VALLEY FORGE LIFE INSURANCE COMPANY
Executive Office: A Stock Company Home Office:
CNA Plaza 000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxxxxxx 00000
READ YOUR POLICY CAREFULLY
This is a legal contract between you, the owner, and Valley Forge Life Insurance
Company (referred to as the Company, we, us and our).
We will pay the death proceeds to the beneficiary when we receive due proof of
the Insured's death while this policy is in force.
Premiums are payable during the lifetime of the Insured or until the Insured's
age 95.
RIGHT TO EXAMINE POLICY - If for any reason you are not satisfied with this
policy, you may return it to: (a) the agent through whom it was purchased; or
(b) our Administrative Office within 10 days after you receive it. We will
refund an amount equal to the cash value plus fees or charges deducted from
premiums less any debt.
Signed for the Company at its Executive Office, CNA Plaza, Chicago, Illinois
60685 on the policy date.
Chief Executive Officer Group Vice President
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CASH VALUE BENEFITS PROVIDED BY THIS POLICY ARE BASED ON THE INVESTMENT
PERFORMANCE OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT AND MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. THE AMOUNT OF THE DEATH
BENEFIT MAY VARY BASED ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS OF THE
VARIABLE ACCOUNT BUT IT WILL NEVER BE LESS THAN THE SPECIFIED AMOUNT.
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FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ADJUSTABLE DEATH BENEFIT
DEATH PROCEEDS PAYABLE AT INSURED'S DEATH
NON-PARTICIPATING
INVESTMENT EXPERIENCE REFLECTED IN BENEFITS
POLICY SCHEDULE
OWNER: [Xxxx Xxx]
INSURED: [Xxxx Xxx] INSURED'S AGE: [45]
INSURED'S SEX: [Male] POLICY DATE: [July 1, 1999]
POLICY NUMBER: [1234567]
RISK CLASS: [Preferred - Nonsmoker]
BENEFICIARY: As stated in the application for this policy unless changed in
accordance with policy provisions
ADMINISTRATIVE OFFICE: [000 XXX Xxxxx, Xxxxxxxxx, XX 00000] [0-000-000-0000]
DEATH BENEFIT OPTION: [1]
MONTHLY DATE: [1st] Day Of Each Month
SPECIFIED AMOUNT: [$100,000]
MINIMUM SPECIFIED AMOUNT $100,000
MINIMUM CHANGE IN SPECIFIED AMOUNT: $ 25,000
MINIMUM MONTHLY PREMIUM PAYMENT: [$ 50.00]
INITIAL PREMIUM: [$673.00 Annually]
PLANNED PREMIUM [$1,100.00 Annually]
TARGET PREMIUM PAYMENT: [$1,400.00 Annually]
MINIMUM ADDITIONAL PREMIUM PAYMENT: [$50.00]
GUIDELINE ANNUAL PREMIUM PAYMENT: [$2,006.00 Annually]
LAPSE PREVENTION PREMIUM [$673.00 Annually]
LAPSE PREVENTION GUARANTEE PERIOD [5 years]
MINIMUM PARTIAL SURRENDER AMOUNT: [$500.00]
MINIMUM LOAN AMOUNT: [$500.00]
POLICY LOAN INTEREST RATE: [8%]
PREFERRED POLICY LOAN CREDITED RATE: [8%]
POLICY LOAN CREDITED RATE: [6%]
CHARGES AND FEES
(MAXIMUM CHARGES)
PREMIUM CHARGES:
Policy Years 1 - 10: [7.5%] of premium payments up to the target
premium payment
Policy Years 11+: [5.5%] of premium payments up to the target
premium payment
All Years: [3.5%] of premium payments in excess of the
target premium payment
EXPENSE CHARGES:
Policy Years 1 - 10: [.002477%] (Daily Factor);
([0.90%] Approximate Annual Rate)
Policy Years 11+: [.001236%] (Daily Factor);
([0.45%] Approximate Annual Rate)
POLICY CHARGES
MONTHLY POLICY FEE: FIRST POLICY YEAR [$ 26.00]
THEREAFTER [$ 6.00]
COST OF INSURANCE: See Cost of Insurance Provision
TRANSACTIONAL CHARGES
MONTHLY SPECIFIED AMOUNT INCREASE FEE
(FOR FIRST 12 MONTHS AFTER INCREASE): [$10.00]
TRANSFER PROCESSING FEE: [$25] Each After First [12] In A Policy Year (Assessed
After The First [12] Transfers In A Policy Year)
SURRENDER CHARGE
The Surrender Charge Is [$ 16.00] Per Thousand Dollars Of Specified Amount.
The Surrender Charge Grades Off As Follows:
100% Of The Surrender Charge In Policy Years 1-6
80% Of The Surrender Charge In Policy Year 7
70% Of The Surrender Charge In Policy Year 8
60% Of The Surrender Charge In Policy Year 9
50% Of The Surrender Charge In Policy Year 10
40% Of The Surrender Charge In Policy Year 11
30% Of The Surrender Charge In Policy Year 12
20% Of The Surrender Charge In Policy Year 13
10% Of The Surrender Charge In Policy Year 14
No Surrender Charge In Policy Years 15 And Later FIXED ACCOUNT
Fixed Account I:
Minimum Guaranteed Interest Rate: 3.00%
Current Interest Rate as of Effective Date: [x%.] The current
interest rate applies only to premium payments allocated or
transferred to Fixed Account I during the calendar month
following the Policy Date. This rate is guaranteed for one
policy year.
