not based on
the investment experience of the Variable Sub-Account or the Guaranteed Interest
Rates applicable to the Fixed Sub-Accounts of the Fixed Account. The Loan
Credited Rate is shown in the Schedule.
"Loan Account Value" is the amount of all loans under a Certificate that have
not been repaid, adjusted for interest we credit to the Loan Account at the Loan
Credited Rate for any due and unpaid loan interest we charge at the Loan
Interest Rate. The Loan Interest Rate is shown in the Schedule.
"Market Value Adjustment" is a positive or negative adjustment that may apply to
surrender, withdrawals, loans or transfers from a Fixed Sub-Account before the
end of a Guarantee Period.
"Monthly Processing Date" is the day of each month that the Monthly Deduction
Amount is deducted from the Account Value of a Certificate. Monthly Processing
Dates are the Certificate Date and the same day of each month thereafter. If
there is no such date in a particular month, the Monthly Processing Date will be
the last day of that month. If a Monthly Processing Date is not a Valuation
Date, the Monthly Processing Date will be the next Valuation Date.
"Net Asset Value" is the price of one share of an investment portfolio.
"Payee" is the natural person receiving payments under a Settlement Option.
"Satisfactory Notice" is a notice or request authorized by the Owner, in a form
satisfactory to us, received at our Customer Service Center.
"Sub-Account" includes both Variable Sub-Accounts and Fixed Sub-Accounts, unless
the context indicates otherwise.
"Surrender Value" is the amount the Owner receives upon surrender of a
Certificate. It is the Owner's Account Value, plus or minus any applicable
Market Value Adjustment, and less any applicable surrender charges or other
charges shown in the Certificate Schedule that are due us but not yet deducted,
less any Debt.
Page 12
"Valuation Date" is the date at the end of a Valuation Period when each Variable
Sub-Account is valued.
"Valuation Period" is the period between one calculation of an Accumulation Unit
value and the next calculation. Normally, we calculate Accumulation Units daily
when the New York Stock Exchange is open for trading and we are open for
business. We can delay this calculation if an emergency exists, making disposal
of or fair valuation of assets in the Variable Account not reasonably
practicable, or the Securities and Exchange Commission (SEC) permits the delay.
We may change when we calculate the Accumulation Unit value by giving the Owner
30 days notice, or such notice as may be required by law.
"Variable Account" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"Variable Account Value" is the sum of the value of each Variable Sub-Account on
a Valuation Date.
"Variable Sub-Account" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable Sub-Account
is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable Sub-
Account; and
(b) equals the value of the Accumulation Unit for the Variable Sub-Account.
"We", "us" or "our" is Sage Life Assurance of America, Inc.
MAKING PURCHASE PAYMENTS
--------------------------------------------------------------------------------
Initial Purchase Payment - The Owner must make the initial purchase payment in
order to put a Certificate in force. The amount of the Owner's initial purchase
payment is shown in the Certificate Schedule.
Additional Purchase Payments - Subject to our acceptance and the limits
described in the Schedule, additional purchase payments may be made at any time
while a Certificate is in force. All purchase payments after the first are
payable at our Customer Service Center.
If additional purchase payments are accepted, they may increase the death
benefit. We reserve the right to require satisfactory evidence of insurability
before accepting any additional purchase payment that increases the death
benefit by more than it increases the Account Value.
Unless specified otherwise, all payments received while a loan is outstanding,
will first be considered as a payment of any loan interest, next as a loan
repayment, and last as an additional purchase payment to the Certificate.
Allocation of Purchase Payments Among the Fixed and Variable Accounts - Subject
to limits described in the Schedule, the Owner tells us how to allocate purchase
payments by notifying us of his or her choices. The Owner specified how to
allocate the initial purchase payment in an application for a Certificate.
Initial purchase payments allocated to the Fixed Account will be invested in
Fixed Sub-Accounts with the Guarantee Periods specified in the Owner's
application. We may, however, require that an initial purchase payment allocated
to a Variable Sub-Account be invested in the Designated Sub-Account shown in the
Schedule during the Free-Look Period. At the end of the Free-Look Period, if the
Owner's initial purchase payment was allocated to the Designated Sub-Account by
us, we will transfer the value of that Designated Sub-Account to the
Sub-Account(s) the Owner specified in the Owner's application. For the purpose
of processing transfers from the Designated Sub-Account, the Free-Look Period
will be assumed to end 15 days after the Certificate Date.
Page 13
If the Owner does not tell us how to allocate any additional purchase payments,
they will be allocated in the same manner as the Owner's most recent purchase
payment.
Grace Period - If the Surrender Value on a Monthly Processing Date is not
sufficient to cover the Monthly Deduction Amount, a grace period of 61 days will
be allowed for the Owner to pay an amount sufficient to cover the Monthly
Deduction Amount due. We will send the Owner a notice at the start of the Grace
Period at the Owner's last known address. The Grace Period will end 61 days
after we mail the Owner the notice.
If the Owner does not make the necessary payment by the end of the Grace Period,
his or her Certificate will terminate without value. Subject to the terms and
conditions of the Certificate, if the Insured dies during the Grace Period, we
will pay the Death Proceeds.
Reinstatement - If the Grace Period has ended and the Owner has not paid the
required purchase payment and has not surrendered his or her Certificate for its
Surrender Value, the Owner may be able to reinstate such Certificate. To do so
the Owner must:
1. submit a written request for reinstatement within 3 years after the
end of the Grace Period;
2. provide evidence of insurability satisfactory to us;
3. pay an additional purchase payment equal to at least the minimum
reinstatement payment shown in the Schedule; and
4. repay or reinstate any Debt against such Certificate that existed at
the end of the Grace Period.
The effective date of a reinstated Certificate will be the Monthly Processing
Date on or next following the date we approve the Owner's application for
reinstatement and receive the necessary purchase payment.
If the Owner's Certificate is reinstated, the Account Value on the date of
reinstatement will be the amount provided by the purchase payment paid. Any
applicable charges will be based on the length of time from the Certificate Date
to the effective date of the reinstatement. Unless the Owner has provided
otherwise, the allocation of the Account Value will be based on the allocation
instructions in effect at the start of the Grace Period.
ACCOUNT VALUE
--------------------------------------------------------------------------------
The Account Value is the entire amount we hold under a Certificate for the
Owner. It is equal to the sum of the Variable Account Value, the Fixed Account
Value and the Loan Account Value.
Variable Account Value - On the Certificate Date the Variable Account Value for
a Sub-Account is equal to the portion of the initial purchase payment allocated
to the Sub-Account. On each subsequent Valuation Date, it is equal to (a) + (b)
- (c) - (d) - (e), where:
(a) is the Variable Account Value in the Sub-Account on the preceding
Valuation Date multiplied by its net investment factor for the current
Valuation Period;
(b) is the amount of any allocation or transfer to the Sub-Account during
the current Valuation Period;
(c) is the amount of any transfer from the Sub-Account during the current
Valuation Period;
(d) is the amount of any charges allocated to the Sub-Account during the
current Valuation Period; and
(e) is the amount of any withdrawal or loan allocated to the Sub-Account
during the current Valuation Period.
Page 14
Fixed Account Value - On the Certificate Date the Fixed Account Value for a
Sub-Account is equal to the portion of the initial purchase payment allocated to
the Sub-Account. On each subsequent Valuation Date, it is equal to (a) + (b) -
(c) - (d) - (e), where:
(a) is the Fixed Account Value in the Sub-Account on the preceding
Valuation Date multiplied by the daily equivalent of its Guaranteed
Interest Rate earned for the number of days in the current Valuation
Period;
(b) is the amount of any allocation or transfer to the Sub-Account during
the current Valuation Period;
(c) is the amount of any transfer from the Sub-Account during the current
Valuation Period;
(d) is the amount of any charges allocated to the Sub-Account during the
current Valuation Period; and
(e) is the amount of any withdrawal or loan allocated to the Sub-Account
during the current Valuation Period.
The Fixed Account Value is also adjusted for any Market Value Adjustment the
Owner incurs that results from a transaction in (b), (c) or (e).
Loan Account Value - Unless the Owner takes a loan, the Loan Account Value is
zero. (Amounts the Owner takes as a loan are sometimes referred to in the
Certificate as amounts the Owner "borrows".) If the Owner takes a loan, then on
the effective date of the loan the Loan Account Value is equal to the amount of
the loan. On each subsequent Valuation Date, it is equal to (a) + (b) + (c) -
(d) - (e), where:
(a) is the Loan Account Value on the preceding Valuation Date;
(b) is the amount of interest earned (at the Loan Credited Rate shown in
the Schedule) on item (a) during the current Valuation Period;
(c) is any amounts transferred to the Loan Account because of any
additional loans and any due and unpaid loan interest during the
current Valuation Period;
(d) is the amount of any loan repayment the Owner makes during the current
Valuation Period; and
(e) is any amount of interest earned on item (a) and transferred to the
Sub-Accounts during the current Valuation Period.