ALLOCATION GUIDELINES:
1. Currently, you may select as many investment options as you wish. We
reserve the right to limit this in the future.
2. Currently, you may also select any fixed account which is available at the
time the premium payment or transfer is made.
3. The initial premium payment will be credited on the policy date. The
initial premium will be allocated to the investment options on the latest
of:
a. Two business days after the policy date;
b. Two business days after our receipt of your initial premium at our
Administrative Office; or
c. The date our underwriters approve this policy.
Additional premium payments will be credited to your policy as of the
business day they are received.
4. Allocation percentages must be in whole numbers. Each allocation must
be at least [1%].
TRANSFERS:
Number of Free Transfers: Currently, you are allowed [12] free transfers
each policy year.
Transfer Fee: For each transfer in excess of the free transfers permitted,
the transfer fee is [$25.00]. Transfers made pursuant to a prescheduled
transfer will not be counted in determining the application of the transfer
fee.
Minimum Amount to be Transferred: The minimum amount which may be
transferred is [$250.00] or your entire interest in any subaccount or fixed
account, if less. This requirement is waived if the transfer is pursuant to
a prescheduled transfer.
Prescheduled Transfers: You may elect the dollar cost averaging option or
the automatic transfer option. However, that portion of the cash value held
in Fixed Account I is included in any prescheduled transfer option. We
reserve the right to limit the availability of any fixed account option or
subaccount for a prescheduled transfer.
INVESTMENT OPTIONS
[Federated High Income Bond] [Fidelity Asset Manager]
[Federated Prime Money] [Fidelity Contrafund]
[Federated Utility] [Fidelity Equity-Income]
[Fidelity Index 500]
[Xxxxx Growth]
[Xxxxx Mid-Cap Growth] [MFS Emerging Growth]
[Xxxxx Small Capitalization] [MFS Growth With Income]
[SoGen Overseas] [MFS Research]
[MFS Total Return]
[Xxx Xxx Emerging Markets]
[Xxx Xxx Gold And Natural Resources] [Janus Twenty]
[Janus Growth]
[Janus Balanced]
[Janus Flexible Income]
[Janus International Growth]
[Janus Worldwide Growth]
ADDITIONAL BENEFITS PROVIDED BY RIDER
MONTHLY COST
BENEFIT DESCRIPTION EXPIRY DATE OF RIDER
------------------- ----------- --------
[Additional Insurance Rider July 1, 2024 [$15.00]
[$100,000]]
[Term Insurance On Children - [10-] Units July 1, 2019 [$4.75]
Each Unit Provides $1,000 Of Coverage For Each Child]]
[Other Insured Term Rider July 1, 2024 [$17.50]
[$100,000]]
[Accidental Death Benefit July 1, 2024 [$9.00]
[$100,000]]
TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
ATTAINED ATTAINED ATTAINED
AGE COST AGE COST AGE COST
--- ---- --- ---- --- ----
0 0.2192 33 0.1317 66 2.0559
1 0.0858 34 0.1375 67 2.2685
2 0.0825 35 0.1442 68 2.4996
3 0.0808 36 0.1517 69 2.7559
4 0.0775 37 0.1617 70 3.0459
5 0.0733 38 0.1725 71 3.3772
6 0.0692 39 0.1842 72 3.7599
7 0.0650 40 0.1984 73 4.1933
8 0.0625 41 0.2134 74 4.6700
9 0.0617 42 0.2292 75 5.1800
10 0.0625 43 0.2467 76 5.7192
11 0.0675 44 0.2659 77 6.2834
12 0.0767 45 0.2876 78 6.8761
13 0.0892 46 0.3109 79 7.5161
14 0.1033 47 0.3359 80 8.2237
15 0.1133 48 0.3635 81 9.0181
16 0.1233 49 0.3935 82 9.9157
17 0.1309 50 0.4277 83 10.9128
18 0.1359 51 0.4669 84 11.9904
19 0.1392 52 0.5119 85 13.1242
20 0.1400 53 0.5637 86 14.2999
21 0.1384 54 0.6212 87 15.4999
22 0.1359 55 0.6855 88 16.7191
23 0.1325 56 0.7556 89 17.9749
24 0.1292 57 0.8299 90 19.2857
25 0.1250 58 0.9125 91 20.6824
26 0.1225 59 1.0052 92 22.2179
27 0.1208 60 1.1087 93 24.0437
28 0.1200 61 1.2240 94 26.5035
29 0.1200 62 1.3568
30 0.1208 63 1.5073
31 0.1233 64 1.6745
32 0.1267 65 1.8576
THE MAXIMUM COST OF INSURANCE RATES DO NOT EXCEED THE COST OF INSURANCE RATES
BASED ON THE APPLICABLE (MALE OR FEMALE, SMOKER OR NONSMOKER) 1980 COMMISSIONERS
STANDARD ORDINARY MORTALITY TABLE, AGE LAST BIRTHDAY.