VARIABLE ACCOUNT
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Variable Account - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will not
be charged with liabilities that arise from any other business that we conduct.
We may transfer to our General Account assets that exceed the reserves and other
liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
We may offer certain series or variable accounts that may not be registered with
the SEC under the Securities Act of 1933. Any such series or variable account,
if offered, will be described in the applicable offering document.
The Variable Account for a Certificate is shown in the Schedule. The laws of our
state of domicile govern this Variable Account.
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Variable Sub-Accounts - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified in
the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
Changes Within the Variable Account - We may, from time to time, make additional
Variable Sub-Accounts available. These Sub-Accounts will invest in investment
portfolios we find suitable for the Group Contract. We also have the right to
eliminate Sub-Accounts, to combine two or more Sub-Accounts or to substitute a
new investment portfolio for the portfolio in which a Sub-Account invests. Such
an action may become necessary if, in our judgment, a portfolio or Sub-Account
no longer suits the purposes of the Group Contract. This may happen due to a
change in laws or regulations, or a change in a portfolio's or Sub-Account's
investment objectives or restrictions, or because the portfolio or Sub-Account
is no longer available for investment, or for some other reason. We will get
prior approval from the insurance department of our state of domicile before
taking such action. If required, this approval process will be on file with the
insurance department of the jurisdiction in which the Group Contract is
delivered. We will also get any required approval from the SEC and any other
required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of Group Contracts to which the Group Contract belongs, to another
variable account or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act of
1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit
investment trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other persons
who have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment accounts;
and,
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying investments
of a Variable Sub-Account in which the Owner is invested, we will notify the
Owner of the change. the Owner may then choose a new Sub-Account.
Accumulation Units - We keep track of the value of each of the Owner's Variable
Sub-Accounts by the number of Accumulation Units in that Sub-Account.
Accumulation Units are credited to a Sub-Account when a purchase payment is
allocated to that Sub-Account or when an amount is transferred to that
Sub-Account. Accumulation Units will be canceled from a Sub-Account when amounts
are transferred from a Sub-Account or on payment of death proceeds, a
withdrawal, a loan, a surrender, or assessment of charges shown in the Schedule
(other than the variable sub-account charges). The number of Accumulation Units
credited to or canceled from a Sub-Account in a transaction is determined by
dividing (a) by (b) where:
(a) is the dollar amount of the transaction; and
(b) is the value of the Accumulation Unit for that Sub-Account for the
Valuation Date for that transaction.
Page 16
Value of Accumulation Units - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined.
The value of an Accumulation Unit may increase, decrease or remain the same from
one Valuation Period to the next.
Net Investment Factor - The net investment factor for a Variable Sub-Account is
an index that measures the investment performance of that Sub-Account from one
Valuation Period to the next. The net investment factor for any Valuation Period
is determined by dividing (a) by (b) and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio
share in which the Sub-Account invests determined at the end
of the current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares
held in the Sub-Account if the "ex-dividend" date occurs
during the current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for,
which is determined by us to have resulted from the
operations of that Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
immediately preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT
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Fixed Account - The Fixed Account is a separate investment account under state
insurance law. It is maintained separate from our General Account and separate
from any other separate investment account that we may have. We own the assets
in the Fixed Account. Notwithstanding the foregoing, our obligations under (and
the values and benefits under) the Fixed Account option of a Certificate do not
vary as a function of the investment performance of the Fixed Account. Owners
and Beneficiaries with rights under a Certificate do not participate in the
investment gains or losses of the assets of the Fixed Account. Such gains or
losses accrue solely to us. We retain the risk that the value of the assets in
the Fixed Account may fall below the reserves and other liabilities that we must
maintain in connection with our obligations under the Fixed Account option of a
Certificate. In such event, we will transfer assets from our General Account to
the Fixed Account to make up the difference. The Fixed Account will not be
charged with liabilities that arise from any other business that we conduct. We
may transfer to our General Account assets that exceed the reserves and other
liabilities of the Fixed Account. The Fixed Account is not required to be
registered with the SEC as an investment company under the Investment Company
Act of 1940.
Fixed Sub-Account - We will establish a separate Fixed Sub-Account for the Owner
each time the Owner allocates amounts to the Fixed Account. Amounts invested in
these Fixed Sub-Accounts earn interest at the Guaranteed Interest Rate in effect
on the date the amounts are allocated.
Page 17
Guarantee Periods - Each Fixed Sub-Account is guaranteed an interest rate for a
period we refer to as a Guarantee Period. The Guaranteed Interest Rate for a
Fixed Sub-Account is effective for the entire Guarantee Period. The length of a
Guarantee Period is measured from the end of the calendar month in which the
amount is allocated to the Fixed Sub-Account. The last day of the Guarantee
Period is its Expiry Date. Surrender, or withdrawals, or transfers, or loans
from all or part of a Fixed Sub-Account made prior to the Expiry Date of a
Guarantee Period may be subject to a Market Value Adjustment.
We will notify the Owner at least thirty days prior to an Expiry Date of the
Owner's options for renewal, which include:
1. electing a new Guarantee Period from among those then offered by us;
or
2. transferring the value of the Fixed Sub-Account to one or more
Variable Sub-Accounts.
If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Fixed Sub-Account to a Fixed Sub-Account with
the same Guarantee Period, but not longer than 5 years. The transfer will be
effective as of the Expiry Date of the previous Guarantee Period.
Guaranteed Interest Rates - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates will
never be less than the Minimum Guaranteed Interest Rate shown in the Schedule.
Market Value Adjustment - A Market Value Adjustment may be applied to surrender,
withdrawals, transfers or loans when taken from a Fixed Sub-Account other than
the thirty-day period prior to its Expiry Date. A Market Value Adjustment is
applied separately to each Fixed Sub-Account.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or borrowed by the following factor:
[(1+I)/(1+J+.0025)]to the power of N/365 - 1
Where:
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period;
. J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period; and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
1. For a surrender, withdrawal, transfer or loan, the Market Value
Adjustment will be calculated on the total amount that must be
surrendered, withdrawn, transferred or borrowed in order to provide
the amount requested.
2. If the Market Value Adjustment is negative, it is deducted from any
remaining value in the Fixed Sub-Account or amount surrendered. Any
remaining Market Value Adjustment is deducted from the amount
withdrawn, transferred or borrowed.
3. If the Market Value Adjustment is positive, it is added to any
remaining value in the Fixed Sub-Account or amount surrendered. If the
full amount of the Fixed Sub-Account is withdrawn, transferred or
borrowed, the Market Value Adjustment is added to the amount
withdrawn, transferred or borrowed.
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TRANSFERS AMONG ACCOUNTS
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While a Certificate is in force, the Owner may transfer the Owner's Account
Value among Sub-Accounts. Certain restrictions may apply during the Free-Look
Period. To make a transfer, the Owner must give us Satisfactory Notice.
Transfers generally take effect on the Valuation Date we receive the notice. The
number of free transfers that we allow each Certificate Year is shown in the
Charges section of the Schedule. Restrictions for transfers are shown in the
Schedule. A transfer from a Fixed Sub-Account may be subject to a Market Value
Adjustment.
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE
--------------------------------------------------------------------------------
While a Certificate is in force, the Owner may withdraw all or part of his or
her Account Value by giving us Satisfactory Notice. The minimum withdrawal is
shown in the Schedule.
When a partial withdrawal is made, we will reduce the Account Value by the
amount of the partial withdrawal. We will also reduce the Insurance Amount in
proportion to the reduction in the Account Value that results from the partial
withdrawal (including any associated surrender charge and Market Value
Adjustment incurred).
If the Owner requests a surrender, we will terminate the Owner's Certificate and
pay the Owner the Surrender Value. This amount may also be applied to a
Settlement Option, subject to any restrictions described in the Certificate.
Unless specified otherwise, we will make partial withdrawals as described in the
Schedule. Surrender and withdrawals generally take effect on the date we receive
Satisfactory Notice.
If the Owner makes a withdrawal from his or her Certificate in excess of the
Free Withdrawal Amount described in the Certificate Schedule, a surrender charge
may be assessed. Surrender charges are described in the Certificate Schedule. A
withdrawal from the Fixed Account may also be subject to a Market Value
Adjustment.