The table below gives the "applicable percentage" for each attained age in
accordance with Section 7702 of the Internal Revenue Code.
APPLICABLE PERCENTAGE OF CASH VALUE TABLE
Attained Percentage Attained Percentage Attained Percentage Attained Percentage
Age of Age of Age of Age of
Policy Policy Policy Policy
Value Value Value Value
----- ----- ----- -----
Through 40 250 50 185 60 130 70 115
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75 thru 90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 94 101
95+ 100
SUPPLEMENTAL SCHEDULE
SCHEDULE OF MONTHLY COST OF INSURANCE RATES
WAIVER OF MONTHLY DEDUCTION
RATES PER $1 OF MONTHLY DEDUCTION
ATTAINED
AGE COST
[
45 0.13440
46 0.14250
47 0.15300
48 0.16520
49 0.17820
50 0.19120
51 0.20360
52 0.21440
53 0.22290
54 0.22830
55 0.23200
56 0.23430
57 0.23520
58 0.23570
59 0.23570
60 0.22490
61 0.21000
62 0.19100
63 0.16790
64 0.14070]
TABLE OF CONTENTS
POLICY SCHEDULE
DEFINITIONS
OWNER, BENEFICIARY AND ASSIGNMENT PROVISIONS
Owner
Contingent Owner
Beneficiary
Assignment
PREMIUM PROVISIONS
Premium Payments
Right to Refund
Grace Period
Reinstatement
Lapse Prevention Guarantee
DEATH BENEFIT PROVISIONS
Death Benefit
Death Benefit Charges
Death Proceeds
Payment of Claims
POLICY VALUE PROVISIONS
Cash Value
Subaccount
Policy Loan Account
Fixed Account I
Interest Crediting
Minimum Values
Basis of Computations
POLICY COST FACTORS
Monthly Deduction
Monthly Cost of Insurance
Monthly Policy Fees
Expense Charge
Premium Charges
Surrender Charge
Transfer Fee
Changes in Policy Cost Factors
Charges after the Insured's 95th Birthday
TABLE OF CONTENTS - CONTINUED
SURRENDER PROVISIONS
Total Surrender
Partial Surrenders
LOAN PROVISIONS
Maximum Loan Value
Policy Loan
Loan Interest
Loan Repayment
Termination of Policy
Effect of Loan
THE VARIABLE ACCOUNT
Variable Account
Investments of the Variable Account
Valuation of Assets
Change in Operation of the Variable Account
Accumulation Units
Accumulation Unit Value
Net Investment Factor
FIXED ACCOUNT I
TRANSFER PROVISIONS
Transfer Rules
Transfer Processing Fee
GENERAL POLICY PROVISIONS
Entire Contract
Incontestability
Suicide
Error in Age, Sex or Tobacco Use
Payment of Proceeds
Right to Defer Payments or Transfers from any fixed account
Termination
Annual Report
Non-Participating
Currency
Signature Guarantee
OPTIONAL MODES OF SETTLEMENT
DEFINITIONS
ATTAINED AGE: The issue age plus the number of full policy years since your
policy was issued.
BUSINESS DAY: Any day that Valley Forge Life Insurance Company and the New York
Stock Exchange are open.
CASH SURRENDER VALUE: The cash value less any surrender charge.
CASH VALUE: The total of all values under this policy held in the Variable
Account, the fixed accounts and in the loan account. Refer to the Policy Values
Provisions for details.
DEATH PROCEEDS: The amount of money payable to the beneficiary if the Insured
dies while this policy is in force. Refer to the Death Benefit Provisions for
details.
DEBT: Any amount you owe us as the result of a policy loan. This includes any
accrued loan interest.
INSURED: The person, named on the policy schedule, whose life is insured by this
policy.
INVESTMENT OPTION: An investment choice within the Variable Account available
under the policy. Current investment options are shown on the Policy Schedule.
ISSUE AGE: The Insured's age as of the nearest birthday on the policy date.
MONTHLY DATE: The same day as the policy date for each succeeding month.
POLICY ANNIVERSARY: The same day as the policy date for each succeeding policy
year.
POLICY DATE: The date coverage under this policy becomes effective and from
which the Incontestibility and Suicide provisions are determined.
POLICY LOAN ACCOUNT: That portion of the cash value resulting from a policy
loan.
POLICY YEAR: The twelve month period beginning on the policy date and ending the
day before the same date in the next calendar year; and each succeeding twelve
month period.
NET CASH VALUE: Cash surrender value less any debt.
SPECIFIED AMOUNT: A dollar amount used to determine the death benefit of your
policy. It is shown in the Policy Schedule.
SUBACCOUNT: A subdivision of the Variable Account.
VARIABLE ACCOUNT: Valley Forge Life Insurance Variable Life Separate Account.
WRITTEN NOTICE: A notice or request signed by you and received and recorded at
our Administrative Office.
OWNER, BENEFICIARY AND ASSIGNMENT PROVISIONS
OWNER: The person(s) or entity(ies) named in the Policy Schedule who has all
rights under this policy while the Insured is living. Your rights in this policy
belong to your estate if you die before the Insured dies and there is no joint
owner or contingent owner. All references to owner shall include joint owners.
If there is more than one owner, each owner shall be a joint owner of the
policy. Joint owners have equal ownership rights and both must authorize any
exercising of these rights except for transfers and allocations.
CONTINGENT OWNER: The contingent owner, if any, will become the owner if the
named owner dies before the date of the Insured's death. In the event of Joint
Owners, the contingent owner will become the owner if both named joint owners
die before the Insured. The contingent owner, if any, is as named in the
application, unless changed. You may name a contingent owner at any time while
the Insured is living. Such designation must be by written notice. Once
recorded, the designation will be effective as of the date the written notice
was signed. Such change will not affect any payment we make or action we take
before it was recorded.
BENEFICIARY: There are two categories of beneficiary - primary and contingent.
The primary beneficiary is the person to whom the death proceeds are paid when
the Insured dies. The contingent beneficiary, if any, will become the
beneficiary if no primary beneficiary is living on the date of the Insured's
death. The primary beneficiary and contingent beneficiary on the policy date are
as named in the application. More than one primary or contingent beneficiary may
be named. If more than one primary beneficiary is alive when the Insured dies,
we will pay such primary beneficiaries in equal shares unless you have provided
otherwise.
If any beneficiary dies before the Insured, that beneficiary's interest in the
death benefit will end.
If any beneficiary dies at the same time as the Insured, or within 30 days after
the Insured, that beneficiary's interest in the death benefit will end if no
benefits have been paid to that beneficiary. If the interest of all designated
beneficiaries has ended when the Insured dies, we will pay the death benefit to
you. If you are not living at that time, we will pay the death benefit to your
estate.
While the Insured is alive, you may change any beneficiary. Any change must be
by written notice. Once recorded, the change will take effect as of the date you
signed it. Such change will not affect any payment we make or action we take
before it was recorded. An irrevocable beneficiary must consent in writing to
any change in beneficiary.
ASSIGNMENT: While the Insured is living, you may assign any or all rights under
your policy. Assignment of all rights is a change of ownership. An irrevocable
beneficiary must agree in writing to any assignment. We will not be bound by any
assignment unless it is by written notice. An assignment will not affect any
payments we have made or actions we have taken before we receive notice of the
assignment. We are not responsible for the sufficiency or validity of any
assignment.
PREMIUM PROVISIONS
PREMIUM PAYMENTS: The initial premium is due on the policy date. Other premiums
may be required as described below. Unless specified, any payments received will
be considered premiums and not loan repayments.
All premiums must be sent to us at our Administrative Office. A receipt signed
by one of our authorized officers will be furnished upon request.
You may change the allocation for future premiums at any time while your policy
is in force by written notice. The change will take effect on the date we
receive your request at our Administrative Office. Future premium payments will
be required if additional premium payments are necessary to keep the policy in
force in accordance with the grace period provision.
Premiums are allocated to one or more subaccounts of the Variable Account or to
any fixed account in accordance with your election. We will accept subsequent
premiums at any time. All subsequent premiums are allocated in the same manner
as the initial premium payment unless you direct us otherwise. Allocations of
premiums are subject to the allocation guidelines shown on the Policy Schedule.
RIGHT TO REFUND: We reserve the right to return any premium that would cause the
policy to be disqualified as life insurance under the Internal Revenue Code.
GRACE PERIOD: If the net cash value on any business day is not sufficient to
cover any expense charges which are due but unpaid, a grace period of 61 days
will be allowed for the payment of sufficient premium to keep your policy in
force. A minimum payment of a sum equal to two monthly deductions must be paid.
We will send you a notice at the start of the grace period to your last known
address and to any assignee. The grace period will end 61 days after we mail you
the notice.
If sufficient premium is not paid by the end of the grace period, the policy
will terminate without value. If the Insured dies during the grace period, we
will pay the death proceeds. (See the Death Benefit Provisions for details.)
If the lapse prevention guarantee described below is in effect, the grace period
will not apply until the beginning of the policy year following the lapse
prevention guarantee period shown on the Policy Schedule.
REINSTATEMENT: If this policy terminates as provided in the grace period
provision, you may apply to reinstate this policy unless you have surrendered it
for its cash surrender value. To reinstate this policy , you must: (1) submit a
written request at any time within three years after the end of the grace
period; (2) provide proof of insurability satisfactory to us; (3) pay an amount
large enough to pay the next two monthly deductions; (4) pay any negative cash
surrender value that existed at the end of the grace period; and (5) repay or
reinstate any debt which existed at the end of the grace period.
The effective date of a reinstatement will be the monthly date on or next
following the date we approve the application for reinstatement.
If a surrender charge was applied when the policy lapsed, the surrender charge
applied will be credited to the cash value. The surrender charge on the date of
reinstatement will be the same as it was on the date of lapse. For the purpose
of determining the surrender charge on any date after the effective date of
reinstatement, the period the policy was lapsed will not count. Unless you have
provided otherwise, the allocation of the amount of the surrender charge,
additional premiums, and loan repayments will be based on the allocations in
effect at the start of the grace period.