Excess Withdrawals - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc. until
all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of the purchase payment being liquidated by the
applicable percentage shown in the Certificate Schedule. The total surrender
charge will be the sum of the surrender charges for each purchase payment being
liquidated.
In a partial withdrawal, the surrender charge is deducted from the Account Value
remaining after the Owner is paid the amount requested. The amount requested
from a Sub-Account may not exceed the value of that Sub-Account less any
applicable surrender charge. In a complete withdrawal (or surrender of a
Certificate), it is deducted from the amount otherwise payable.
Page 19
BORROWING PART OF THE ACCOUNT VALUE
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While a Certificate is in force and after the Free-Look Period, the Owner may
request a loan by giving us Satisfactory Notice. Unless specified otherwise, an
amount equal to the loan will be transferred from the Sub-Accounts to the Loan
Account in proportion to the Account Value in each Sub-Account in which the
Owner is invested as of the date we process the loan. The Certificate will be
the only security we require for the loan. The minimum loan amount is also shown
in the Certificate Schedule. A loan may be a taxable event and may affect the
amount of the Death Proceeds payable under a Certificate.
Maximum Loanable Value - The maximum loanable value is shown in the Schedule.
The amount of the loan and all existing loans may not be more than the maximum
loanable value as of the loan date. The loan date is the date we process the
loan.
If on any Valuation Date where there is Debt outstanding and the Surrender Value
is negative, we will send the Owner an overloan notice at the Owner's last known
address. The Owner will then have 61 days from the date we send the notice to
avoid termination by paying us at least the minimum repayment amount listed in
the notice.
Loan Repayment - All or part of a loan may be repaid to us at any time while the
Certificate is in force during the Insured's lifetime. The minimum loan
repayment amount is shown in the Certificate Schedule. If the Grace Period has
expired and the Certificate has terminated, any Debt that exists at the end of
the Grace Period may not be repaid unless the Certificate is reinstated.
Unless specified otherwise, an amount equivalent to a loan repayment will be
transferred from the Loan Account to the Sub-Accounts in proportion to the
Account Value in each Sub-Account in which the Owner is invested.
Loan Interest - Interest on the loan accrues daily at the Loan Interest Rate
shown in the Schedule. It is due on each Certificate Anniversary. If loan
interest is not paid when due, the difference between the Loan Account and Debt
will be transferred from the Sub-Accounts to the Loan Account in proportion to
the Account Value in each Sub-Account in which the Owner is invested.
Effects of a Loan - A loan will be transferred from the Sub-Accounts to the Loan
Account. Any loan interest that becomes due and is not paid will also be so
transferred. A repayment or loan interest payment will be transferred from the
Loan Account into the Sub-Accounts. Amounts transferred to the Loan Account will
earn interest daily at the Loan Credited Rate shown in the Schedule from the
date of transfer.
Since the amount the Owner borrows is transferred from the Sub-Accounts, a loan
whether or not repaid, will have a permanent effect on the Surrender Value and
may have a permanent effect on the death benefit. The effect may be favorable or
unfavorable. This is true whether the Owner repays the loan or not. If not
repaid, the loan will reduce the amount of Death Proceeds.
CHARGES
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Monthly Deduction Amount - The Monthly Deduction Amount is deducted on each
Monthly Processing Date. It is equal to (a) + (b) + (c) + (d), where:
(a) is the cost of insurance charge described below;
(b) is the asset-based charges described in the Schedule;
(c) is the cost of any riders for which a separate charge is shown in the
Schedule; and
(d) is any other applicable charge shown in the Schedule.
Page 20
Monthly Deduction Amount on a Certificate Anniversary - On a Monthly Processing
Date that is also a Certificate Anniversary, the Monthly Deduction Amount is
equal to (a) + (b) where:
(a) is the Monthly Deduction Amount as described above; and
(b) is the administration charge shown in the Schedule.
Cost of Insurance Charge - The maximum monthly cost of insurance charge is equal
to (a) times (b) and then divided by (c), where:
(a) is the Maximum Cost of Insurance Rate per $1,000 shown in the Table in
the Schedule;
(b) is an amount equal to the death benefit minus the Account Value; and
(c) is $1,000.
The actual monthly cost of insurance charge may be less than, but never more
than, the maximum monthly cost of insurance charge.
OWNER AND BENEFICIARY
--------------------------------------------------------------------------------
The Owner is also the Insured unless another Insured has been named in the
application and is shown in the Certificate Schedule. The Owner has the rights
and options described in the Certificate while the Insured is living and the
Certificate is in force. One or more people may own the Certificate.