LAPSE PREVENTION GUARANTEE: The Company guarantees that the policy will not
lapse during the lapse prevention guarantee period shown on the Policy Schedule
if, throughout that period, (a) equals or exceeds (b) where:
(a) is the aggregate premium payments made less the amount of any surrenders
(including applicable surrender charges) less any loan amount; and
(b) is the minimum monthly lapse prevention guarantee premium multiplied by the
number of complete months since the policy date, including the current
month.
DEATH BENEFIT PROVISIONS
DEATH BENEFIT:
We will pay the death benefit as soon as we receive due written proof that the
Insured has died while this policy is in force.
If death benefit option 1 is shown on the policy schedule, the death benefit
will be the greater of:
1. The specified amount; or
2. The applicable percentage of the cash value on the date of death.
If death benefit option 2 is shown on the policy schedule, the death benefit
will be the greater of: 1. The specified amount plus the cash value on the date
of death; or 2. The applicable percentage of cash value on the date of death.
DEATH BENEFIT CHANGES:
Death benefit changes are made only by written notice. You may change the
specified amount after this policy has been force for one year. A change will be
effective on the monthly date following our approval or recording of the change.
Any change is subject to the following:
1. a decrease will be applied first against prior increases, if any, on a
last-in, first-out basis, then against the initial specified amount. A
decrease in specified amount shall not reduce the specified amount lower
than the minimum specified amount shown on the Policy Schedule. A pro rata
share of any applicable surrender charge may apply;
2. an increase will require proof of insurability.
We will show the effective date of any change in specified amount in a
Supplemental Policy Schedule we will send you. Any changes are subject to the
minimum specified amount and the minimum change in specified amount shown on the
Policy Schedule.
You may change the death benefit from Option 2 to Option 1. This will increase
the Specified Amount by the amount of cash value.
You may change the death benefit from Option 1 to Option 2. Proof of
insurability satisfactory to us is required. In such case, the Specified Amount
will be reduced by the amount of cash value so that the death benefit is not
increased as of the date of change.
DEATH PROCEEDS: The death proceeds equals:
1. the death benefit provided by your policy; plus
2. any insurance on the Insured's life that may be provided by riders to your
policy; less
3. any debt; less
4. any due and unpaid premiums.
We will pay the death proceeds after we receive due proof of death and such
other information as we may reasonably require at our Administrative Office. The
death proceeds will be adjusted under certain conditions. Refer to the
Incontestability, Suicide, and Error in Age, Sex or Tobacco Use Provision.
PAYMENT OF CLAIMS: When this policy becomes a claim by the death of the Insured,
settlement will be made upon receipt of due proof of death. If proceeds are not
paid within 30 days of receipt of due proof of death, the payment will include
interest at the legal rate from the date of death of the Insured until the date
the claim is paid.
POLICY VALUE PROVISIONS
CASH VALUE: The cash value is the sum of the value in each subaccount, any fixed
account and the policy loan account. The value in each subaccount on the policy
date is equal to the portion of the initial premium allocated to the subaccount.
The cash value reflects net premiums paid, monthly deductions, the investment
experience of the subaccounts selected, any interest credited on any fixed
account selected, any interest earned or interest charged on amounts allocated
to the policy loan account, and any deductions due as a result of a transfer or
a partial surrender.
SUBACCOUNT: The value in each subaccount on each subsequent business day is
equal to:
1) the value in the subaccount on the preceding business day multiplied by its
net investment factor; plus
2) any amounts allocated to the subaccount; plus
3) any amounts transferred to the subaccount; less
4) any amounts transferred from the subaccount; less
5) the portion of any charges which are due and charged to the subaccount,
less
6) any partial surrender amounts allocated to the subaccount.
POLICY LOAN ACCOUNT: The value in the policy loan account is zero, unless you
take a policy loan. On the business day a policy loan is taken, the value in the
policy loan account is equal to the amount of the loan.
The value in the policy loan account on each subsequent business day is equal
to:
1) the value in the policy loan account on the preceding business day; plus
2) guaranteed interest credited; plus
3) any amounts transferred to the policy loan account because of additional
policy loans; plus
4) any due and unpaid loan interest during the current business day; less
5) the amount of any loan repayments you make during the current business day.
FIXED ACCOUNT I : The value in Fixed Account I is equal to:
1) the premiums allocated to Fixed Account I; plus
2) guaranteed interest credited; plus
3) any excess interest credited; plus
4) any amounts transferred to Fixed Account I; less
5) any amounts transferred from Fixed Account I; less
6) the portion of any charges which are due and charged to Fixed Account I;
less
7) any surrender amounts and surrender charges deducted from Fixed Account I.
INTEREST CREDITING: We credit interest daily to Fixed Account I at the minimum
guaranteed interest rate shown on the policy schedule. We may credit excess
interest to Fixed Account I in an amount which we will declare from time to
time. Declared interest rates will be guaranteed for one Policy Year.
MINIMUM VALUES: Your policy values are at least equal to those set by law in the
state where the policy was issued. Where required, we have given insurance
regulators a detailed statement of how we compute values and benefits.
BASIS OF COMPUTATION: All values are based on the applicable (male or female,
smoker or non-smoker) Commissioners 1980 Standard Ordinary Mortality Table, Age
Last Birthday.
POLICY COST FACTORS
MONTHLY DEDUCTION: Each monthly date, we will make certain deductions from the
cash value of your policy. The monthly deduction is for:
1. Cost of insurance for the following month;
2. The monthly cost of any rider attached to this policy; and
3. The monthly policy fee.
The first monthly deduction will be determined as of the policy date.
The monthly deduction will be deducted on a pro-rata basis from the cash
surrender value allocated to the subaccounts and any fixed accounts.
MONTHLY COST OF INSURANCE RATE: We determine the monthly cost of insurance rate
each year as of the policy anniversary. This rate will be charged for the next
policy year. The monthly cost of insurance rate will not exceed the maximum
guaranteed monthly cost of insurance rate shown on the Policy Schedule.
MONTHLY POLICY FEE: The monthly policy fee is shown on the Policy Schedule.
EXPENSE CHARGE: We deduct an expense charge daily from each subaccount of the
Variable Account. The expense charge is shown on the Policy Schedule.
PREMIUM CHARGES: Premium charges are levied on premiums received as shown on the
Policy Schedule
SURRENDER CHARGE: The surrender charge is levied when you make a partial or
total surrender of the cash value. It is shown on the Policy Schedule.
TRANSFER FEE: Transfer fees are levied when the number of transfers among
subaccounts and/or any fixed accounts exceeds the number of free transfers
allowed in a policy year. The amount of the transfer fee and the number of free
transfers are shown on the Policy Schedule.
CHANGES IN POLICY COST FACTORS: Changes in cost of insurance rates, credited
interest rates, policy expense charges or other charges will be by class and
will be based on changes in future expectations.
If required, the procedures for making such changes are on file with the
insurance regulators in the state in which this policy was delivered.
CHARGES AFTER THE INSURED'S 95TH BIRTHDAY: Policy Charges as shown on the Policy
Schedule will not apply on and after the policy anniversary on or next following
the Insured's 95th birthday.
SURRENDER PROVISIONS
TOTAL SURRENDER: You may surrender your policy for its net cash value at any
time while it is in force by written notice. We may also require return of your
policy.
The date of surrender will be the date we receive your written request. The net
cash value will be determined as of the end of the normal business day during
which your written notice is received. All coverage will end on the date of
surrender.
PARTIAL SURRENDERS: A partial surrender may be made at any time after the fifth
policy anniversary by written notice.
When you make a partial surrender, we will reduce the cash value by the partial
surrender amount and any surrender charges. We will also reduce the specified
amount. The reduction in specified amount will be proportional to the reduction
in cash value due to the partial surrender. A new Policy Schedule will be issued
reflecting the changes.
The minimum partial surrender amount is shown on the Policy Schedule. We may
require that any partial surrender amounts be first deducted from the cash value
in the subaccounts.
Partial surrenders will be allowed only if this policy continues to qualify as a
contract of life insurance under IRC Section 7702. We may limit the maximum
amount of all partial surrenders in each policy year to the greater of:
1) 10% of the total premium payments; or
2) cash value less total premiums paid less any debt.
LOAN PROVISIONS
MAXIMUM LOAN VALUE: The maximum loan value is 90% of the net cash value as of
the date of the loan.
POLICY LOAN: You may obtain a loan at any time while your policy is in force by
written notice. The amount of the loan and all existing loans may not be more
than the maximum loan value as of the date we process the loan. The minimum loan
amount is shown on the Policy Schedule. The loan will be made upon the sole
security and proper assignment of this policy to us.
LOAN INTEREST: The loan interest rate is as stated in the Policy Schedule.
Interest is charged daily and is payable at the end of each policy year. Unpaid
interest will be added to the existing debt as of the due date and will be
charged interest at the same rate as the rest of the loan.
The Company credits a higher effective annual interest rate on: (1) amounts
borrowed up to an amount equal to cash value less aggregate premium payments
made to date (preferred loans); and (2) all loans against policies in the 11th
policy year or later. Preferred loans also include the amount of any outstanding
policy loan transferred in a tax-free exchange.
LOAN REPAYMENT: All or part of a loan may be repaid to us at any time while this
policy is in force.
TERMINATION OF POLICY: If the total debt ever equals or exceeds the cash value
less the surrender charge, your policy will terminate without value.
EFFECT OF A LOAN: When you take a policy loan, we will transfer an amount equal
to the policy loan from a subaccount or Fixed Account I to the policy loan
account. We will also transfer any loan interest that becomes due and unpaid .
Xxxxxxx transferred to the policy loan account will earn interest daily from the
date of transfer. When you repay part or all of a loan, we will transfer an
amount equal to the amount you repay from the policy loan account to a
subaccount or any fixed account.
Unless otherwise specified, transfers from the subaccounts to the policy loan
account will be in proportion to the cash value in each subaccount as of the
loan date. Loan amounts will be transferred from any fixed account only when
insufficient amounts are available in the subaccounts.
Since the amount you borrow is removed from a subaccount or Fixed Account I, a
loan will have a permanent effect on any death benefit and cash surrender value
of this policy. The effect may be favorable or unfavorable. This is true whether
you repay the loan or not. If the loan is not repaid, debt will reduce the
amount of any death proceeds.