The Beneficiary - We pay the Death Proceeds to the primary Beneficiary. If the
primary Beneficiary dies before the Insured, we pay the Death Proceeds to the
Contingent Beneficiary, if any. If there is no surviving Beneficiary, we pay the
Death Proceeds to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any Death Proceeds are to be paid in equal shares to
the multiple surviving Beneficiaries, unless the Owner specifies otherwise.
The Owner has the right to change Beneficiaries. However, if the Owner
designates the primary Beneficiary as irrevocable, the Owner may need the
consent of that Beneficiary to exercise the rights and options under his or her
Certificate.
Change of Owner or Beneficiary - During the Owner's lifetime and while the
Certificate is in force the Owner can transfer ownership of the Certificate or
change the Beneficiary. To make any of these changes, the Owner must send us
Satisfactory Notice. If accepted, any change in Owner or Beneficiary will take
effect on the date the Owner signed the notice. Any of these changes will not
affect any payment made or action taken by us before our acceptance. A change of
Owner may be a taxable event.
DEATH PROCEEDS
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Death Benefit - If the Insured dies while a Certificate is in force, the death
benefit will be the greater of (a) or (b), where:
(a) is the Insurance Amount on the date of death; and
(b) is the Minimum Death Benefit on the date of death.
However, if the state in which a Certificate is issued does not allow us to
deduct a cost of insurance charge on or after the Certificate Anniversary when
the Insured reaches age 100, the death thereafter will be limited to (b) above.
Page 21
Minimum Death Benefit - To ensure that a Certificate continues to qualify as
life insurance under the Internal Revenue Code of 1986, as amended (the "Code"),
we will also calculate a Minimum Death Benefit for each Valuation Date. The
Minimum Death Benefit on a Valuation Date is equal to (a) times (b), where:
(a) is the Account Value plus any positive Market Value Adjustment on the
Valuation Date; and
(b) is the Minimum Death Benefit Percentage shown in the Table in the
Schedule.
Death Proceeds - The actual amount payable to the Beneficiary if the Insured
dies while a Certificate is in force is called the Death Proceeds. The Death
Proceeds are equal to (a) + (b) - (c) - (d) - (e), where:
(a) is the death benefit described above;
(b) is any insurance on the Insured's life that may be provided by riders
to such Certificate;
(c) is any Debt;
(d) is any due and unpaid Monthly Deduction Amount accruing during the
Grace Period; and
(e) is any Certificate values previously paid pursuant to any riders
attached to such Certificate.
We will pay the Death Proceeds to the Beneficiary after we receive due proof of
death. The Death Proceeds will be adjusted under certain conditions. Refer to
the Incontestability, Suicide, and Misstatement of Age or Sex provisions.
The Owner may choose to have the Death Proceeds paid in one sum, in which case
the Certificate will terminate, or under a Settlement Option. If the Owner has
not made a choice before the Insured dies, the Beneficiary may make this choice.
Unless the Owner or the Beneficiary specify otherwise, we reserve the right to
pay the Death Proceeds in one sum within 90 days after we receive due proof of
death.
Proof of Death - Due proof of death must be received at our Customer Service
Center before we will pay any Death Proceeds.
Insurance Amount Increases - Payment of additional purchase payments may require
us to increase the Insurance Amount so that a Certificate continues to qualify
as life insurance under the Code. We reserve the right to require satisfactory
evidence of insurability for any increase in the Insurance Amount. In addition,
we reserve the right to require that the Owner's risk class be identical to that
on the Certificate Date.
GENERAL PROVISIONS
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Entire Contract - This Group Contract including any attached riders,
endorsements, amendments, and the application of the Contractholder constitutes
the entire contract between the Contractholder and us. All statements made by
the Contractholder, any Owner, or any Insured will be deemed representations and
not warranties.
Assignment -The Owner may assign his or her Certificate at any time while the
Insured is living and his or her Certificate is in force. No assignment will be
binding on us unless we receive Satisfactory Notice. We will not be liable for
any payments made or actions we take before we accept the assignment. An
absolute assignment will revoke the interest of any revocable Beneficiary. We
will not be responsible for the validity of any assignment. An assignment may be
a taxable event.
Claims of Creditors - To the extent permitted by law, no benefits payable under
a Certificate will be subject to the claims of creditors.