THE VARIABLE ACCOUNT
VARIABLE ACCOUNT: The Variable Account is designated on the Policy Schedule and
consists of assets set aside by us, which are kept separate from our general
assets and all of our other Variable Account assets. The assets of the Variable
Account, equal to reserves and other liabilities of your policy and those of
other owners, will not be charged with liabilities arising out of any other
business we may do.
The Variable Account assets are divided into subaccounts. The assets of the
subaccounts are allocated to the investment options shown on the Policy
Schedule.
INVESTMENTS OF THE VARIABLE ACCOUNT: We may, from time to time, add additional
investment options to those options shown on the Policy Schedule. You may be
permitted to transfer cash value to the additional investment option(s).
However, the right to make any transfer will be limited by any terms and
conditions in effect at the time of transfer.
If the shares of any of the investment options become unavailable for investment
by the Variable Account, or we deem further investment in these shares
inappropriate, we may limit further purchase of such shares or substitute shares
of another investment option for shares already purchased under this policy.
VALUATION OF ASSETS: Assets of the Variable Account are valued at their fair
market value in accordance with our procedures.
CHANGE IN OPERATION OF THE VARIABLE ACCOUNT: We reserve the right to modify the
structure or operation of the Variable Account. In such an event, we guarantee
that such modification will not affect the value of your contract.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or surrendered from a subaccount as a result of premium payments,
transfers, surrenders, or fees and charges. We will determine the number of
accumulation units of a subaccount purchased or canceled. This is done by
dividing the amount allocated to (or the amount surrendered from) the
subaccount, by the dollar value of one accumulation unit of the subaccount as of
the business day during which we received written notice.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each subaccount was
arbitrarily set at $10 when the Variable Account began operations. Subsequent
accumulation unit values for each subaccount are determined by multiplying the
accumulation unit value for the immediate preceding business day by the net
investment factor of the subaccount for the current business day. The
accumulation unit value may increase or decrease from business day to business
day.
NET INVESTMENT FACTOR: The net investment factor for each subaccount is
determined by dividing (1) by (2) and subtracting (3) from the result, where:
1) is the result of:
(a) the net asset value per share of the investment option held in the
subaccount, determined at the end of the business day; plus
(b) the per share amount of any dividend or capital gain distributions
made by the investment option held in the subaccount, if the
"ex-dividend" date occurs as of the current business day; plus or
minus
(c) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the operations of the subaccount.
2) is the net asset value per share of the investment option held in the
subaccount, determined at the end of the last prior business day.
3) is a daily factor representing the expense charges deducted from the
subaccount.
FIXED ACCOUNT I
Fixed Account I is funded by the general account of the Company. The general
account consists of all of our assets other than those held in any separate
investment account. Fixed Account I is credited with interest as described under
the Policy Value Provisions. In addition to allocating your premiums to one or
more of the subaccounts described above, you may direct all or part of your
premium payments into any fixed account.
TRANSFERS
TRANSFER RULES: A transfer is subject to the following:
1) The maximum number of transfers without a transfer fee is shown on the
Policy Schedule;
2) We reserve the right to assess a transfer fee if the number transfers
exceeds the maximum number of free transfers shown on the Policy Schedule.
We will notify you if we deduct a transfer fee and will deduct such fee
from the amount which is transferred;
3) You may not make a transfer until after the end of the free look period;
4) The minimum amount which may be transferred is shown on the Policy
Schedule;
5) A transfer will be effected as of the end of the normal business day when
we receive an acceptable transfer request;
6) We are not liable for a transfer made in accordance with your instructions;
7) Your right to make transfers is subject to modification if we determine
that the exercise of the right by one or more owners is, or would be, to
the disadvantage of other owners. Restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right which we
consider to be to the disadvantage of other owners. A modification could be
applied to transfers to or from one or more of the subaccounts and could
include, but is not limited to:
a. the requirement of a minimum time period between each transfer; or
b. not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one owner; or
c. limiting the dollar amount that may be transferred between the
subaccounts at any one time;
8) During times of drastic economic or market conditions, we may suspend the
transfer privilege temporarily without notice and treat transfer requests
based on their separate components (a redemption order with a simultaneous
request for purchase of another subaccount). In such a case, the redemption
order would be processed at the source subaccount's next determined
accumulation unit. However, the purchase into the new subaccount would be
effective at the next determined accumulation unit value for the new
subaccount only after we receive proceeds from the source subaccount, or we
otherwise receive cash on behalf of the source subaccount;
9) Transfers do not change the allocation instructions for future premium
payments;
10) You may elect to make transfers by telephone. However, to elect this option
you must first make a written request. If there are joint owners, unless we
are instructed to the contrary, instructions by telephone will be accepted
from either one of the joint owners. We will use reasonable procedures to
confirm that instructions communicated by telephone are genuine.
TRANSFER PROCESSING FEE: A number of transfers during each policy year are free
as shown on the Policy Schedule. We will deduct from the amount being
transferred the processing fee shown on the Policy Schedule for transfers in
excess of the free amount of transfers. Each written notice of transfer is
considered to be one request regardless of the number of subaccounts or any
fixed account affected by the transfer.