Page 22
Misstatement and Proof of Age or Sex - If the age or sex of the Insured has been
misstated, the benefits under the Certificate will be those which the initial
purchase payment and any additional purchase payments would have provided for
the correct age and sex.
No Dividends Payable - This Group Contract is non-participating and does not
share in any distribution of our surplus. We will not pay any dividends.
Incontestability - We will not contest the payment of the Death Proceeds based
upon the initial purchase payment after a Certificate has been in force during
the Insured's lifetime for two years from the Issue Date.
For any increase in Insurance Amount requiring evidence of insurability, we will
not contest payment of the Death Proceeds based on such an increase after it has
been in force during the Insured's lifetime for two years from its effective
date.
Suicide - If the Insured dies by suicide, while sane or insane, within two years
from the Issue Date, we will not pay the Death Proceeds normally payable on the
Insured's death. Instead, we will limit the death benefit to the Account Value
as of the date we receive proof of death, and Death Proceeds will otherwise be
calculated in the usual manner.
If the Insured dies by suicide, while sane or insane, within two years of any
date we receive and accept an additional purchase payment, any amount of death
benefit that would not be payable except for the fact that the additional
purchase payment was made will be limited to the amount of such payment.
Required Reports - We will furnish a report to the Owner as often as required by
law, but at least once in each Certificate Year that a Certificate is in force.
The report will show the number of Accumulation Units credited to each Variable
Sub-Account in which the Owner is invested and the corresponding Accumulation
Unit value as of the date of the report. It will also show the Owner's Fixed
Account Value. The report will also include any other information required by
the laws and regulations of the jurisdiction in which a Certificate is
delivered.
Changes in Certificate Cost Factors - Changes in cost of insurance rates,
credited interest rates, or other Certificate expense charges will be applied on
a uniform basis for insureds of the same sex, attained age and risk class whose
Certificates have been in force for the same length of time. Changes in these
nonguaranteed elements will be based on changes in future expectations for
factors such as investment earnings, mortality, persistency, expenses and taxes.
Any changes will be determined in accordance with the procedures on file, if
required, with the insurance regulator in the state in which a Certificate was
delivered.
Taxes Based Upon Purchase Payments or Value - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of a
Certificate, we reserve the right to charge the Owner and all similarly situated
Owners proportionately for that tax. This would include a tax based upon our
realized net capital gains in the Variable Sub-Accounts and on earnings in the
Fixed Account, on which we are not currently taxed.
Payments We May Defer - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading or trading on the
New York Stock Exchange is restricted;
2. The SEC determines that a state of emergency exists; or
3. An order or pronouncement of the SEC permits a delay for the
protection of Owners.
Page 23
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any withdrawal;
2. Determination and payment of any death benefit;
3. Transfers of the Account Value; or
4. Granting of any loan.
We reserve the right to delay payment or transfer of amounts from the Fixed
Account for up to six months. If deferred 30 days or more, the amount deferred
will earn interest at a rate not less than the Minimum Deferral Interest Rate
shown in the Fixed Account section of the Schedule.
We may also defer payments for any amount attributable to a purchase payment
made in the form of a check for a reasonable amount of time (not to exceed 15
days) to permit the check to clear.
Reduction or Elimination of Certificate Charges - Certificate charges may be
reduced or eliminated when certain sales or administration of the Group Contract
result in savings or reduction of expenses and/or risks.
Authority to Make Agreements - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of a Certificate or make any agreement binding on us. However,
we can, with the agreement of the Group Contractholder, make changes to the
Group Contract and a Certificate without the Owner's consent.
Required Note on Our Computations - We have filed a detailed statement of our
computations with the insurance supervisory official in the appropriate
jurisdictions. The values are not less than those required by the law of that
state or jurisdiction. Any benefit provided by an attached rider will not
increase these values unless otherwise stated in that rider.
Certificates - We will furnish Certificates to the Owners. Each Certificate will
summarize provisions of this Group Contract affecting an individual Owner.
Facts Relating to Coverage - At any reasonable time we will have the right to
inspect any records of the Contractholder and plan sponsor which relate to this
Group Contract.
Discontinuance of Group Contract - This Group Contract may be discontinued by us
or the Contractholder. The party who initiates the discontinuance will send a
notice to each Owner of record, at his or her last known address, at least 15
days prior to the date of discontinuance. No new Owners will be accepted and no
additional purchase payments will be accepted on or after the date notice of the
discontinuance is received or sent by us, whichever is applicable.