GENERAL POLICY PROVISIONS
ENTIRE CONTRACT: We have issued this policy in consideration of the application
and initial premium payment. A copy of the application is attached to and made a
part of this policy. The policy, including the application and any attached
riders or endorsements forms our entire contract with you. All statements made
by or for the Insured in the application or any supplemental application will be
considered representations and not warranties. We will not use any statement
made by or for the Insured to deny a claim unless the statement is in the
application or supplemental application and a copy of the statement has been
furnished to the claimant.
INCONTESTABILITY: Except for accidental death and disability benefits, we cannot
contest this policy after it has been in force during the lifetime of the
Insured for two years from the policy date; nor can we contest any increased
benefit or reinstatement after it has been in force, while the Insured is alive,
for two years after the effective date of such increase or reinstatement.
We cannot contest this policy, any reinstatement or any increase in benefits
after the policy date of the policy, reinstatement, or increase in benefits
unless:
1) An answer in the application for the policy, reinstatement or increase in
benefits was not true or complete; and
2) If we had known the truth, we would not have issued the policy as we did or
increased the benefits.
Any statement made by the Insured will not be used in any contest unless a copy
is furnished to the beneficiary.
SUICIDE: If the Insured commits suicide, while sane or insane, within two years
from the policy date, our liability shall be limited to the premiums paid prior
to death, less any debt and less any partial surrenders.
If the Insured commits suicide, while sane or insane, within two years from the
effective date of any increase in the specified amount, the total liability with
respect to such increase shall be limited to the monthly deductions for such
increase.
ERROR IN AGE, SEX OR TOBACCO USE: If the age, sex or tobacco use of the Insured
has been misstated, all payments and benefits under the policy will be those
which the premiums paid would have purchased at the Insured's correct age, sex
or tobacco use.
PAYMENT OF PROCEEDS: Unless an optional mode of settlement is elected, all
benefits will be paid in one sum to the beneficiary.
POSTPONEMENT OF PAYMENTS: We will pay surrender proceeds or the amount of a
policy loan as soon as possible after we receive your written notice. We will
pay any death proceeds when we receive due proof of death. (Due proof of death
includes all information we may reasonably require.)
The payment or transfer from the Variable Account may be postponed if:
1. The New York Stock Exchange is closed, other than customary weekend or
holiday closing, or trading on the exchange is restricted as determined by
the Securities and Exchange Commission ("SEC"); or
2. The SEC permits, by an order, the postponement for your protection; or
3. The SEC determines that an emergency exists that would make the disposal of
securities held in the variable account or determination of their value not
reasonably practicable.
RIGHT TO DEFER PAYMENTS OR TRANSFERS FROM ANY FIXED ACCOUNT: We have the right
to defer payment of any surrender or transfer of any fixed account value for up
to six months from the date we receive your written notice, unless the law in
your state provides otherwise.
TERMINATION: This policy will terminate on the date when the earliest of the
following events occurs:
1. you request in writing that coverage terminate; or
2. the Insured dies; or
3. the grace period ends.
ANNUAL REPORT: At least once each policy year, we will send you a report showing
current cash values and any other information required by law or regulation. We
will mail this report to you at your last known address.
NON-PARTICIPATING: This policy will not share in our profits or surplus
earnings.
CURRENCY: Any money we pay, or that is paid to us, must be in United States
currency.
SIGNATURE GUARANTEE: For your protection, a request for surrender, policy loan,
or a change in ownership must be by written notice. We may require the signature
to be guaranteed by a member firm of the New York, Boston, Midwest,
Philadelphia, or Pacific Stock Exchange, or by a commercial bank (not a savings
bank), which is a member of the Federal Deposit Insurance Corporation. In some
cases, the Company may require additional documentation of a customary nature.
OPTIONAL MODES OF SETTLEMENT
Proceeds may be paid in a lump sum, or in one of the optional modes of
settlement. Once the proceeds are applied under an optional mode, any amounts
payable are paid from our general account and will not be affected by the
investment experience of any variable account.
While this policy is in force, you may choose or change settlement options at
any time. If no settlement option has been chosen before the Insured's death,
the beneficiary may choose one.
When proceeds become payable under any option, a settlement contract is issued
in exchange for this policy. The new contract's effective date is the date of
the Insured's death or the date this policy is surrendered.
OPTION 1 - PAYMENT CERTAIN - We pay the cash value in equal payments as
specified. After each payment, interest of 3% compounded annually is added to
the remaining amount which has not been paid. Payments are made until the amount
applied, plus interest, is exhausted. The total of all payments made each year
must be at least 5% of the amount applied under this option. Any outstanding
balance may be withdrawn at any time.
OPTION 2 - PERIOD CERTAIN - We pay the cash value in equal installments over a
designated period of time.
OPTION 3 - LIFE ANNUITY -- We make monthly payments for the lifetime of the
payee.
OPTION 4 - LIFE ANNUITY WITH PERIOD CERTAIN - We make monthly payments while the
payee lives. If the payee dies before the specified period ends, the payments
will continue until the end of the specified period. If, at any age, the amount
of payments is the same for two or more periods certain, payment will be made as
if the longest period certain was selected.
ADDITIONAL OPTIONS: We may make other options available.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ADJUSTABLE DEATH BENEFIT
DEATH PROCEEDS PAYABLE AT INSURED'S DEATH
NON-PARTICIPATING
INVESTMENT EXPERIENCE REFLECTED IN BENEFITS