Page 24
SETTLEMENT OPTIONS
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The Surrender Value or Death Proceeds may be paid in a single sum or under one
of our Settlement Options. If the amount available to apply under any Variable
or Fixed Settlement Option is less than the minimum amount shown in the
Schedule, we reserve the right to require that such amount be paid in a lump
sum.
If at any time payments under the Settlement Option become less than the minimum
payment shown in the Schedule, we reserve the right to reduce the frequency of
payment to an interval that results in each payment being at least equal to the
minimum payment. In no event will the interval be less frequent than annual.
At the time the Owner elects the Settlement Option, the Owner may also elect to
have the Account Value applied to provide Variable Payments, Fixed Payments, or
a combination of both. Unless the Owner specifies otherwise, we will provide
either variable or fixed payments, or a combination of variable and fixed
payments in proportion to the Sub-Accounts in which the Owner is invested as of
a date not more than [5] Valuation Days before the due date of the first
payment.
Once payments have begun under a Settlement Option, we reserve the right to
disallow further changes without our prior approval.
We may require proof of age, sex or survival of any person upon whose age, sex
or survival any payments depend. If the age or sex of a Payee has been
misstated, the amount payable will be the amount that the Surrender Value or
Death Proceeds would have provided for the correct age and sex. If we have made
incorrect payments, the amount of any underpayment will be paid immediately. The
amount of any overpayment will be deducted from future payments until the amount
of the overpayment is repaid.
VARIABLE PAYMENTS
Amount of First Variable Payment - The Settlement Option Tables shown in the
Schedule are used to determine the first monthly variable payment for an assumed
investment rate of 3%. The Settlement Option Tables show the dollar amount of
the first monthly variable payment that can be purchased with each $1,000
applied. The assumed investment rates we currently allow are shown in the
Schedule.
Value of Income Units - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the number
of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
Number of Income Units - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable payment attributable
to that Sub-Account by its Income Unit value as of a date not more than [5]
Valuation Days before the due date of the first variable payment.
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Amount of Second and Subsequent Variable Payments - The dollar amount of the
second and subsequent variable payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
payment will be equal to the sum of the variable payments in each Variable
Sub-Account. The dollar amount of each payment for a Variable Sub-Account is
determined by multiplying the number of Income Units by the Income Unit value
for the Variable Sub-Account for the Valuation Period which ends on a
consistently applied date not more than [5] Valuation Days before the payment is
due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
Exchange of Income Units - If there is an exchange of value of a designated
number of Income Units of particular Variable Sub-Accounts into other Income
Units, the value will be such that the dollar amount of payment made on the date
of exchange would be unaffected by the exchange.
FIXED PAYMENTS
Fixed Payments are payments that remain fixed as to dollar amount throughout the
payment period. The Settlement Option Tables shown in the Schedule are used to
determine the monthly fixed payment. The Settlement Option Tables show the
dollar amount of the monthly fixed payment that can be purchased with each
$1,000 applied.
SETTLEMENT OPTIONS
The following list of Settlement Options or any option acceptable to us may be
elected.
Option 1 - Payments for Life: Payments during the lifetime of the Payee and
terminating with the last payment preceding the death of the Payee.
Option 2 - Payments for Life with 10 or 20 Years Guaranteed: Payments during the
lifetime of the Payee with the guarantee that payments will be made for a
minimum of 10 or 20 years, as elected. If at the death of the Payee, payments
have been made for less than the guaranteed number of years elected, payments
will be made to the Beneficiary for the remainder of the guaranteed number of
years elected.
Option 3 - Joint and Last Survivor Payments: Payments during the joint lifetime
of the Payee and a designated second person, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the death of
the survivor.
Option 4 - Payments for a Fixed Period: An amount payable for the number of
years selected which may be from 5 to 30 years. If the Payee dies before the end
of the period selected, payments will be continued to the Beneficiary for the
remaineder of the selected period.
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[LOGO] SAGE
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SAGE LIFE ASSURANCE OF AMERICA, INC.
Member of Sage Insurance Group, Inc.
GROUP MODIFIED SINGLE PAYMENT COMBINATION FIXED AND VARIABLE LIFE INSURANCE
CONTRACT
Limited purchase payment flexibility
Death benefit payable at Insured's death while this Group Contract is in force
Nonparticipating
